Multilateralism: Opportunities and challenges for Africa

Rome, Italy, February 14, 2018 – Increasing numbers of people around the world are living in contexts, which for different reasons, may be considered to be fragile. Situations associated with relatively low institutional capacities, social and political instability, as well as (in some cases) conflict, are reducing resilience to shocks emanating from climate and weather-related conditions, environmental pressures and adverse economic conditions – with virtually all countries affected to a greater or lesser degree by these challenges.

It is also notable that the incidence of violent conflict is at an all-time high, which is multiplying the numbers of internally displaced persons and refugees. These realities are undermining the prospects for sustainable development and threatening the livelihoods of the rural people.

The International Fund for Agricultural Development (IFAD) 41st Governing Council, held on 13 and 14 February, was on the theme ‘From fragility to long-term resilience: investing in sustainable rural economies.’

Global collective commitment to development is even more essential today and a key success factor for sustainable local solutions. It would not be an exaggeration to state that as frustration grows globally on issues as such as poverty and inequality, unemployment, migration and climate change, the world is at the same time experiencing trends that are important to note – from globalisations (mixed with some radical spikes of protectionism) through to a global society that is increasingly become multi-ethnic, multi-religious and multi-cultural. This is clear wakeup call on the issue of multilateralism.

At a high-level event on Multilateralism: Opportunities and challenges, the NEPAD Agency’s CEO, Dr Ibrahim Mayaki emphasised that multi-sectoriality is now an imperative.

With regards effective multilateral action for African agriculture, Dr Mayaki highlighted the fact that the framework of CAADP- the Comprehensive Africa Agriculture Development Programme – currently implemented in 54 African countries, is a good case in point.

“CAADP was a product of multilateralism, aligned to Africa’s priorities, which, as a framework, put agriculture in 2003 back on the table as a key to growth,” Dr Mayaki stated. “Agriculture is a sector that employs more than 70 percent of the people in Africa.” Due to its very nature, agriculture by default cuts across different sectors.

Dr Mayaki also pointed out that currently multilateralism is challenged by bilateralism, for instance, in implementing decisions on the Paris Agreement on climate change.

However, for the African continent, “Most of our solutions are not at national level but at regional level. For us it is a form of multilateralism through regional integration – be it through energy, land restoration, trade or infrastructure – that will lead us to optimal solutions,” Dr Mayaki said.

“Transitions”: Preface by Carlos Lopes

Another timely and straightforward article from Carlos Lopes, on Africa’s industrialisation. A great read!

Africa’s prospects are again being questioned for many reasons: some quite familiar, like commodity prices, debt or conflict; others less so, such as climate change, technology or migration.

To link the fortunes of a continent to its natural resources bounty should have been positive. Indeed, Africa has been blessed with mineral wealth, a remarkable blue economy, and incredible energy potential. However, paradoxically, these ingredients for growth have benefited others, empowering others’ industrialisation, creating value chain opportunities for others, generating employment elsewhere, or accumulating capital in other shores.

Unsurprisingly, part of the Africa Rising narrative matured around the commodity boom and the need to take note of the continent’s growing business opportunities. It was, therefore, only natural that such a narrative would change with the end of the so-called commodity super cycle; heralded with historic low prices for oil that hit hard some of the continent’s largest economies. Pundits were quick to identify the reasons for lowering expectations.

Full article here.

Without its own data, Africa is doomed to remain in the dark

By stating in an interview to the Wall Street Journal that inaccurate methodologies, or even a political bias, have affected the performance of some states in the “Doing Business” ranking, the former – highly iconoclastic – chief economist of the World Bank Paul Romer triggered a real storm. The interview particularly shakes Chile, a country especially victim of this bias. Former Socialist President Michelle Bachelet said she was very “concerned” and called for a thorough investigation of the institution.

If Africa is not at the heart of this case, the Chilean case is a new opportunity to sound the alarm. In fact, African countries, like many emerging countries, have not yet succeeded in developing tools for collecting data and producing reliable statistics. African governments, researchers and citizens depend on data provided by international institutions such as the UN, the OECD, the IMF and the World Bank.

Far from wanting to discredit the essential work done by these different institutions, it is no less important that Africa fully embraces the challenge of data and statistics in order to develop its own strategic vision. No international institutions is immune from possible manipulations, or simply from structural bias against certain countries or certain types of reforms. But an African analysis of the development of the continent is essential to lay the sound foundations of the future Africa.

Several factors explain Africa’s backwardness in this area. Firstly, the limited resources available to national statistical institutions that rely too heavily on external funding for their operations. Also because these institutes are too often under political tutelage, leaving the suspicion of a possible lack of neutrality. The independence of these institutions is necessary, so that they themselves establish their research programs, regardless of political agendas and the electoral calendar.

Statistics mirror the reality of everyday life. But to make the right political and economic decisions, a distorted reality can be a big source of mistakes. Without reliable information, an efficient development policy is not possible. These statistics are essential for a good allocation of resources and a rigorous evaluation of public policies outcomes. For this reason, governments need to understand that investing in statistics is more than profitable because of the overall improvement in resource allocation.

Above all, beyond the economic imperative, African governments must provide good statistics available to their citizens. They improve transparency and accountability in public management. It is only in these conditions that citizens can judge the policies put in place by their government and thus vote in the most informed way.

More than ever, open data initiatives and data transparency must be a priority for our societies in order to structure the political debate. In the era of fake news, it is all the more imperative to fight rumors and lies by providing relevant and reliable data on the public space. This is how we will promote the development of participatory democracy and more peaceful societies.

Fast-tracking the implementation of Africa’s Development Agenda

Johannesburg, South Africa, January 25, 2018 – NEPAD Agency, now with a footprint in 52 of the 55 African Union Member States, adopted a results-based approach and aligned its interventions to the First Ten Year Implementation Plan of Agenda 2063 –  African Union’s long-term vision and strategic framework for socio-economic transformation of the continent. Accordingly, the 2017 Annual Report that the Agency has released is results based, giving an account of the NEPAD Agency’s contribution to Agenda 2063.

The results of the NEPAD Agency’s contribution to Agenda 2063 for the year 2017 are presented at continental, regional and national levels. To this end, the 2017 report provides some insights into the possible strategic impact areas of the transformed Agency, namely: Wealth Creation, Shared Prosperity, Transformative Capacities and Sustainable Environment.

At continental level, the Agency’s 2017 results in the area of revolution and entrepreneurship include the application of gene drives for eliminating malaria; the application of drone technology for agriculture and food security; and the promotion of micro-grids for expanding Africa’s access to energy. In the area of sustainability and resilience capacity, results include contribution to Africa’s unified position in global conventions on climate change and environmental resilience that was strengthened.

With regards improved health and nutrition services, some of the achievements include a draft treaty for establishing the African Medicines Agency that was prepared to ensure the supply of safe and effective medicines in Africa. Results towards transformed agriculture and food systems include the blueprint that was produced to implement rural development policies in Africa, as well as the Inaugural Biennial Report, which highlights progress made on commitments enshrined in the Malabo Declaration.

The year 2017 marks the end of the strategic plan cycle that spans 2014 to 2017. It also heralds the medium term development plan, 2018 – 2023, aligned to Agenda 2063’s First Ten Year Implementation Plan. The annual report also comes at a time when preparations are concluding for transforming the NEPAD Agency into the African Union Development Agency, with greater scope for action and capacity.

African States’ Fragility and resilience

If we want things to move forward and improve, especially for the economic and social development of our people, we sometimes have to recognize our weaknesses. One of the most important today is the weakness of the State in most of our countries. This weakness can quickly turn into fragility, as we have seen with phenomena as different as the Ebola virus, or the progression of Boko Haram, not to mention the management of the consequences of global warming.

The weaker or fragile a state is, the more likely it is to be overwhelmed by events and unable to cope with the large-scale challenges it faces. The question of the resilience of our states is therefore very meaningful and relevant. It is necessary to give back to Caesar what is Caesar’s : the African Development Bank (AfDB) has been a pioneer in the field of fragility of States under the presidency of Donald Kaberuka by creating a Department directly responsible for these issues. Initially the focus was on States in transition, especially post-conflict, but gradually shifted to the concept of more general resilience and taking into account more scenarios that our States face.

In January 2017, the AfDB organized with success its first Forum on Resilience in Africa. It had made it possible to analyze various situations of fragility present on the continent, but also to note a major fact: the continent is progressing, and some extremely fragile states manage to consolidate. Another observation that logically follows the first is that fragility can precisely derive resilience that can therefore lead to the stability of our states. We just have to recognize our weaknesses.

Last year’s recommendations included the need to forge stronger, competency-based partnerships to make interventions more effective; and “to respond in a concerted manner to the needs of people at the bottom of the poverty pyramid by providing early interventions at the community level in situations of fragility, in order to ensure greater inclusion while giving hope to the most vulnerable”.

It is precisely on the theme “Building resilience – reaching those at the bottom of the pyramid” that the second edition of the African Resilience Forum (ARF), is to be held in Abidjan on February 8th and 9th, 2018. The objective of this new meeting is to share knowledge on new approaches to provide development support in fragile environments. It is also about designing a platform to present innovative solutions and new technologies to provide essential services to the communities that need it most.

The “bottom-up” approach is favoured here, in contrast to what is usually practiced, namely large and  highly centralized national programs whose effect is not always felt by the poorest. This approach is based on the needs of the grassroots to try to improve the situation of the most fragile communities by ensuring that they participate in the definition of solutions. To do this I think it is necessary to develop new types of partnerships, to better mobilize the national resources of each of our States towards a development at the community level, knowing that the reality of development is first local.

For my part, I would also like to see in this endeavour, the direct involvement of the private sector with which partnerships are also possible, to achieve these objectives.

Migratory challenge at the heart of Africa’s rural areas

Contrary to what many still believe, it is now Africa that dominates migration flows to Europe and not the Middle East. The 2016 agreement ratified between the European Union and Turkey contributed to reduce the number of migrants from the Middle East. Africa is the first land of global emigration.

According to the International Organization for Migration (IOM), Sub-Saharans represented 79% of the migrants that went to Italy between January 1, 2015 and June 30, 2017. Meanwhile, Spain has also become an important migration route as the number of migrants that crossed through the “Western Mediterranean route” has already doubled compared to 2016.

If some of our fellow citizens leave the continent to flee wars and political violence, we can not underestimate the weight of economic migrations. The causes are multiple and well-known: mass unemployment, especially among young people, political instability and bad governance, demographic pressure in urban areas, abandonment of rural areas by government, social injustice and a form of fantasy about the promises of Europe.

Among all the possible solutions, numerous econometric studies have demonstrated the relevance of agricultural development in the fight against poverty. In a continent that accounts for 65% of the world’s available arable land, for a population that is still more than 50% rural, this is the best way to provide people with training and employment, a decent income, and hence stabilization.

In a joint study, FAO and CIRAD estimate that nearly 380 million young people, including 220 million in rural areas, will enter the African labor market by 2030. If we do not offer professional opportunities to young people in rural areas, they will have no choice but to migrate to large African cities in precarious conditions or even to Europe. Agriculture and rural development are the pillars on which our response to the migration challenge in Africa must be based.

While 80% of farms in Africa are less than two hectares, linkages between smallholder farmers and agribusiness firms need to be strengthened to create a harmonious ecosystem. By setting up integrated value chains to capture a greater share of added value and by ensuring regional self-sufficiency for certain commodities, these agropoles will provide jobs for people, especially women and young people.

Within the framework of the perspectives defined by the African Union, the NEPAD Agency ensures the establishment of agropoles and infrastructure corridors at the heart of Agenda 2063 for the agricultural transformation of the continent. A better connection to regional markets is key to creating a sufficiently large pool of consumers to justify the necessary investments.

The demographic danger takes a second, more unexpected form: the agricultural labor force is ageing in Sub-Saharan Africa. On average, farmers are sixty years old in many countries while youth is massively affected by unemployment. This is an opportunity to carry out a generational transmission so that experienced farmers can transfer expertise to young people. I often say that a farmer’s life is no different from that of a business owner. Agriculture is particularly transformed by the digital era, which young people will better exploit than the current generation.

It is useless to look towards the Mediterranean when we want to talk about the migratory issue. It’s already too late. It is by acting directly on the causes of migration that the inhuman situations found in Libya and elsewhere will cease. Let’s start by offering a professional future to our fellow citizens and by creating the conditions for inclusive and sustainable growth.

Reform of tax systems one of the best ways to finance development

In early December, the European Union (EU) published  a list of 17 countries now considered tax havens. Among this list, only two African countries were pinned by Brussels: Tunisia and Namibia. Another list, the “gray” one, should be published soon with the countries that have made commitments to be followed, on which, it is said,  Morocco and Cape Verde should appear.

My idea is obviously not to name and shame this or this country, especially as this list compiled by the European authorities is subjective and is sometimes based on more than questionable criteria. It should also be noted that not one single European country appears on the list, considering that they are supposed to apply European law in the fight against fraud…

But I would like to draw attention to the fiscal issue African states are facing and to the scourge of tax evasion. While Africa is still too often perceived (for all the reasons we know), as a continent dependent on official development assistance, our continent has potential resources that it actually lets evaporate each year. This problem goes well beyond the African continent. For instance, the OECD has made the issue of transfer pricing a priority in recent years.

According to the high-level group sponsored by the Economic Commission for Africa (ECA) and the African Union (AU), it is estimated that illicit financial flows out of Africa amount to between $ 50 and $ 60 billion each year. And again, this estimate probably underplays reality, given the difficulty of evaluating these transactions and the lack of data on this subject. Between 1970 and 2008, illicit financial flows cost Africa between $ 854 and $ 1.8 trillion, according to estimates by the high-level group dealing with illicit financial flows from Africa. Another organization, the Independent Commission for the Reform of International Corporate Taxation (ICRICT), estimates that between $ 40 and $ 80 billion are lost each year in Africa. In any case, these figures are staggering.

These illicit flows include, of course, criminal activity of any kind and the transfer of funds from corruption, but they do not constitute the majority of these flows. The bulk of the flows actually come from traditional trade, a combination of tax evasion and avoidance. The first refers to the actual fraud that is illegal, while the second is for a company (or an individual) to take advantage of loopholes in the tax system of a state, to reduce the amount of its levies, which is supposedly legal though deeply immoral. The porous border between evasion and tax avoidance means that both strategies need to be fought hard.

The challenge is twofold. On the one hand, the establishment of increased inter-state cooperation to respond to this challenge is essential. Indeed, companies profit very logically from dissonances between different governments on the international tax system. Several countries are openly betting on a leveling down of tax incentives, to the detriment of many. On the other hand, public administrations too often suffer from a lack of technical expertise in the face of multinationals backed by international law firms helping them to implement aggressive tax avoidance strategies. In order to combat this phenomenon, the first step is the construction and drafting of strengthened legislation, taking into account the various tax avoidance practices, particularly the thorny issue of transfer pricing.

This legislation will only be worth the value of the ability of our tax administrations to implement them.

This is notably the fight of the Forum on African Tax Administration (ATAF), a platform dedicated to promoting mutual cooperation between African tax administrations (and other relevant and interested stakeholders) and aimed at improving the efficiency of their tax laws and administrations. The organization often cites the case of Uganda, which has become aware of this issue and has begun implementing the necessary reforms. In 2015, these reforms allowed Kampala to win a dispute with Heritage Oil for some $ 400 million before the United Nations Commission on International Trade Law (UNCITRAL).

Taxation is an essential element for the economic and social development of African countries. It enables the fair and equitable sharing of the costs and benefits of development, contributes to the creation of a stable environment for economic operators and finances infrastructure needs at the material and social level. This is why reform of tax systems is one of the best ways to finance development, making it possible to strengthen the autonomy of governments. African governments must therefore seize this project as a priority, in order to be able to rely on the fiscal pillar to collect the resources they need to finance their development strategies.

In memory of Pr. Calestous Juma

I would like to formally pay my respect one last time to my dear friend Calestous Juma who passed away last week. Of course, my first thoughts go to his family and friends. But I think they won’t be the only ones deeply affected by his passing.

For a whole generation, and maybe for future generations of leaders, he was an exceptional teacher and thinker as well as one of the shining lights of Africa in the intellectual sphere. Famous for his good spirits and readiness to help out others, he was as charming and charismatic as he was demanding. His vision was one of openness and sound debate.

But although he was one of the most optimistic people I had the chance to meet, he did not take a rose tinted view of Africa’s place in the world, be it from an economic or political standpoint. For instance, he was noticeably quick to pinpoint shortcomings in the conventional narrative about Africa, either overpessimistic or overoptimistic.

His greatest works such as In Land We Trust or Innovation and its Enemies revolved around fundamentals topics for a truly African-led revolution, both political and economical (biological diversity, technological innovation, property rights…). He charted the path to our true emancipation, keeping in mind the importance of taking a pan-African perspective if we want to overcome our challenges.

I remember a few particularly illuminating texts he wrote and that also helped me better define my views of the continent’s development and its place in the world.

For instance this one about industrialization and what he called “the misplaced promise of Africa’s mobile revolution”, helped to deconstruct a myth often played up in the media about the quasi-magical power of new technologies to industrialize Africa. Far from being idealistic, and though he was such a pioneering scholar, he was a very down to earth and dedicated proponent of pragmatic solutions.

Most of his business plan for Africa rested on the physical infrastructure and agricultural revolution he never ceased to promote. He placed them at the center of the continent’s long-term economic transformation but was particularly keen on innovation to achieve this, as he demonstrates in a fascinating book, The New Harvest: Agricultural Innovation in Africa.

For generations of students lucky enough to benefit from his teaching, he will remain one of the most humble and yet noticeable voices from our continent. His voice will be sorely missed but the ones he inspired will keep him alive and well among us. Let’s hope he inspired many vocations. This would be the best tribute we could pay to his memory.

2017 PIDA Week convened in Namibia

The 2017 Programme for Infrastructure Development in Africa (PIDA) Week was held from 10 to 14 December in Swakopmund, Namibia under the theme “Enhancing Trade and Economic Transformation through Regional Infrastructure Development”.

Organized by the African Union Commission (AUC), the NEPAD Planning and Coordinating Agency (NPCA), the African Development Bank (AfDB) and the United Nations Economic Commission for Africa (UNECA) in collaboration with the Namibian Government and the Southern African Development Community (SADC), PIDA Week aims to build on the achievements of the 2015 and 2016 meetings in Abidjan and the momentum created in the previous two events to continue to engage stakeholders on the effective delivery of infrastructure on the continent.

Speaking ahead of the meeting, H.E. Dr Amani Abou-Zeid, Commissioner for Infrastructure and Energy at the African Union Commission said that about 500 delegates were expected in Walvis Bay to discuss how to create synergies and mobilise support in the implementation of African Union’s Agenda 2063 infrastructure projects in Africa, with a particular emphasis on PIDA.

“Delegates gathering in Swakopmund for the Third PIDA Week have addressed several important issues, with a view to moving PIDA projects from conception to implementation and pushing Agenda 2063’s infrastructure goals for Africa,” Dr Amani Abou-Zeid stated.

“This event has offered an opportunity for delegates to unpack the enormous growth potential of increasing the visibility of PIDA projects and validating the relevance of corridors and thereby facilitating the continent’s economic transformation, harnessed to the benefit of our people,” the Commissioner added.

On his part, NEPAD Agency’s Chief Executive Officer, Dr Ibrahim Assane Mayaki stated that “Accelerating the development of Africa’s regional infrastructure could be the game changer that will trigger industrialisation and create jobs. It is for this reason that African leaders developed the Programme for Infrastructure Development in Africa (PIDA) in 2012, as the means for socio-economic growth and intra-African trade.”

Khaled Sherif, Vice-President – Regional Development, Integration and Business Delivery reaffirmed the African Development Bank’s strong commitment to infrastructure development in the continent stating that infrastructure promotes trade and creates a conducive environment for investments and business.

He applauded the significant strides made by PIDA implementing partners in promoting trade and economic transformation through regional infrastructure development, adding that the Bank aims to attract more capital into the infrastructure sector by helping governments structure transactions to contribute to the financing of infrastructure.

Vice President Khaled stated that expectations are high that this meeting will provide a fresh impetus towards PIDA implementation. Similarly, he alluded to the fact that “Co-financing and partnerships remain critical towards mobilising more resources for PIDA implementation.”

PIDA Week was inaugurated in 2015 as a platform for PIDA stakeholders and the first two events have been held in Abidjan under the auspices of the African Development Bank. The event will provide a platform for stakeholders to engage in accelerating and synergising their efforts to: (1) accelerate projects preparation and implementation;(2) mobilise adequate financial and technical resources for projects; (3) increase private sector participation in PIDA implementation; and (4) mobilise Member States to integrate the PIDA projects into their national development plans.

Additionally, statutory closed meetings under the Institutional Architecture for Infrastructure Development (IAIDA) and the NEPAD Infrastructure Project Preparation Facility (IPPF) meetings were held during the Week. PIDA Week also focused on accelerating all PIDA Projects with specific emphasis on five selected projects and a site visit to Walvis Bay.

The meeting was attended by various stakeholders including AUC, NPCA, AfDB, and UNECA, Member States, development partners, Financial Institutions, private sector, civil society and members of the media.

Copyright: Uzo Madu

African countries are building a giant free-trade area

They have long traded with the world, now they want to trade with each other.

“AFRICA must unite,” wrote Kwame Nkrumah, Ghana’s first president, in 1963, lamenting that African countries sold raw materials to their former colonisers rather than trading among themselves. His pan-African dream never became reality. Even today, African countries still trade twice as much with Europe as they do with each other (see chart). But that spirit of unity now animates a push for a Continental Free-Trade Area (CFTA), involving all 55 countries in the region. Negotiations began in 2015, aimed at forming the CFTA by the end of this year. In contrast to the WTO, African trade talks are making progress.

At a meeting on December 1st and 2nd in Niamey, the capital of Niger, African trade ministers agreed on final tweaks to the text. Heads of state will probably sign it in March, once an accompanying protocol on goods has been concluded (agreement on services has already been reached). But trade barriers will not tumble overnight. The CFTA will come into force only when 15 countries have ratified it. Even then, the deal only sets a framework, within which some details of tariff reduction have still to be worked out. Separate negotiations, covering competition, investment and intellectual-property rights, are yet to begin.

Nonetheless, technocrats are keen to talk up the agreement. Chiedu Osakwe, Nigeria’s chief negotiator and chairman of the negotiating forum, sees it as a “massive historical opportunity” to escape the colonial legacy. Some 82% of African countries’ exports go to other continents; they consist mostly of commodities. By contrast, over half of intra-African trade is in manufactured products. Supporters of the deal argue that it will create larger, more competitive markets, helping to ignite Africa’s stalled industrialisation.

African leaders also have an eye on relations with the rest of the world. No longer able to count on unilateral trade concessions from rich countries, they are instead being forced into reciprocal deals, which involve more give-and-take. A strong CFTA would give Africa extra weight in talks with Europe and America, argues George Boateng of the African Centre for Economic Transformation, a pan-African think-tank.

Yet political pressure to rush negotiations may weaken the final text. The CFTA aims to eliminate tariffs on 90% of products over five to ten years, which is less ambitious than it sounds. Much intra-African trade is already between members of smaller free-trade areas, such as the Southern African Development Community. The rest is concentrated in a small range of goods. Peter Draper of Tutwa Consulting, a South African firm, notes that, by retaining tariffs on just 5% of products, African countries could in effect exclude most of their current imports from liberalisation.

A study by the United Nations Economic Commission for Africa estimates that, with the CFTA, intra-African trade would be 52% higher in 2022 than it was in 2010. Since that assumes the removal of all tariffs, the actual effect will almost certainly be more modest. Research also shows that the largest gains come not from reducing tariffs, but from cutting non-tariff barriers and transport times. That will come as no surprise to drivers in the long lines of lorries queuing at a typical African border post. The World Bank estimates that it takes three-and-a-half weeks for a container of car parts to pass Congolese customs.

African countries have a mixed record on easing trade. A new one-stop border post has slashed the time taken to move cargo from Tanzania to Uganda by 90%. But even as tariffs have come down, east African countries are also erecting new non-tariff barriers, such as divergent standards for goods. Informal traders, most of them women, report harassment and extortion at borders. Meanwhile multiple deadlines have been missed on the road to the Tripartite Free-Trade Area, a separate scheme to link three regional blocs.

Free trade runs counter to political currents in many countries, including South Africa and Nigeria, where governments fear losing control over industrial policy. They also worry about losing tariff revenues, because they find other taxes hard to collect. Patience over the CFTA may be a virtue, if it gives countries more time to adjust. The technocrats are optimistic. “You create the foundation, then you can build the house,” says Prudence Sebahizi, the African Union’s chief technical adviser on the CFTA. “Even if it takes many years.”