Africa needs to achieve its infrastructure “big push”

In Africa, we often talk about the opportunities offered by “leapfrog”, these technological leaps that will allow the continent to develop more rapidly by learning from the experiences of other countries and by adopting new technologies more quickly. But if there is one step that Africa will not be able to skip, it is infrastructure. Because, despite its openness to the outside world, with a coastline oriented towards the export of raw materials to industrialized countries, the continent remains the most marginal region in world trade… and the least integrated within its own borders, with inter-African trade barely exceeding 13% of sub-Saharan Africa’s total foreign trade.

It is estimated that the “gap” in terms of infrastructure investment in Africa stands between $130 billion and $170 billion per year. Filling it would allow an annual increase of 2.6% in average per capita income, according to the World Bank – a very rapid jump in growth. Access to electricity, that only 43% of households have access to, is at the top of the list, along with access to drinking water and transport infrastructure. Connecting cities and regions by road, rail and air is no longer just a matter of necessity. Amplified by rapid urbanization, these needs also represent enormous opportunities, which contribute to making Africa one of the last frontiers of growth in the world.

A global awareness happened in the 2000s. Responses commensurate with the challenges were sought. The Infrastructure Project Preparation Facility (NEPAD-IPPF) was launched in 2005 to support regional projects. Fueled by several donor countries, this fund has made it possible to complete the financing of 30 projects, totalling $24 billion. Building on this success, Africa decided to go further in 2012 with its Programme for Infrastructure Development in Africa (PIDA), launched at the initiative of the African Union Commission (AU), NEPAD, the African Development Bank (AfDB), the Economic Commission for Africa (ECA) and the regional economic communities. In view of the diversity of national, regional and international initiatives, synergy between the AU Commission and the regional economic communities is central.

Today, through the “5% Agenda”, we want to mobilize a gigantic and almost “natural” source of financing: African pension funds and sovereign wealth funds. We estimate that African institutional investors hold more than $1.1 trillion. For the time being, these funds are invested in ultra-secure assets such as US government bonds or, ironically enough, European roads and airports.

How can we expect foreign investors to come to invest in us if we do not invest ourselves in our future? We suggest that these African pension funds and sovereign wealth funds invest at least 5% of their assets under management to close the infrastructure financing gap in Africa. That would be about $55 billion. Today, with the establishment in the United States of the Development Finance Corporation – whose objective is to de-risk the financing of institutional investors, particularly towards Africa – Africa must seize the opportunity to lead the way. This is why an African Infrastructure Guarantee Facility (AIGM) is being developed with the African Development Bank (AfDB). As far as infrastructure is concerned, we are not advocating for a leapfrog, but for a “big push”!

High-speed trains no longer wait in Africa

High-speed rail has made significant inroads across the continent. A 300 km line between Tangier and Casablanca was inaugurated in Morocco in November 2018 and the journey now takes two hours instead of six, with only a moderate increase in ticket price. Since 2016, the 200 km journey from Abuja to Kaduna in Northern Nigeria can be completed in one hour. Other routes are now being planned for example between Kaduna and Kano or Kano and Lagos. While economic gains are expected, social and political impact will also be visible. Via these infrastructure developments, inequalities between northern regions that have historically been perceived as neglected and oil-rich southern areas will be reduced.

 The Gautrain, which was launched in 2010 between Johannesburg International Airport and Pretoria is another example of dynamism in that sector. This high-speed line, which raised some controversy at its announcement now carries 100 000 passengers a day. It has strongly reduced daily traffic jams in Gauteng province, the industrial heart of South Africa.

 Africa’s economic integration depends first and foremost on its transport infrastructure, which is still influenced by the planning policies of the colonial era. There are too few highways between countries and too few trains, out of Africa’s 90,000 km of rail network, to cross borders. The network linking Uganda to Tanzania, Ethiopia to Djibouti or South Africa to Zimbabwe remains the exception rather than the rule. Entering the 21st century, railway use remains focused on the transport of goods and raw materials between the coast and the hinterland as was the case decades ago. This situation must change, so that Africa can finally trade internally on a larger scale.

 The African Integrated High Speed Railway Network (AIHSRN), one of the flagship projects of the African Union’s Agenda 2063, is one step in the right direction. The modernisation and extension of rail networks will not be possible without the use of technologies, a key element of modern “intelligent” transport. Africa has already demonstrated a spectacular ability to “leapfrog” in the digital sector as proven by the number of mobile phone users and mobile banking customers. It could be the same in railways, where the continent would directly move on to the use of advanced technologies in transportation.

This week’s first African Digital Rail Summit in Cape Town, organized by NEPAD and the International Union of Railways (IUC), identified major projects, suggested a few steps for a way forward and revitalized the dynamic in the African Union of Railways (UAC).

From now to 2063: four major transitions African governments should pay attention to

A new report defining the way forward for a real transformation of Africa has just been published. “Africa’s path to 2063: choice in the face of great transformations”, developed by the Frederick S. Pardee Center, is distinguished by its long-term deadline and methodology using an analysis system encrypted using the “International Futures” tool (IF). We were particularly proud to work with outstanding international researchers to have a better understanding of the trends of our development and the way forward to achieve the goals of Agenda 2063, the strategic framework for the socio-economic transformation of the continent over the next 50 years.

This report is based on a quantitative forecasting software that is macro-integrated and reveals the key transitions that Africa will face towards 2063. There are four main transition topics: the demographic transition, the transformation of human development and inequality, technological transformation and environmental transformation.

The document focuses on these foreseeable transitions that should be discussed, planned and operated to increase development opportunities and in order to address the current and future challenges of Africa. For instance, according to the study, the African population will grow from 1.3 billion to 3 billion by 2063. The rapid pace of urban growth contrasts with the slow pace of structural transformation that accompanies it. A controlled urbanization will bring economic, social and human development.

In addition, the economic growth in a majority of African countries has reduced the gap in per capita income compared to developed countries but it has been found that, by 2063, inequality will widen further between the rich and poor inside countries. This is an urgent call to quickly create redistribution mechanisms organized by states.

The report concludes that technological development will positively impact economic growth in Africa. Although lower than in other regions, progress has been recorded on the continent including telecommunications which constitute a high potential market. Rwanda has significantly improved its agricultural yields of 5.6 tons per hectare in 2007 to 9.6 in 2013. The technology can be linked with effective public policies.

One of the major concerns is that our continent seems to be one of the most vulnerable to climate change. This should encourage African states to adopt climate-smart agriculture and take measures to promote green technology. The evolution of forms of governance will go some way to face these transformations and the multiple challenges they entail. Countries need more than ever to adapt their model for more flexibility and civil society participation.

To this end, the report highlights four major transitions as a framework for African governments. This requires an understanding of the ongoing changes and policy choices that can be made to promote Africa’s long-awaited development. African states, associated with regional and continental organizations have the means, but also the duty, to heed these transitions and include them in their strategic planning.

The presidency of the World Bank must be entrusted to an African

While the announcement of the resignation of American Jim Yong Kim from the World Bank presidency on Monday, January 7, took everyone by surprise, the resulting debate remained unsurprising. Very quickly, rumours began to circulate about his potential successor, with the usual share of hypotheses, sometimes serious, often extravagant. However, these hypotheses all had one thing in common: the American nationality of the candidates. Indeed, it is a well-known unwritten rule that the President of the World Bank must be an American. A tradition that reflected the world of the 20th century but is a distorting mirror of the realities of the 21st century.

When the World Bank was founded in 1944, the West dominated economic globalization, with the United States as architects of the new world order. In 1991, the fall of the USSR seemed to confirm the irrevocable victory of political and economic liberalism, enshrining the American hyperpower. At the dawn of the 21st century, Western donors and the Bretton Woods institutions were still dictating the way forward for the development of countries in Africa, the Middle East and Asia. Some observers have gone so far as to speak of the “end of history”…

How many certainties have been turned upside down in just under two decades! Asia has emerged as a new centre of the world economy, with China as the engine of growth. Beijing has also set itself up as an alternative to a breathless American order, where a certain “complicity diplomacy” – to use the words of French researcher Bertrand Badie – continued to keep the countries of the South out of the world’s management board. For its part, Africa is now the reservoir of global growth and the demographic giant of tomorrow. At the same time, the scourge of populism has proliferated in many countries around the world. With peoples blaming globalization for all evils, international institutions based on international cooperation and multilateralism are now exposed to many criticisms.

This geopolitical restructuring was logically accompanied by a crisis of legitimacy of the World Bank. Once an essential development institution, it is now experiencing a relative decline due to a combination of factors. First, access to financial markets has increased significantly in recent years for developing countries, offering them greater diversity in their sources of financing. During the same period, an increasing rejection of the Washington consensus took hold among elites and populations in developing countries, but also in developed countries, putting pressure on institutions such as the World Bank and the International Monetary Fund (IMF), which had never been so contested before.

In addition, and for the first time, the Americans have elected a president who openly criticizes multilateral institutions, advocating economic nationalism that is out of step with the pace of current globalization. In this context, under what pretext can we still accept that the President of the World Bank must necessarily be an American? Far be it from me to believe that no American has the right profile for the position, but I plead for an open competition where applications from all nationalities must be taken into account. What credibility can an international institution promoting good governance and transparency have with an opaque and unfair recruitment procedure? The World Bank must change the way its President is recruited if it is to maintain its appeal and credibility.

Because beyond the technical dimension of the post, the role of the President of the World Bank – who has the status of a quasi-Head of State – is eminently political. That is why I believe it is time for the World Bank to be led by someone from the African continent. Of all the World Bank’s fields of action, Africa is the one where the stakes are the highest: investment in infrastructure, poverty reduction, agricultural transformation, access to energy, rapid urbanization, human capital development… Not to mention the main challenge of this century, climate change, which is already affecting many African countries.

Investing in these countries and driving bold reforms requires a relationship of trust, which must now be rebuilt to break the image of arrogance that World Bank teams have sometimes sent back to their interlocutors. An African will be in a better position to encourage governments of developing countries to fight corruption or better manage their public debts without being accused of imperialism or neo-colonialism.

Choosing a candidate from a Southern country in a historically Northern institution also sends a strong message for a more balanced globalization, where each country can have a voice that counts on world affairs. Appointing an African to head the World Bank means recognizing the emergence of new powers in globalization and the need to address new missions such as safeguarding global public goods and conserving biodiversity. To fully enter the 21st century, the World Bank actually has no choice but to put an end to 75 years of “America First” and finally inaugurate the era of “World First”!

 

A food “leapfrog” is possible in Africa

By 2050, the world will have to feed 10 billion people, taking into account the impact of food production on the climate. In other words, it will be a matter of producing enough for all without depleting water, land and forests. A challenge? Not necessarily…

This is what is said by 37 experts from 16 countries who have addressed this very concrete question: what healthy diets can be derived from sustainable agriculture? Their responses, with numerical targets around the world, represent a first. They can be found in the report on food, the planet and health of the commission formed by the NGO EAT Forum and the British medical journal The Lancet.

A healthy diet for humans and sustainable for the planet, according to the report, includes half of fruit and vegetables, followed by cereals and pulses (lentils, beans, nuts, pistachios, etc.) and between 0 and 186 grams of meat per day. The document has already been released in Australia, the United States and Indonesia, where it has been widely reported. It is now being launched in Africa, on the sidelines of the 32nd African Union Summit, in partnership with the NEPAD Agency.

The challenges remain daunting, depending on the context of each region of the world. In Africa, the picture is mixed. As many as 59 million children suffer from chronic malnutrition, while 9 million are overweight. The Sahel, the Great Lakes and Madagascar remain the most food insecure regions. At the same time, diseases from rich countries are spreading as a result of urbanization, the rise of the middle classes and changes in eating habits. Obesity, diabetes, cardiovascular diseases and cancer are on the rise.

Good news, however, is that Africa is one of the few regions in the world, according to the EAT Lancet report, where vegetable consumption is higher than the recommended level and animal protein consumption is lower than the maximum desirable. From Egypt to South Africa and Rwanda, cereals and vegetable proteins from beans, peas, beans and other dried vegetables are already used in daily dishes.

No one is fully aware of this yet, but on the food level, “leapfrogging” is possible on the continent. This jump has already been observed in telecommunications. The expansion of mobile telephony has taken place without the stage of the generalization of fixed lines, as in industrialized countries. By adapting its consumption and agriculture to the climate now, the continent could skip another important step: that of industrial agri-food in the countries of the North, with its harmful effects on health and the environment.

It will be possible, concludes the EAT Lancet report, to feed the planet without damaging the climate under several conditions. The consumption of vegetable protein must increase everywhere, to see the share of animal protein decrease. It will also be necessary to reduce by half the volumes of food thrown away every day in the world, as well as the harvests lost – a crucial problem in Africa. The recipe is now in our hands. It is up to each of us to set an example.

African economic outlook: when it comes to growth, quality matters more than quantity

The African Development Bank has just published its African Economic Outlook. The Pan-African institution based in Abidjan forecasts that Africa’s GDP will increase by 4% this year, up from 3.5% in 2018. This rate is expected to accelerate to 4.1% in 2020. While Africa’s macroeconomic outlook is undoubtedly improving after several difficult years, I would like to insist on the need to remain cautious.

First, because the figures are still well below the average of more than 5% that the continent experienced in the decade preceding the commodity crisis of 2015, and are insufficient to reduce poverty and create jobs, as the report rightly points out. Unfortunately, for years, GDP growth on the continent has not translated into economic development, due to a lack of structural reforms. The fact that Africa is still home to nearly 400 million people living in extreme poverty cannot be ignored. Nor the fact that its share in world GDP does not exceed 3%.

In addition, according to the 2018 Ibrahim Index of African Governance, economic opportunities for African citizens have improved by only 0.2% since 2008, despite a 40% increase in the continent’s GDP. Job creation increased by 1.8% per year between 2000 and 2014 according to AfDB forecasts, which is less than the growth of the working population, estimated at 3% per year. In a demographic context where 440 million young Africans will reach the age to seek employment in the next fifteen years, there is a pressing need for action.

However, it is worrying to note that Africa still has too few examples of determined policy makers on the path to structural reform. The need for reform is intensifying in a context of increasing risks related to trade tensions and debt vulnerability, topics I have already had the opportunity to discuss on this blog. I am even concerned that the favourable economic growth figures presented by the African Development Bank may make some policy makers complacent, as they can use these good performances to justify inaction.

As the saying too often goes in Africa: growth cannot be eaten. However, this should not be a curse: in many countries, growth is “eaten”. Indeed, Africa needs better growth, not just higher growth. To achieve this, the solutions are well known: structural reforms, regional integration, investment in education and infrastructure, which are currently far from sufficient if we want to train and give the next generation every opportunity. It is a collective responsibility that we must assume here.

Finally, it is also the responsibility of the political elites to create the economic wealth that will enable us to free ourselves from the development aid on which we are still dependent. Too many people are unaware of this, but 80% of our States could do without it today. I do not intend to place myself “against” this aid, but I would like to reiterate that it is by definition transitional. However, the nature of the growth we are creating in Africa risks keeping us in this state of dependence. There is now a real urgency to think together to create the conditions for a “growth that can be eaten”!