The Inaugural African Economic Platform will strengthen common policies

A new structure to strengthen the South-South economic and political axis was launched in Mauritius last month. The inaugural African Economic Platform (AEP), an Agenda 2063 programme, was attended by the Chairperson of the African Union, several Prime Ministers and high profile personalities of the continent. The AEP is an initiative driven by Africans to provide the policy space for Africans across all key sectors, to set their own agenda, explore realistic continental and global opportunities, and ways of implementing this agenda. Organized by the African Union Foundation, the African Economic Platform is an event to analyze the strengths and weaknesses of African economies and to identify opportunities in various sectors.

The AEP created an avenue for dialogue amongst a range of sectors, including the African political leadership, business leaders in the private sector, universities and intellectuals. All these different stakeholders are critical to driving the economic transformation agenda. The private sector plays a key role in investment, industrialisation and intra-African trade. The higher education sector provides skills development and are the locus for research and innovation. Governments ensure the implementation of fiscal and macro-economic policies and other environments for economic transformation.

The idea for an Africa focused economic platform originated from the need to ensure that annual meetings among African policy makers and regional business leaders do serve the top priorities in Africa’s drive for development and growth. The launch focused on the employment challenges arising from the skills gap witnessed by the disconnect between Africa’s industry requirements for economic growth and the output from academia. The need to develop an integrated African economy to enable the continent to realise its potential for stronger competitiveness in the global economy was also at stake. The outcome of the inaugural AEP, which focused on South-South cooperation, a commitment to Made in Africa and intra-African trade, bodes well for the continent.

At this launch Forum, measurable short to medium term milestones were set in relation to the promotion of intra-Africa trade through the food and agricultural products that the continent produces: livestock, poultry, fish, seafood, among others. Strategies were developed following the conference, including the establishment of a joint standing committee to facilitate trade relations; to remove the obstacles to the movement of goods and services; and to promote joint efforts among African financial centers to facilitate investment. Africa needs USD 200 billion annually over the next four years to reach its targets, while Foreign Direct Investment is USD 60 billion a year. Air connectivity was also reviewed, with the development of a master plan for the African continent in the pipeline.

The AEP launch was a meeting of great minds to discuss how the continent can harness its vast resources to enhance the development of the African people. It is now time to come forward with concrete plans to accelerate investment and competitiveness in Africa. NEPAD has already been active on the front of Human Skills Capital Development through its Skills Initiative for Africa Programme, launched this April. Leveraging the potential of the African Diaspora to participate in and advocate for Africa’s integration and development is a point we will take up next week.

The spectre of recolonisation

Among the many challenges facing Africa, there is one that cuts across them all and with painful echoes of our recent history, the possible recolonization of the continent. There has been a disturbing sense that foreign actors are taking hold of the assets and the growth of the continent. This fear is multifaceted, there is the fear of not being able to respond to the challenges of 21st Century Africa in autonomous fashion, the fear that it is the last chance to give the continent a push with the help of international partners, and simultaneously it is felt that this is the moment to stop the depletion of Africa’s natural resources. This fear, which is more or less rational and justified, translates a crisis of confidence creating doubt as to the basis for a clear pathway to sustained and long term development.

This state of affairs is dangerous because it can lead to withdrawal. We have recently seen a number of African countries threaten to leave the ICC. The ICC was founded with the idealistic goal of trying the perpetrators of the world’s worst atrocities and premised on the idea that nations must work in harmony. But the perception that the Court has been targeting Africa, at a time when the continent is asserting its political and economic independence, has not been well received. Mistrust is settling in, not the least from Uganda in the case of Dominic Ongwen, a Ugandan Rebel Leader abducted as a child. The ICC is going through an existential crisis and the outcome of this case will set an important precedent for international criminal justice and determine the allegiance of African countries.

The question of recolonization also arises through the presence of the United States, China, India, France, Britain, Germany, Japan on the continent, powerful countries which all have important and increasingly competitive stakes on our lands. China, in particular, has a strong presence on the continent, with one million Chinese nationals and a burgeoning economic presence in Africa. Chinese capital investment into Africa, up to July 2016, had increased by 515% from full-year 2015 figures with more than $14bn invested in Africa by Chinese companies. China acquires the raw materials like oil, iron, copper and zinc that it urgently needs to fuel its own economy but builds and improves infrastructure such as roads, railways and telecom systems which are necessary to Africa’s manufacturing sector. This can be a win-win situation only if Africa governments are in a position to negotiate the deals in a way that makes financial, legal and economic sense for their respective countries.

In our dealings with foreign countries, there has often been a weak enforcement of environmental laws to our detriment, through illegal logging depleting our woodlands, unregulated and overfishing of our seas by other countries and the poaching of protected species of animals. Growing multinational investments in industrial plantations are also contributing to deforestation. Are we still supplying goods such as cocoa, sugar and tea to the West to the detriment of our own environment? Is the abundance of land, lax regulations and cheap labour, that we are too easily prepared to trade off, working against our ability to determine our own destiny?

The independence we acquired around 50 years ago requires ongoing nurturing in the tough questions we need to ask ourselves over the price we are willing to pay for accelerated development.

 

 

International Day of Reflection on the Genocide in Rwanda 7 April 2017

In making strides towards the goal of transforming our continent into “The Africa We Want” – a peaceful, strong and united Africa, reflection on the 1994 genocide in Rwanda reminds us that we cannot take our peace and security for granted.

Current and past events in African and around the world, as evidenced by the high number of people displaced by war, conflict or persecution, which now stands at almost 60 million, builds a strong case for prevention of conflict to come to the fore in all that we do. Prevention has become an essential aspect of foreign policy due to the nature of today’s conflicts, their growing complexity and the fact that conflicts are more intra-state than inter-state. Moreover, the presence of powerful non-state actors and violent extremisms all make it necessary to strengthen early warning and preventive diplomacy mechanisms.

On the African continent, efforts for peace are on the increase, as demonstrated by an ever growing number of peaceful transitions of power, with recent examples being Nigeria, Ghana, Cape Verde, to mention but a few.  At the beginning of the 1990s, there were approximately thirty ongoing conflicts, but now they have been reduced to about a dozen. In addition, we are also witnessing Africa’s integration through regional and continental efforts, under a direct manifestation of the “ownership principle” that is the cornerstone of an African prevention and development policy embedded in the African Union.

Reflecting on Rwanda today, the words of Wole Soyinka ring true:

“Given the scale of trauma caused by the genocide, Rwanda has indicated that however thin the hope of a community can be, a hero always emerges. Although no one can dare claim that it is now a perfect state, and that no more work is needed, Rwanda has risen from the ashes as a model of truth and reconciliation.”

Together with Africa’s 1.2 billion people, the NEPAD Agency commemorates the International Day of Reflection on the Genocide in Rwanda, in order to eventually see a continent where all guns are silenced, a continent in which its people flourish in a culture of human rights, democracy, gender equality, inclusion and peace.

The African youth should be invited to co-create its future

Increasingly the youth, who constitute an overwhelming majority of the population of African countries, feel disenfranchised from their political representatives and other figures of authority. This is a youth which is connected and exposed everyday through television, via the internet or the radio to foreign realities, and one which exercises, therefore, a degree of autonomy in relation to traditional lifestyles. Our youth are no longer confined to developing their identity and aspirations based upon the place in which they live or upon the answers that the elders are prepared to give.

On the other hand, traditional leadership often remains problematic in Africa. Political figures and other figures of authority find it difficult coming to terms with the increasingly fluid identities and fragmented authority in the modern African state. Eventually this state of affairs could lead to the progressive breakdown of the norms which have sustained African life till now. This process has taken place in other parts of the world. But it is taking place at such an accelerated pace on the continent that the question needs to be asked as to whether it could threaten the development pathway of Africa.

However, here is another way of looking at the issue beyond a simple juxtaposition. Culture is not static but always changing as each generation contributes its experience of the world and discards things that are no longer useful to them. African countries are already largely multinational, multi-ethnic and multi-religious countries built on European ideas of the modern state. The source of traditional authority and legitimacy, blood and land, has mostly since been replaced by civic ideas of democracy. Today this democracy seeks new energy, as it does across the world. To be able to harness the energy and ambitions of our youth into a positive force we must create space to allow them to co-create the future.

The youth bulge in sub-Saharan Africa has not escalated into political violence. But we should not wait for a climate of us-versus-them to settle. Governments need to continue to invest in all levels of education, in vocational training and, most of all, in policy that creates the incentives for higher investments to absorb the country’s labour. Traditional leadership styles need to give way. Barriers against transparency need to come down, allowing access to public information, open data and creating, in the process, a more meaningful participation in the political process. We need to build the bridges necessary to allow the voice of the African youth to shape party policy, and contribute to their country’s crucial dialogues over nation building. So, let us create the conditions for a real partnership with the youth, sending a strong signal that their involvement is an integral part of the transformation of the continent.

World Water Day : 22 March 2017

The critical importance of water in daily living cannot be overemphasised. World Water Day, an international day that celebrates freshwater, was recommended at the 1992 United Nations Conference on Environment and Development.

In Agenda 2063, Africa’s 50 year development strategy, Africans expressed in Aspiration number 1, the desire to see “a prosperous Africa based on inclusive growth and sustainable development.”  This aspiration is underpinned by the wish to see an Africa in which its “cities and other settlements are hubs of cultural and economic activities, with modernised infrastructure, and its people have access to all the basic necessities of life, including shelter, water and sanitation.”

Key to Africa’s inclusive growth and sustainable development is the equitable and sustainable use and management of water resources for socio-economic development, regional cooperation and the environment.

The best way to push water and sanitation up on the political agenda is to find an obvious way to link water to development. This is why Goal 6 of the UN Sustainable Development Goals (SDGs) calls for clean water and sanitation for all. That SDG has 8 major targets to reach by 2030. Among them we find a commitment to “protect and restore water-related ecosystems, including mountains, forests, wetlands, rivers, aquifers and lakes.”

That commitment is not something that people (and by extent governments) should consider as redundant. Indeed, water scarcity must be considered as a top priority risk: It is at the same time a major constraint to socio-economic development of nations, a growing problem for businesses, and a threat to growth and stability on a global scale. Thus, it is far from being a minor problem.

This is the reason why it is inconceivable to act with short-term financial interest as the only goal and not to look on consequences on the environment and water conservation. For instance, water is critical for successful climate change mitigation, as many efforts to reduce greenhouse gas emissions depend on reliable access to water resources.  This year’s focus on wastewater points to the need to reduce and reuse wastewater as a valuable resource.  Increasing water recycling and safe reuse of wastewater is a key component of sustainable water management – that will go a long way in enabling us to have “The Africa We Want!”

We have a long way to go before water scarcity problems are solved across the globe but it is our strategic interest to act now, on our continent. I urge all stakeholders to rally together and get things done. Water is not a secondary issue – it is a social, human, and economic issue. Water is the lifeline for the 1.2 billion people living in Africa.

Africa Common Passport as a Catalyst to Boost Intra-Africa Travel and Trade

During the Twenty Seventh (27th) Ordinary Session of the African Union Assembly of Heads of State and Government, which took place in July 2016, in Rwanda, the Chadian President, H.E. Idriss Deby, remarked on receiving the African Union passport, “I feel deeply and proudly a true son of Africa after receiving this passport.” Two months later, African billionaire businessman, Mr. Aliko Dangote, in a CNBC Africa interview given in September 2016, lamented, “Somebody like me, despite the size of our group, I need 38 visas to move around Africa. You go 
to a country that is looking for investments; that particular country will give you a run around just to get a visa. They are giving you visas as if it is a favor.”

The views presented by the above-mentioned prominent African political and business leaders tell differing stories. President Deby was speaking about his feelings on the acquisition of the African passport, as well as how the adoption of the passport by all African counties would fast track integration on the continent to achieve socio-economic growth for the well-being of its citizenry. Then, there is the other experience, as narrated by Mr. Dangote, which tends to frustrate African citizens. Some African countries are getting stricter in terms of their visa requirements. Apart from a letter of invitation and an itinerary, one is required to also show proof of company registration, bank-account statements, and tax-clearance certificates. In some cases, the required documents have to be translated into the official language of the country issuing the visa, if the documents are
in other languages. Even when the visa requirements are met, visas are not issued on time. More so, transit visas are required when transiting to countries that do not have direct connecting flights.

It is well documented that strict visa regulation brings about differentiated negative socio-economic spin-offs. The share of intra-Africa total trade is very unfavorable when compared with other trading blocs. Intra-Africa trade is about 12%, slightly higher than Western Asia which stands at 9%. The rest of the intra-regional trade at the global level enjoys high volumes, with North America and the European Union trading within their blocs at 61% and 62%, respectively. However, it could be argued that Africa’s low intraregional trade stems from the fact that economies of African counties are premised on primary produce, making it less attractive for the countries to trade amongst each other. However, the argument is denigrated by the other indicators, in which cost of doing business is higher in Africa than in other regional groupings.

In another related development, the lack of free movement of people, goods and services
 on the continent impacts negatively on economic growth and job creation. For example, highly skilled Africans who needed
 to ply their trade outside their home countries, usually migrate to other continents searching for pastures new, instead of sharing and transferring their skills with fellow Africans in other African counties. Many unfortunate ones have been found dead in the Mediterranean Sea, while trying to emigrate to Europe and other parts of the world. Wealthy and highly skilled Africans are normally encouraged and attracted to invest and work in the global north. Ironically, African countries tend to attract foreign expatriates from the global north to work in the local service sectors at a significant cost. Bringing in foreign expatriates at higher cost is a major impediment to Foreign Direct Investments.

Africa boasts a rich and diverse cultural heritage as
well as natural assets, in terms
 of dramatic landscapes and unique flora and fauna, which should render the continent the preferred tourism destination. Moreover, there are a number of factors that can drive the continent’s intra trade and travel, including improved air access, mega infrastructure projects, and a skilled workforce. However, these factors require heavy investments and resources to come to fruition. In contrast, more relaxed visa policies do not require lengthy processes and huge resources to be introduced. Evidently, countries with relaxed visa regulations reap significant economic gains. One major example in Africa is Seychelles, whose main source of revenue is tourism. Seychelles’ ascendancy in the Sub-Saharan Africa travel and tourism index for almost
a decade is reflected in the secure level of employment that its citizens enjoy. The tourism industry in Seychelles contributes about 30% to its Gross Domestic Product (GDP).

If we look specifically at 
the aviation sector in Africa, it supports about 7 million jobs
and contributes US$80 billion to the continent’s GDP. Therefore, relaxing visa policies, especially the adoption of the AU passport, would expand air travel and guarantee more employment and economic opportunities across the continent.

Africa’s regional integration agenda for the economic transformation of the continent has been on the cards for over four decades. The Organization of African Unity (OAU) Charter
and the Constitutive Act of the African Union (AU) place emphasis on the ideals of African unity; continentalism; pan-Africanism, and regionalism. The Lagos Plan of Action and the Abuja Treaty proposed the economic, political and institutional mechanism to attain regional integration. Many African leaders have come to the realization that regionalism is urgently needed to deal with political, economic, and social crises facing the continent. This has been reflected in the various development agendas that African countries have adopted thus far: the New Partnership for Africa’s Development (NEPAD), the overarching development framework for the region in 2001; the NEPAD Tourism Action Plan of 2004 –a framework to foster sustainable tourism on
the continent; the 2012 adoption of a Framework, Roadmap and Architecture for fast-tracking the establishment of the Continental Free Trade Area (CFTA); Action Plan for Boosting intra-African trade (BIAT), and Agenda 2063.

Nonetheless, scepticism by some persists and challenges the adoption of the common African passport. A number of rebuttals have been advanced to cast aspersions on the concept of a more open continent: the notion that countries will lose their sovereignty; an increased risk to national security; exposure to regional conflicts; health-related concerns due to the spread of diseases, and migration problems in which jobless people and refugees tend to concentrate in countries which, although possibly more affluent, may not have the accommodation and funding to house, feed and employ a large influx of such people. Other challenges include a lack of technological facility and capacity to issue biometric passports in most Africa countries. Only about 14 countries in Africa currently issue biometric passports.

However, there already exists free movement of Africans on the continent within some Regional Economic Communities (RECs) in Africa, such as the Economic Community of West Africa States (ECOWAS), as well as most of the Southern Africa Development Community (SADC) countries. Furthermore, a few countries such as Rwanda and Ghana offer visas on arrival. Kenya, Rwanda, and Uganda have introduced the UNI-VISA, whereby the acquisition of a common visa can be used to travel to all three countries. The citizens of the three countries can travel to the other counties with the UNI-VISA arrangement, without visas. The existence and implementation
of the aforementioned policies
in the sub-regional blocs and countries is a demonstration that security concerns and economic migration can be addressed, through the investment of technologies, integrated border control, and identification management systems.

In conclusion, given that the economic benefits of the free movement of goods and services outweigh the minor shortcomings, it would not be too much to ask of the continent to focus and give more priority to a sector that contributes 10% to the continent’s GDP. The policies to attain the economic Holy Grail, which intra-Africa travel and trade could bring, are already in place. What is required now is the collective e orts, as well as the political will, of African leaders to implement the policies, including the adoption of the African passport by 2018. The full roll-out of the common passport would ensure that the likes of President Deby and Mr. Dangote really feel African, as well as free to contribute to the economic prosperity
of the continent. In the interim, other similar policies such as:
visa reciprocity; visa-free regional blocs; visas on arrival; multi-year visas; standardized and simpler visa processes; and showcasing of African success stories, exemplified by Seychelles’ achievements, should be encouraged.

 

The farmer, an entrepreneur like any other

African agriculture is no longer a traditional way of life, it is a business. And like any other, it will grow, through investment and access to markets. The African farmer, like any other entrepreneur, and perhaps even more so, needs to take into account the uncertain nature of business. The farmer will be at the mercy of market flux and climate change. They will need to access finance, manage their own accounts, and diversify their assets, or perish.

The energy, the ideas and the motivation are there but not every good idea will be funded. The continent has yet to produce enough productive and profitable small businesses. According to the World Bank sub-Saharan Africa has only a quarter as many small businesses as Asia, relative to its population. Government borrowing drives up interest rates for everybody else. Interest rates to farmers in parts of East and West Africa can be as high as 20-45%. The World Bank found that only 1% of Nigerian farmers borrowed to buy fertiliser last year since small farmers find credit access difficult. But mobile technology is changing this, opening new and more advantageous lending rates to farmers. Governments and investors are also channelling huge investments into infrastructure and power, initiatives facilitated by NEPAD.

There are also many opportunities to be exploited in doing simple things for local markets. Better management skills, more judicious use of fertilisers are key skills that can be made widely available. Hybrid seeds, in particular, which are being developed in Africa for Africans, hold much promise. Governments and NGOs are rapidly teaching farmers how to plant the new seeds. One-stop-shops such as the charity One Acre Fund, in Rwanda, provide their clients with seeds, fertiliser, know-how and credit. Creating facilities to allow farmers to store crops securely and the opportunity for food processing near farms will help reduce waste as well as provide decent paying jobs.

Social networks are also primordial to the success of entrepreneurial farmers. There is a correlation between strong social networks and flourishing business. Our role models need to be flagged especially in those areas where there are few successful companies that would-be entrepreneurs can aspire to, or few successful friends in business who can be sought out for advice.

We have witnessed a different kind of farmer through the success story of Rotimi Williams, the ambitious 35 year-old Nigerian entrepreneur and rice farmer. Previously a journalist, Williams is the owner of Kereksuk Rice Farm, the second largest commercial rice farm in Nigeria by land size. Having lived and worked abroad for a while, he returned to Nigeria with no farming training but with a willingness to learn. He trained himself through every article he could find on Google and then put these skills into practice. His farm of 45,000 hectares employs today more than 600 locals, leveraging on a sense of community and remaining attuned to the cultural approach of the indigenes to farming.

Agriculture is a business and promoting smallholder agriculture does not preclude the promotion of ambitious large scale, commercial farming for Africa.

 

 

 

Ruralisation of the towns and urbanisation of the country: leveraging on the potential of the continuum

The African model of urbanisation is an idiosyncratic model of development. Africa’s urban population is expected to grow at an annual rate of 3.09 between now and 2030, the highest in the world. At this rate, there will be a billion more people living in African cities by 2063.

Urbanization offers opportunities for economic growth, social and cultural development but has also come with its own challenges. But just as our cities require long-term, integrated urban planning and design, sustainable financing frameworks and the cooperation of all levels of government for an urban paradigm shift, so rural Africa requires a rethinking in terms of an extension of its potential and facilities. Town and country are part of a continuum where different economic activities take place. The success of these activities is linked to access to markets and proximity to urban centres. We need more inclusive development policies for both urban and rural inhabitants as well as a healthy flow of people and goods through linkages. This continuum must be nurtured especially because it has the potential to drive agro-industrial transformation.

Agro-industrial transformation remains the most sustainable and stable path of development for the continent. Being the sector that employs the majority of Africans and accounting for a third of Africa’s GDP, it is 11 times more effective at reducing poverty than growth in any other sector. The impetus of a properly framed and financed agricultural economy is not to be underestimated. Smallholder farmers need financial support to stop piloting and go to scale with what works and to treat agriculture as a business. African women constitute close to 70% of the agricultural workforce and mainstreaming their participation and empowerment in Africa’s agricultural revolution is therefore critical.

Over and above agricultural production, other jobs can be created in the rural areas, from hairdressers to medical doctors, mechanics, notaries, agronomists. Many rural areas also have tourist industries that are fundamentally changing employment structures. The reinforcement of agro-industry, urban traits and facilities in the rural areas can decrease the differences between villages and cities, and this without spoiling the rural cachet if we ensure that environmental pressures are minimized.

Our attention also needs to be on the urban corridors, the areas near the city which facilitate the movement of people in and out of the city and demand an extension of facilities. Many of these areas have a multiplicity of non-farm enterprises and a considerable proportion of the economically active population.

Rural-urban linkages allow the flow of people, goods, money, technology, knowledge, information. Agricultural products flow to urban areas, and goods from urban manufacturing areas to more rural areas. If well managed, the interactions between towns and countryside are the basis for a balanced regional development which is economically, socially and environmentally sustainable. It is time to rethink the town-country continuum by leveraging on solidarities, complementarities, governance, better livelihoods and environments for all.

Technological leapfrogging: the other side of the coin

The technological leap has been one of the big themes of the African economic history for the past 10 years. Today, it represents a huge transformative potential insofar as infrastructure development and socio-economic challenges are concerned.

Africa has, indeed, taken the bull by the horns in embracing mobile technology, demonstrating leadership in innovation in the mobile ecosystem. Mobile penetration across the continent is high at 60%, and more than 50% of those users have access to the internet. Africans develop services and apps for the continent, providing information on market prices, weather, health and even good farming practice. Drones are becoming more widely available with prices starting as low as $300. They can help farmers with mapping their land, with construction and mining, even market research. Parts of Africa have already come a long way in developing mobile money payment systems that give the unbanked millions a chance to move into the formal economy.

We will likely see transformations that touch the fundamental aspects of our lives in ways we cannot yet expect, all made possible by the presence of the mobile phone on a continent with limited infrastructure.

Nonetheless, the following anecdote illustrates the caveats in relation to technology. Nji Collins Gbah, 17-year old Cameroonian, is Google’s new coding champion. He is a first African and one of 34 winners of the annual global Google Code-in competition. But Nji Collins Gbah’s hometown in Cameroon has been cut off from internet since mid-January.

It is important to not generalize or count on the transformational power of technological leaps in a naïve fashion. Technology will not take care of everything. Africa also needs basic services before it can use high-tech solutions, a minimal of infrastructure and government policy. We will need national and regional plans to incorporate the Digital Economy into our overall business strategy. South Africa, Botswana and Kenya have taken the lead to flesh out ICT plans and infrastructure. There are now growing expectations on African countries, conscious of the success of Silicon Savannah, to follow suit.

A big hurdle that technology innovation faces in Africa is access to energy. About 620 million Africans live without access to electricity. Yet mobile phones need to be charged and transmitter towers need power. Limited infrastructure on the ground also leads to congested mobile networks. Further constraints presented by data costs, regulation, and financing, have proved a drag to start-ups.

Our cities remain crowded, fragmented and disconnected. This means that commercial, industrial and housing infrastructure investment has been unable to keep up with the rise in urban population. The result is that congestion and the associated costs currently outdo the expected benefits of urban concentration. Effective urban planning and coordinated infrastructure investments should be prioritized strategies in helping Africa’s cities.

Having the tools for high-tech solutions is one side of the coin, talent creation, training people to use the tools is the other side. We have a demographic advantage with more than 70% of the rapidly urbanising population under 30. This young population wants nothing more than a phone, access to information and a chance to create something new. Investing in our human capital through excellent training is the precursor to capitalizing on technology.

Unleashing the potential of the private sector – whereby the informal economy traces the way forward

In every African neighbourhood, in every family almost, there is an entrepreneur with a side business who seeks funding from a tontine. Africa has more than 50 million micro small and medium businesses which contribute 33 % of the continent’s GDP . Today, the informal sector in Africa is not just a label, it is an established way of life, a tradition. Many of our big African enterprises started off small in the informal sector. NEPAD seeks to respond to the expectations of citizens in all matters of public service. One of our priorities is to nurture a dialogue between the public and the private sectors with the view to removing the hurdles to entrepreneurship and have the higher possible impact on the ground.

Although in the past, little attention has been paid to the role of the informal sector in fostering growth, the informal economy in Africa is big business, it is a huge employer and will continue to play a key role in the future development of Africa. It represents about three-quarters of non-agricultural employment across the continent, and about 72% of total employment in sub-Saharan Africa .

Here are some trends that we need to take into account if we are to find ways of unleashing the full potential of the informal sector:

– the informal sector in most African economies offers opportunities to the most vulnerable populations such as the poorest, women and youth;
– people with higher levels of education are entering the informal sector as a career of choice;
– a closer look at the informal sector in Africa provides a glimpse of what could be achieved if Africa’s economies and financial policies were more attuned to the continent’s realities;
– the informal economy is often community-based in the spirit of social entrepreneurship, tapping into an indigenous African collectivist mode.

However, although the informal sector is an opportunity for generating reasonable incomes for many people, it continues to overlap with poverty because it does not cater for secure income, employments benefits and social protection. The way forward, therefore, lies in organizing the informal sector and recognizing its contribution to economic development by raising government awareness, allowing better access to financing, and disseminating information on the sector.

Formalization goes hand in hand with the fear of taxes. Governments have a role to play in helping to nip this fear in the bud. In a context where better cellular telecommunication and access to cheap smartphones are a reality, we need to encourage informal sector workers to embrace modern technology, the internet and social media. For example, ICT and Fintech offer innovative administrative solutions which can make insurance available to our entrepreneurs. Access to financial services allows people to earn and save more, build their assets and protect themselves against external shocks. But financial inclusion also needs to be supported by education, skills development and training (including financial literacy) focused on sectors such as agriculture, food production and rural manufacturing. Finally, virtual platforms have the potential to provide the informal sector with greater visibility, voice and representation.

The informal sector has become a major driver of economic opportunity and innovation and NEPAD remains determined to enhance the transitional intersection to the formal economy for a beneficial impact on all actors.