Statement on the 29th African Union Summit

The 29th African Union Summit took place in Addis Ababa from June 27 – July 4, 2017. The Summit programme, as per tradition, commenced with the meeting of the Permanent Representatives Committee (PRC), followed by the meeting of foreign ministers as Executive Council, and culminated in the Assembly of Heads of State and Government.

Throughout the Summit period, the Chairperson of the African Union, H.E. President Alpha Condé of Guinea and the Chairperson of the African Union Commission H.E. Mr Moussa Faki Mahamat, emphasised the necessity for a new approach in governing African Union business. The institutional reform of the African Union, including a new AU nancing mechanism, were at the top of the agenda for this Summit, providing momentum with the intention of giving further ef ciency and credibility to our continental organisation.

I was privileged to hold a bilateral meeting during the Summit with the champion of the AU reform process, H.E. President Paul Kagame of Rwanda, where we discussed the important recommendation that the AU reform team has made, which is to transform the NEPAD Agency into the African Union Development Agency.

The Assembly included a roundtable led by H.E. President Idriss Deby Itno of Chad on the theme of the year 2017, “Harnessing the Demographic Dividend through Investments in the Youth,” where the establishment of the new African Youth Fund was introduced. The Assembly also witnessed the donation of a cheque to the AU Foundation by H.E. President Robert G. Mugabe of Zimbabwe, and the launch of the

“Dot Africa” roadshow to promote a top-level domain for the pan-African internet community.

The NEPAD Agency was well-represented at the 4th High Level Panel on Gender Equality and Women’s Empowerment held on the side-lines of the Summit, and the tradition of reporting an annual AU Gender Scorecard continued, providing recognition to African countries making particular strides in this area.

Peace and security was debated in detail, specially related to the implementation of the Master Roadmap of practical steps to silence the guns in Africa by the year 2020. Other reports were presented related to the implementation of Agenda 2063 and its First 10 year plan, including the consolidation of the Continental Free Trade Area.

The Summit witnessed the election of the Commissioner for Human Resources, Science and Technology, Prof Sarah Anyang Agbor of Cameroon, and the Commissioner for

Economic Affairs Dr Victor Harison of Madagascar, as well as the election of several new members of the African Commission on Human and Peoples’ Rights, the Advisory Board on Corruption, and the Panel of the Wise.

The Summit also celebrated milestones by distinguished Africans, including the election of Dr Tedros Adhanom as Director General of the World Health Organisation and the delegates held a minute of silence in honour of Mr Babatunde Osotimehin, late Executive Director of the UN Population Fund.

The NEPAD delegation to the AU Summit ended the mission on a particularly high note, with a dinner hosted by our former colleague and newly-appointed Permanent Representative of Nigeria to Ethiopia and the African Union, Ambassador Bankole Adeoye.

The combination of private and public strengths will allow Africa to reach true rural growth

Africa recently experienced an unusually long spell of steady growth. Sadly, it is a well-known fact that our economies failed to ensure the equitable sharing of the benefits of one of the highest growth rate in the world. So we are today in a specific context of a general decline in commodity prices and a consecutive slowdown in growth in Africa. This downward trend in commodity prices may be a constraint, but I would also like to see it as an opportunity because both public and private stakeholders will have to be more innovative in order to unlock new sources of endogenous growth, wealth and inclusive employment with greater spill over effects for the region’s economies.

Addressing the challenge of employment and wealth in the rural world is crucial for Africa’s development. The situation is highly paradoxical: Africa imports the equivalent of USD 50 billion in food each year, even though more than half of the world’s uncultivated arable land is on the continent and 60% of the population still lives in the rural world! The development of this agricultural potential, at a high productivity and competitiveness level, is essential if Africa is to feed 2.5 billion people by 2050.

Today, the challenge is to identify new tools for sustainable economic growth, this time based on principles of inclusion and equity, while maintaining a steady growth rate. Meeting these conditions will enable African economies to cope with a population that is still booming and with the ever-growing number of young people looking for education, training and jobs. These challenges are set against a backdrop of climate change and resource depletion, calling for the use of production techniques that are tailored to environmental challenges.

The principles of inclusion and equity imply adopting spatial and territorial approaches and policies that ensure rural areas benefit from the same developments and initiatives as urban areas; that responsible investments are made in rural areas; and that women and young people have access to the factors of production, especially training, land, water, finance, renewable energy, markets and income that reflects the fruits of their labour.

There are promising signs that private sector money is finding its way towards more inclusive development models. Conservation finance is one of the most exciting corners of agriculture development in emerging countries today. Conservation finance strives to reach three major and complementary goals to finance the agro-ecologic transition by calculating three different kinds of returns: economic, environmental and social.

These new investment projects are based on limited land acquisition and partnerships with farmers networks that are empowered with new techniques. The new actors take care of their production and of its transformation and ensure an access to the market, whether locally or internationally. Private investment in agroforestry businesses is a big driver for the intensification of farmer’s activities while restoring degraded lands, protecting forests and raising farmers’ incomes.

The African public sector should invest more money in incubators and accelerators to channel funding and technical support at the beginning of the cycle of these projects. This investment will pay off because the incubators could create a network of agroforestry start-ups with the infrastructure, knowledge and access to the funding needed to realize their concept. The consequences in terms of employment and resource developent could be tremedous. In this regard, the support of international governments and donors will also be essential. The progressive transition from solidarity systems to mixed market systems will help to stimulate investment and the development of structural activities capable of laying the foundations for this much-needed change.

Renewing public policies on the basis of local development would also help to tackle the root causes by providing appropriate solutions to ensure people settle and remain in their areas of origin. The empowerment of local authorities should be based on their specific characteristics, their ecosystems, their cultural heritage and their know-how combined with technological innovation and learning, especially for young people and women.

The governance of our natural resources and the financial resources they generate are the cornerstone of our structural change; they require appropriate solutions at the continental, regional, national and local levels, the most critical ones being the regional and local levels. Change will be sustainable when it happens at these two levels.

G20 Compact with Africa and the Position of Youths

It was a great pleasure to be interviewed on CNBC Africa about the G20. Thanks to the team, thank you Onyi Sunday.

The G20 Compact with Africa is an initiative that aims to promote private investment and investment in infrastructure. African countries will determine what they want to do to improve conditions for private investment, with whom they want to cooperate, and in what form. This is against the backdrop of a continent whose median age is only 19 years.  What does all this mean?

View the full video here

Rencontres Économiques d’Aix-en-Provence

I thank the Circle of Economists for inviting me to this new edition of the "Rencontres Économiques d'Aix-en-Provence". Exceptional guests and exciting debate.

The video of my speech during the round table: From a world of inequalities to a world of solidarity - coordinated by Pierre Jacquet, member of the Cercle des économistes, and moderated by Béatrice Mathieu, Deputy editor of L'Express, with Jacques Attali, President of Positive Planet, Pierre-André Chalendar, President and CEO of Saint-Gobain, Esther Duflo, Professor at the Massachusetts Institute of Technology and Geoffrey Lamb, Senior Advisor of the Bill & Merinda Gates Foundation, Is available by clicking here.

Leapfrogging Progress

I am sharing an excellent article from my friend Calestous Juma on leapfrogging progress via The Breakthrough website:

ithin two years of its launch in 2007, money transfers through M-Pesa, a cell-phone-based mobile banking application, already equaled the equivalent of 10 percent of Kenya’s GDP. What started as a local system to serve populations too poor for traditional banking has since grown into a global industry, one that threatens to disrupt traditional banking systems around the world. Today, M-Pesa’s network includes 30 million users across 10 countries, and its services have expanded to include international transfers, loans, and even health care.1

Image credit: CNN, “M-Pesa: Kenya’s mobile money success story turns 10” (2017), http://www.cnn.com/2017/02/21/africa/mpesa-10th-anniversary/.

The wide adoption of mobile phones in Africa, along with applications like M-Pesa that it has enabled, has created remarkable technological enthusiasm on the continent. Symbolizing the great potential that lies in technological catch-up and leapfrogging, M-Pesa has served as an inspirational example of what Africa could accomplish in other sectors like energy, education, health, transportation, and agriculture. Indeed, countries such as Rwanda are already using drones to transport medical supplies, while the dramatic drop in the cost of solar energy points to the widespread adoption of the technology across Africa.

Full article here

Why the solutions to global challenges are found at the pan-African level

At a time when more and more voices are being heard to challenge the European Union (EU), the idea of ​​unity of the Old Continent and especially the functioning of its institutions, the African Union (AU) has just accepted a new member: Morocco.

This demonstrates the attractiveness of the continental organization, which, although not perfect, has to its credit many achievements that are conducive to stability and development. It must be said that the AU was able to renew itself. From the OAU of independence to the AU that we know today – in fact largely inspired by the EU – there has been a real qualitative leap we must welcome.

Today the AU is an essential interlocutor for the international community. Africa is able to speak with one voice in the major international arenas, whether on climate or trade. Unity is strength, as the saying goes. But union, especially when it goes beyond the mere economic framework, is not easy: one sees it in other parts of the world, in the Middle East for example, but also in North America where deep divisions have been growing.

In Africa, on the contrary, the continental unity is now strengthened. It is interesting to note that even when countries are divided, at no time do the new entities envisage leaving the AU. I’m thinking here about the latest example to date, South Sudan. Morocco has clearly understood this, which is back in the ideological lap of the founding fathers of Africa, who, after independence, wanted this African unity because they dreamed of a community of destiny and interests.

Already with NEPAD, or with the African Development Bank (AfDB), the vision of development, projects and commitments are continental. We have succeeded in producing an overall African project, where each country sees its interest and can hope to be part of the general effort. This is true for infrastructures – rail, electricity – but also for the social issue through Agenda 2063, which includes measures over 50 years to stimulate socio-economic transformation across the continent.

A key element of this transformation is to take full advantage of the “demographic dividend” to ensure that economic progress improves growth, social development and the sharing of wealth. This is also the case for health with the “African Health Strategy” and the “Catalytic Framework for the Elimination of AIDS, Tuberculosis and Malaria in Africa by 2030”, set up by the AU. There is still progress to be made, especially in integration, the free movement of people and goods, but in 15 years progress has been quite extraordinary.

With its values, ambitions and strengths – economic and demographic growth, important natural resources and dynamic youth – Africa today can face the challenges coming from a world in perpetual change by cultivating unity. In the UN, for example, our countries weigh more when they are united. And it is with this unity that we can also open ourselves to the rest of the world. The AU is our home, our safe haven. We can look at other geographical areas, such as the EU, for example, for Morocco and Tunisia, or as the BRICS for South Africa, but in the end we know where we come from. That is our strength. These extensions from Africa to the rest of the world via individual countries, or also via diaspora, is a key strength. It remains to ensure that there is a principle of “diplomatic sharing” or preferential access set up within pan-African bodies.

Our partners are already very active: for example, on the board committee of the AfDB, we find France, the United Kingdom, the United States, Japan and China, among others. These partner countries and friends of Africa therefore participate directly in the projects implemented by the continental bank. This facilitates action and makes the partnership more effective. Our inequalities can also be forces: if Moroccan and South African banks play their role as a capital distributor, this can benefit other countries and their respective private sectors.

Integrating the pan-African perspective into reflection can only benefit the actors in this immense market that has become Africa.

 

From Africa’s resource curse to Africa’s wealth

Nobel economist Jan Tinbergen has shown in his work the negative impacts that the exploitation of natural resources can have on the economics of a country, based on the example of the Netherlands with the extraction of natural gas in the 1960s. Since then, the “Dutch disease” theory has evolved to refer to the “resource curse”. Africa, a continent rich in raw materials of all kinds, obviously faces a challenge in terms of managing the rent derived from the exploitation of its resources.

The 2017 version of the Annual Report on Commodity Analytics and Dynamics in Africa (Arcadia)[1] deals with the evolution of the various linkages between Africa and world commodity markets, considering both economic and structural developments. Talking about commodities, just like talking about Africa in general, is a huge challenge in view of the heterogeneity that characterizes these two fields of study.

The report therefore focuses on raw materials “that matter” to African countries. These is the case obviously of iron ore and cobalt, present in the African subsoil, which have soared this year. US and China investment announcements in infrastructure led to an increase in iron ore prices (+ 70% this year) and bauxite (the source of aluminium). A country like Guinea, which accounts for nearly a quarter of the world’s bauxite reserves, is expected to benefit from unprocessed export bans in Indonesia and the Philippines to become the world’s largest exporter.

However, there are many examples of countries illustrating the danger of a national economy and state budget dependent on commodities, whose prices are essentially volatile. The downturn in cocoa prices has led to serious social and economic unrest in Côte d’Ivoire and Ghana, despite the good macroeconomic performances of both countries. Angola, South Africa and Nigeria, the continent’s main economic driving forces, were also hard hit by falling prices for oil, precious stones and metals.

Obviously, the various economic difficulties of these states cannot be explained only by the fall in commodity prices. Each country has an economic, fiscal and budgetary context explaining its level of GDP and growth. However, pan-African challenges persist across the continent: improving the attractiveness of mining activities, promoting electricity generation through renewable energy, strengthening food security by developing an efficient agricultural model and increasing the capacity of states and companies to raise funds.

The challenge of commodities is to make it a source of growth for the African continent. Local demand for commodities in response to growing African demand and capturing a greater share of added value is crucial. And for that, let us not forget a fundamental aspect: the rent derived from raw materials must be managed in the long term with structural policy instruments, without falling into the trap of short-term management exposed to the risk of cyclical reversals. Thus, we will definitely make commodities an asset for African economies.

[1] Arcadia 2017, « Annual Report on Commodity Analytics and Dynamics in Africa », edited Philippe CHALMIN et Yves JEGOUREL, publishing house ECONOMICA et OCP Policy Center 2017

Africa: an emerging destination for investments

One of the major audit firms recently published its index on the attractiveness of Africa for 2017[1]. The report puts into perspective the economic trend of the continent in a rigorous and detailed way, enabling us to avoid the two pitfalls of Afro-optimism or Afro-pessimism.

It should first be noted that 2016 has been the worst year in terms of economic growth for sub-Saharan Africa over the past 20 years. The continent has been hardly hit by the end of the super-cycle of commodities, particularly impacting Nigeria, Angola and South Africa. The geopolitical upheavals of the West such as the Brexit and the election of Donald Trump also contributed to diminishing or at least stagnating investments from these countries which are important investors in Africa. However, while the number of FDI projects fell by 12% in 2016, they increased by 32% in value terms (reaching $ 94.1 billion), making it the second region of FDI growth at world.

Obviously, Africa is not a homogeneous bloc and in fact there are great disparities between countries. The three major countries impacted by the drop in the commodity prices mentioned above should not distract us from the bigger picture that reveals the growing young shoots in French-speaking Africa as in East Africa. While Morocco, South Africa, Kenya, Egypt and Nigeria attract the bulk of FDI projects (57%), other investment hubs appear. Ghana (4th), Côte d’Ivoire (7th) and Senegal (9th) attract investors, as evidenced by their ranking in the Africa Attractiveness Index. On the other side of the continent, growth is also very strong with an average of 6% for Kenya, Ethiopia, Tanzania and Uganda. These last two being boosted by the recent discoveries of oil and gas fields.

As nature abhors the vacuum, Asia-Pacific, especially China, has filled the decline in investment from the United States and Great Britain. China is now the third largest investor in terms of FDI projects in Africa, with the strongest growth in terms of jobs created. Note also the breakthrough Japan has seen its level of investment and jobs created increase by 757% and 106% respectively.

These figures, which show a real enthusiasm of investors for the African continent, remain to be relativized and taken in retrospect. Africa still receives an inadequate share of global FDI (11.4%) in terms of its population and its potential. Long coveted for its natural resources, the diversification of the African economy is underway, driven by the dynamism of sectors such as transport and logistics or the automobile. It is also worrying that the share of investment projects carried by African investors has continued to decline since 2013, falling to 15.5% in 2016. This contributes to the degradation of Africa’s resilience to external shocks ‘economy.

That Africa is attractive to foreign investors is a good thing, but it must also become an opportunity for African investors themselves! That is why we must redouble our efforts to achieve greater regional integration and a policy of reducing barriers to trade between the countries of the continent. History has shown that these choices lead not only to economic development but also to political stability, two essential objectives for ensuring the well-being of the population.

[1] EY’s Attractiveness Program Africa, « Connectivity redefined », May 2017

A message for the youth of South Africa

On June 16, South Africa commemorates Youth Day, a day to honour the role played by South Africa’s young women and men in the pursuit of independence and social economic development. As we reflect on the gains of the past, we also celebrate the successes of South Africa’s young entrepreneurs and innovators – taking on new frontiers and staking their claim in the country’s socio-economic growth.

On the other hand, as we look for hope towards a brighter future, we need to also reflect on the high unemployment levels and education challenges faced by young adults. This is against a backdrop of 27,7% national unemployment rate of which youth unemployment consists 38,6% in the country (SA Stats).

This scenario is not unique to South Africa, as it resonates with the rest of the African continent in which about 200 million of its people are aged between 15 and 24. Africa has countries with the 10 youngest populations in the world and the youth populations continent-wide are set to double by 2050. Furthermore, approximately 66% of young people are unemployed.  They are unable to find jobs within the job market due to a mismatch of skills and demand. Recognising the critical role of youths in shaping the continent’s future, the African Union theme for 2017 is Harnessing the Demographic Dividend through Investments in Youth.

However, without more deliberate and concerted efforts to address the challenges faced by youths today, such as unemployment and lack of meaningful economic opportunities which rank high, Africa faces the real risk of frustration from the youth leading to a spike in instability and civil conflicts. Youth Day should therefore remind us all to take action, and to take that action now, to put in place conditions for our youths to develop into skilled entrepreneurs and innovators, as well as provide meaningful employment and economic opportunities for them.

To this end, NEPAD Agency promotes policy and capacity development interventions such as support towards the development of National Action Plans on youth employment and skills development, enhancing the employability and entrepreneurial activity for young people. The interventions include promoting innovative approaches for employment orientated Technical Vocational Education Training (TVET) and promoting decent rural youth employment and entrepreneurship in agriculture and agribusiness.

On the bright side, Africa’s youthful population is one from which real dividends can be drawn, since they make up the much needed working-age population that is crucial for the continent’s economic growth. According to the World Bank, Africa’s youth demographic dividend can potentially generate 11-15% GDP growth between 2011 and 2030. What is more, if African countries were to take full advantage of this potential dividend and provide adequate education and jobs, up to $500bn a year could be added to its economies for 30 years.

As South Africa celebrates Youth Day, let us not forget that it was the events in 1976 that contributed to changing the socio-political landscape of the whole country. Oppression through inferior education and limited choices for youths was not acceptable then, and it is not acceptable now.  It is up to us then to work together with youths today, in creating a brighter future for generations to come, even as we build ‘The Africa We Want’ in the African Union’s Agenda 2063.  In making this appeal, I would like to echo the words of Nelson Mandela, “To the youth of today, I also have a wish to make: Be the script writers of your destiny and feature yourselves as stars that showed the way towards a brighter future.”

What the preservation of our heritage tells us about our future

Recently, in certain countries of Sahelian Africa such as Burkina Faso and Mali, there has been a renewed interest in the so-called “Nubian vault” architectural technique. Houses built according to this ancestral model, probably coming from the ancient Egyptians, are less costly, because they use the local earth for the bricks, more perennial (about fifty years), better insulated than the iron sheets covered houses, and ecological since they do not use wood. These fresh houses with small and chiselled openings that retain heat on the outside, allow the easy addition of a roof terrace. NGOs have made it the basis for some development projects in response to the lack of decent housing, lack of employment and the challenge of ecological preservation.

This example illustrates a legitimate questioning of some of our States about the accumulation of capital. Should we accumulate physical capital or knowledge? At first sight we naturally answer both. But in this case, what should be prioritized between knowledge that is difficult to measure, which is a bet on the future, and the accumulation of infrastructures and financial capital, more easily quantifiable? I believe that we can lead the two accumulations head on, one helping the other, supporting the other, nourishing it, making it even wealthier.

The example of the Nubian vault shows that it is important to preserve the techniques specific to Africa, to know how to adapt them, but also to defend them as our genuine heritage. The effort must be global: finding funding and partnerships for the development of our continent, but also maintaining control over what we want to do, according to our needs and cultures. The days when we were forced to make laterite tracks rather than paved highways are gone. That is why we must also give ourselves the means to choose and build. And this requires a renewed effort to educate, preserve and transmit the intellectual capital that we have, sometimes without even noticing.

Likewise, without knowledge, how can we maintain the physical capital that we have received as an inheritance, too often fallen into decay? Africa, today more than ever, needs hydraulic engineers, renewable energy specialists, mining engineers and geologists to exploit its immense natural resources. We also need to better protect our inventions. The world observes us – to say that it spies on us would be too strong – and tries in good industrial logic to take over what belongs to us, sometimes legally, sometimes illegally. I think of Ethiopia’s long battle against the American giant Starbucks to recover the appellations of origin of its finest varieties of coffee: Yirgacheffe, Sidamo and Harrar. In this case, David defeated Goliath, and these three names which evoke voluptuous perfumes are now registered Ethiopian trademarks. As a result of this initiative, some 15 million people living in the coffee sector in Ethiopia have seen their incomes increase, while the state has exported more. Ethiopia is today one of the leaders of the continent in the protection of intellectual property.

Like the Nubian vault, coffee is a heritage, both genetic, agricultural and cultural, which we must preserve and develop. We must continue to invest in the production of knowledge. The State, with its public sector, the private sector and citizens, each at their level, must participate in this effort. Let us not doubt that the profits, which seem sometimes impalpable, will eventually bring about a sound and stumbling effect, as shown by these two examples.