Diaspora remittances are a key source of financing for Africa’s development

Whether formal or informal, remittances from the diaspora have long been undervalued. However, they characterize a large part of Africa’s financial life. These financial flows between individuals contribute significantly to the economic growth of African countries: between 10% and 20% of the GDP of some countries, from Senegal to Lesotho, thanks to remittances that are sent through formal channels. According to the World Bank, money transfers to Sub-Saharan Africa represent $46 billion for the continent as a whole in 2018. These transfers have become more important than official development assistance.

Donors have been slow to realize the importance of remittances. The first report was published only in 2010 by the World Bank and the AfDB. It estimated that some 30 million African nationals from the diaspora, including North Africa, made “formal” transfers through traditional banking networks. 

Another category of less documented flow, that is crucial in daily life, is the funds that flow between African countries, such as Nigerian operators who source agricultural inputs in Côte d’Ivoire, Somali expatriates who support their families from South Africa or Malian manufacturers who source cement in Senegal, for example. These exchanges do not necessarily involve direct transfers. They are based above all on a form of “relational” economy specific to our continent and is based on trust. (see below the main amounts of remittances in Africa).

We can also note that a significant proportion of money transfers are made through informal means. In reality, this money circulates through ingenious channels, aimed at circumventing exchange control regulations or fees charged on international transfers. A simple call between New York and Dakar is all it takes, through banks managed by the “Modou-Modou”, small traders belonging to the Muslim community of the Mourides. These dematerialized money transfers are based on trusted networks and intermediaries charging small commissions: for example, an informal operator in Morocco will take the money of a Senegalese in Morocco who would like to transfer it home, but keep the cash for a different transaction made by another Senegalese customer in Morocco. 

Commissions are half the amount of the 10% or so charged by some remittance companies that are deeply involved in Africa and are located in every cities from which migrants leave, such as Louga in Senegal or Kayes in Mali. The market is huge, since 80% of African migration takes place within the continent, according to the African Union.

These agencies share a rapidly expanding sector, with 61% of the market share of a $4 billion per year market according to the World Bank. This is a trend coveted by banks (32% market share), post offices (5%) and, increasingly, by mobile phone operators. Some operators, particularly in Kenya, have changed the situation, such as the M-Pesa electronic wallet. This approach has been adopted across the continent.

Two countries are leading by example. Ethiopia launched in 2002, a website, the Ethiopian Diaspora Directorate, which identifies investment opportunities in the country for the diaspora members. They are very involved in their home countries, the Ethiopian diaspora the Ethiopian diaspora has invested more than $56 million in the project to build one of Africa’s largest hydroelectric dams, the Great Renaissance. Rwanda launched the Agaciro sovereign solidarity fund in 2012, which has raised €51.5 million in four years.

In fact, African financial success stories are countless. The Dahabshiil remittance network, founded in 1970 in Dubai by Somali businessman Abdirashid Duale, has grown to the size of a multinational… It has more than 2,000 employees in 144 countries. They have the advantage of receiving declared salaries, with pay slips. A good way out of the informal sector, while taking advantage of the huge contribution of migrants, whether on the continent or elsewhere.

 

 

 

 

 

 

 

 

 

Source : The Global Knowledge Partnership on Migration and Development, 2019

Statistics, industrialisation and agricultural revolution, three challenges for the continent: my thoughts on Carlos Lopes’ Africa in Transformation

Africa and the statistical challenge
Africa must invest in the production of better quality data, because the lack of reliable and independent statistical systems can compromise diagnosis and forecasting. Many analyses are distorted by the lack of reliable statistics. Thus, in many countries, the Gross Domestic Product is underestimated, says Carlos Lopes. But if wealth is poorly measured, how can appropriate tax policies be developed? Africa’s ability to pay is undoubtedly diminished. An additional 1% tax effort, which may seem marginal, would nevertheless bring in more than all the public development assistance from industrialized countries! Let’s repeat it because this point is essential: strengthening Africa’s statistical capacity must be a priority, both for individual countries and for the African Union and its related bodies. This was one of the key points of Carlos Lopes’ strategy when he was head of the UN Economic Commission for Africa (Uneca).

Africa and the industrialisation challenge
Carlos Lopes’ book also provides a reflection on the development model that Africa must adopt to create the conditions for a structural transformation of its economy. Indeed, despite remarkable resilience since the 2008 financial crisis, despite some of the highest average growth rates in the world in the past decade, the continent has not succeeded in creating enough jobs or curbing extreme poverty. The dynamism of its domestic markets, the good performance of its exports and the significant increase in investment flows do not compensate for the lack of genuine industrial policies.

The examples of Brazil from the 1950-1980 period, China, which, after its agricultural revolution, became the world’s factory, and, more recently, Malaysia or the United Arab Emirates show that emergence is inseparable from the industrialization process. Carlos Lopes’ observation is worrying: Africa’s share of world industrial production fell by a quarter between 1980 and 2010, from 1.9% to 1.5%. The author calls for smart protectionism, inspired by the policies implemented in emerging countries, and for a proactive approach by public authorities on this subject. The failure of the industrialisation attempts of the 1960s and 1970s should no longer be used as an excuse for inertia, as contexts and objectives have changed radically.

Africa and the agricultural productivity challenge
It is urgent to change our view of agriculture and recognize that “the farmer is an entrepreneur like any other”, the expression I used in my book Africa’s Critical Choices. It is also the idea forcefully hammered out by Carlos Lopes, which underlines that the challenges of industrialization and the modernization of the agricultural sector are closely linked. While most countries on the continent doubled their average transformation rate after the CAADP was launched in 2003 and agricultural productivity increased by an average of 67%, this rate hides huge disparities. Progress remains insufficient, although Egypt, Ivory Coast, Nigeria or Ghana have performed remarkably well. The average yield of cereal crops in Africa represents only 40% of the average world yield.

Subsistence agriculture on small plots, characterized by very low productivity, remains the dominant mode of production (80%). It does not generate surpluses. Marginalized farmers have limited access to finance and are unable to integrate into the value chain.

However, a paradigm shift is required. African agriculture will have to support the continent’s exponential population growth and rapid urbanization: by 2020, 50% of Africans will live in cities. The agribusiness revolution cannot be postponed any longer and the leaders of this revolution must be those who are today called “smallholder farmers”. 

Press freedom is a cornerstone of our democracies

On the occasion of the 26th World Press Freedom Day, celebrated in Addis Ababa on 2-3 May and jointly organized by the Ethiopian Government, the African Union and UNESCO, it is essential to recall that this day finds its origin on the African continent. It was indeed the Windhoek Declaration of 1991 on the struggle for pluralism and freedom of the media that motivated the United Nations two years later to proclaim May 3 as World Press Freedom Day.

More than ever, Article 19 of the Universal Declaration of Human Rights has a particular resonance in Africa: “Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.”

African media experienced an unprecedented growth in the 1990s, following the end of the Cold War and democratization. This spectacular progress is explained by the rise of a significant movement that has fundamentally led to major institutional reforms such as the creation of various African regulatory bodies and media observatories. The protest movements and the multi-party system have also led to political, socio-economic and institutional transformations, but above all to the rethinking of the role of the media in the countries’ development processes.

This explosion has also taken on a new dimension with the digital age. Information websites have spread everywhere, from Senegal to the Democratic Republic of Congo (DRC), helping to strengthen the “fourth power”. A decisive counter-power in building public opinion that counts, as can be seen from Algeria to South Africa, where leaders are being held accountable for their actions in their countries.

In addition to the place now given to whistleblowers, who have been in Kenya with the Uhashidi open source software ahead of the rest of the world, it is another narrative about itself that the continent has appropriated. A sign of the times: the same dynamic has gripped the capitals of the western world, where websites and television channels dedicated to Africa have sprung up, with a coverage that is both critical and constructive. 

World Press Freedom Day is being celebrated this year in a capital that has become highly symbolic. Ethiopia made a spectacular leap in 2018 in terms of freedom of expression. The country has moved up 40 places in the 2019 World Press Freedom Index published by the French NGO Reporters Without Borders (RSF). Journalists and bloggers can relay criticisms addressed to the authorities without being disturbed. 

The thousand participants who gathered in Addis Ababa to discuss this year’s theme, “Media for Democracy: Journalists and Elections in Times of Disinformation”, spoke out against the role of social networks and “fake news” in information – a global trend. Reference was made to the persistent obstacles to freedom of information, including the cuts to Internet access in some countries during elections, such as in Benin during the recent parliamentary elections and in the DRC last December.

For this reason, the media environment is still today characterized by many challenges that do not always allow journalists to work in a professional, free and independent way.

A few advice to the Tutu Fellows…

On 29 April, I travelled to Stellenbosch, in the Western Cape Province of South Africa to hold a discussion with the 2019 Desmond Tutu Fellows. My book, Africa’s Critical Choices, triggered an engaging discussion and I exhorted the Tutu Fellows to diligently try and link technical solutions to political ones in whatever they do. I gave some of the following examples to illustrate this point: If Fellows, for instance, are working in agriculture, their objective could be to strengthen a farmers’ association, or if they are working in the health domain then it could be linked to nutrition in a community.

I also urged the Fellows to create networks beyond their current domains, as this will allow them to create synergies and have greater impact in society. I also encouraged the young leaders by stating that the incremental changes being effected in the short and medium term will contribute to the long term objectives, thus instilling transformation.

I concluded by saying that the value of any democracy lies in its inherent values of dignity, freedom, and equality which are essential for a democratic system in order to avoid the development of conflict.

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”!

To succeed, pan-Africanism must switch from ideal to pragmatism

Former Prime Minister of Niger, Ibrahim Assane Mayaki, is the Executive Secretary of NEPAD, the African Union’s Development Agency. He tells Marie Hourtoule from The Parliament Magazine that there is an inextricable link between the quality and robustness of Africa’s institutions and its prosperity. This interview was first published in The Parliament Magazine March 2019 issue.

Marie Hourtoule: NEPAD is set to become the AU’s Development Agency. What changes will this involve?

Ibrahim Assane Mayaki: The pan-African idea is not a new one. It was supported by the founding fathers of the Organisation of African Unity (OAU), at the forefront of whom was Kwame Nkrumah of Ghana. The original version of pan-Africanism had a single aim: the decolonisation of the continent. The emancipation of the last Portuguese colonies in 1975, the accession of Namibia to international sovereignty in March 1990 and the abolition of the Apartheid Regime in June 1991 signalled the triumph of the pan-African idea as an ideology of liberation.

Yet in a sense, this achievement deprived the OAU of its raison d’être; it then had to redirect its attention elsewhere and overcome internal disagreements. At the turn of the millennium, the idea of an “African Renaissance” emerged, under the impetus of personalities such as South Africa’s Thabo Mbeki, Nigeria’s Olusegun Obasanjo, Algeria’s Abdelaziz Bouteflika and Senegal’s Abdoulaye Wade. The transformation of the OAU into the African Union (AU), launched at the 2002 Durban Summit, laid the foundations for “pragmatic pan-Africanism”.

During the same period, NEPAD was set up to achieve economic, alongside Africa’s political, independence, by adopting an innovative approach and reconciling public sector planning and private sector investment. Today, 17 years later, the transformation of NEPAD into the African Union’s Development Agency, a technical organisation with its own articles of association and its own legal identity, marks a significant strengthening of this pragmatic ambition. Prompted by a special recommendation in the report by President Paul Kagamé, this change will take effect in 2019 at the next AU summit. We look forward to this transformation, as it will enable us to implement more effectively our development programmes for our continent.

MH: Do you think the Comprehensive Africa Agriculture Development Programme can succeed?

IAM: Development in Africa will not be possible until its agriculture has undergone significant change. Don’t forget that agriculture provides 60 percent of Africa’s jobs and 25 percent of its GDP.The Comprehensive Africa

Agriculture Development Programme is an important part of NEPAD and one of its pillars. NEPAD provides AU member states with support for its implementation, through close collaboration with the AU Commission and the various Regional Economic Communities. This programme aims to achieve at least a 10 percent increase in public investment in agriculture and at least a 6 percent increase in farming productivity. We are still some way off this goal, as over half the member states have not achieved these targets.

NEPAD recently launched the African partnership platform for the environment in Nairobi, with the aim of producing a road-map for the development of sustainable agriculture. We need to work together, to mobilise our resources, develop agricultural technology and increase productivity, without losing sight of food security. Inclusivity must be our watchword.

MH: In your latest book, you write that there are not enough countries with institutions able to confront the challenges facing Africa. Can you expand on this?

IAM: Our continent is faced with enormous challenges, starting with population growth and climate change. The African workforce is set to rise to 880 million people by 2050. This figure alone gives some insight into what we are facing. As the former Prime Minister of Ethiopia, Mélès Zenawi – one of the most remarkable personalities I have met – used to say, “analyse your problems in your own terms”. This lack of an appropriate analytical approach has been the basic reason for the failure of development policies attempted in various African countries. It is the failure to take ownership. The same applies to our institutions. It is not enough to replicate foreign institutions; they have to be adapted to the conditions in Africa, to our resources, both human and material. The outcome is not inevitable. Botswana and the Central African Republic, two states similar in many ways, were in similar positions forty years ago. However, both have followed very different paths. The institutions play a decisive role. It will take Africa about ten years to establish sound institutions that will provide a basis for its future progress.

It is one of the tragedies of our continent is that our best minds eschew politics and the public realm. It is not my place to point the finger at particular countries or situations. I ask for a clear-sighted examination and consideration of how we can make up for the shortcomings of our institutions. The World Bank’s latest assessment of public policy and institutions in Africa showed a drop in the quality of policies and institutions in sub-Saharan Africa. This was particularly marked in those countries exporting raw materials and in fragile states. By contrast, the countries that have sound institutions are those demonstrating the greatest economic resilience. This supports my belief that there is an inextricable link between the quality and robustness of the institutions and prosperity.

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).

Mon message pour la Journée internationale de la femme : L’Afrique que nous voulons ne peut être atteinte si nous laissons nos femmes de côté

Sur le continent africain, nous nous joignons à d’autres dans le monde entier pour commémorer la Journée internationale de la femme, dont le thème cette année est #BalanceforBetter. “Un monde équilibré est un monde meilleur.” Comment pouvons-nous tous contribuer à forger un monde plus équilibré entre les sexes ?

Ici, à l’Agence de développement de l’Union africaine (AUDA-NEPAD), nous sommes toujours conscients de la nécessité de l’égalité des sexes, de l’autonomisation des femmes et des droits humains des femmes dans tout ce que nous faisons. Nous continuons à avancer vers “L’Afrique que nous voulons” grâce aux Objectifs de développement durable et à l’Agenda 2063 de l’Union africaine.  #TheAfricaWeWant ne peut être atteinte si nous laissons nos femmes derrière.

La Journée internationale de la femme nous donne l’occasion de réfléchir à la longue marche vers la liberté, la dignité et l’autonomie des femmes issues de différents parcours de vie. Il est bien connu, en particulier sur le continent africain, que l’activité économique est fortement déterminée par le sexe et implique des différences dans la participation à la population active et dans les revenus. Les femmes et les jeunes sont la plupart du temps des acteurs qui ont moins accès aux possibilités de participation et à des revenus significatifs.

En tant qu’Agence de développement de l’Afrique, nous visons à faire en sorte que l’intégration de la dimension de genre souligne l’autonomisation des femmes et l’intégration de la dimension de genre dans toutes les politiques et tous les projets, afin d’améliorer le bien-être et la situation socio-économique des femmes, de leurs familles et de leurs communautés.

Nous continuons à travailler sans relâche pour combattre le fléau de la marginalisation des femmes, car “un monde équilibré est un monde meilleur” pour tous.

Bonne Journée de la femme !

Ending stereotypes about African women

On this International Women’s Day, March 8, we must ask ourselves questions without complacency about our views on African women, whether from outside or even within our continent. And to challenge certain stereotypes about them, because they simply do not reflect the facts.

Let’s start with the sensitive issue of birth rate. For the most part, if forced marriages are excluded, women fight to have families they love. Women in Africa have an average of 4.4 children. Urbanization and girls’ schooling have a structural impact on these declining figures.

Moreover, fertility rates appear – wrongly – out of control on the continent. Only Niger has had a peak in 2018 of seven to six children per woman according to the United Nations Population Fund (UNFPA), while entire regions are in the process of completing their demographic transition. The average number of children per woman no longer exceeds 2.3 in Southern Africa and 2.9 in North Africa (compared to 1.6 in Europe and 1.8 in France). These two regions are thus approaching the minimum threshold (2.1) required for population renewal.

Politically, several countries are among the most advanced in the world in terms of parity in parliament. Rwanda ranks first in the world with 61% of women parliamentarians, almost three times higher than the global average. Namibia ranks 7th before Costa Rica, South Africa (10th) and Senegal (11th) before Finland, Mozambique (17th) after France and Ethiopia (19th) after Argentina.

African women are also not lagging behind in their participation in the labour market. On the contrary, the employment rate for women in sub-Saharan Africa is the highest in the world, far ahead of Western Europe and North America. According to the International Labour Organization (ILO), it stood at 64.7% in 2018, compared with a world average of 48.5%. They work for the vast majority in the informal economy, which does not necessarily mean that they are in weak positions.

As Bineta Diop, special envoy of the President of the African Union (AU) Women, Peace and Security Commission, reminds us, the women targeted by microfinance programmes say it loud and clear: “There is nothing micro or small about us!”. Their ambition far exceeds the amounts lent to them. The tontine, often the prerogative of women, sees large amounts of money being passed from hand to hand across the continent. Women do not wait to be employed, and they willingly take their destiny into their own hands. Thanks to the digital revolution, many of them are creating new services and offering new products in digital markets.

There is no shortage of success stories and sources of inspirations either. For the record, three African women have won Nobel Prizes: Nadine Gordimer for literature, Wangari Mathai and Leymah Gbowee for peace. In October 2018, diplomat Sahle-Work Zewde became President of Ethiopia. She joined a dozen women who have served as heads of state, including Ellen Johnson Sirleaf (Liberia), Joyce Banda (Malawi), Catherine Samba-Panza (Central African Republic) and Ameenah Gurib-Fakim (Mauritius).

In an article published by the Financial Times on 7 March, Sahle-Work Zewde said that much remains to be done in terms of equal pay, promotion to positions of responsibility and maternity leave… Africa is nevertheless recognised by the World Bank as the region in the world with the most reforms in favour of women. Another strong signal, according to the Ethiopian President, is that the African Union (AU) has been the first to recognize the importance of “patriarchal norms” in its roadmap to gender equality.

Other powerful women head major institutions, from the International Organisation of the Francophonie (OIF) to the International Football Federation (Fifa). The list would be too long of all those who hold important ministerial positions, manage large companies or have established themselves as opinion leaders. For example, Chimamanda Ngozi Adichie, a Nigerian novelist who has been translated into more than 25 languages around the world. They are champions not only in sport or the arts, but also in civil society, in cities and rural areas.

It is high time for our continent to awaken to the potential of its better half, and for the world to recognize it. My ancient and deep belief is that there will be no development without them.