Africa and the debt trap

In its latest “Economic Outlook” for Africa published on 7 December last year, the International Monetary Fund (IMF) does not hide its scepticism about the evolution of the African economies. The average growth forecast for the zone is certainly rising, however, going from 2.8% in 2017 to 3.34 in 2018. Africa is benefiting mainly from the recovery in commodity prices and the timid recovery of global growth thanks to better access to international markets.

Nonetheless, as long as debt growth remains above GDP growth, the fiscal position of African countries will only deteriorate. The IMF therefore considers that out of the 35 countries in the zone, 15 of them are in debt crisis or are in the process of becoming over-indebted. This situation is all the more worrying because some of the international donors are somewhat cold about the idea of buying African debt while some countries have disappointed with regard to the transparency of their management of public debt.

Today, history is repeating itself: the countries most affected are those that have built their growth mainly on the export of raw materials, hydrocarbons or minerals. With falling prices, national currencies have collapsed, making debt repayment more difficult. So much so that servicing of the debt absorbs up to 60% of the public revenues of certain countries. This means a lot of money lost for key sectors such as education, health and infrastructure: the only type of spending that will prepare our countries for the demographic challenge ahead.

We sometimes hear about that the level of African debt is not as high as it is in Western countries, for example, and that Africa has therefore no reason to make special budgetary efforts. This ignores two elements specific to African countries: firstly, the feeble capacity to mobilise tax revenues given the predominant weight of the informal sector in our economies as well as the limits our administrations experience in coping with multiple tax evasions, and secondly, the rates at which we borrow are much less advantageous than those enjoyed by Western countries.

The IMF stresses that despite the significant progress made over the last 20 years, Sub-Saharan Africa still has the lowest revenue-to-GDP ratio in the world. Its median level was 18% in 2016, i.e. five percentage points lower than other emerging or developing countries. The IMF is still repeating what we have known for a long time: Sub-Saharan African countries must and can increase their tax revenues by three to five percent of GDP. This amount would be much higher than that received annually by the region in international aide, which, in any case, is shrinking dramatically or is focused on security aspects related to terrorism and migration.

There is no miracle solution to the debt trap. In order to consider the development of a country in the long term, we need to build inclusive and sustainable growth based on three pillars: rigorous fiscal management; a significant increase in tax revenue; a strengthening of the attractiveness to foreign investors. The solutions are known, but they require political courage and an ability not to give in to short-term measures. Here begins the economic independence of our continent: be careful not to make the mistakes that have cost us dear in the past.

Mo Ibrahim Forum 2018 – Roundtable on Public Services in Africa

I was delighted to participate to the Mo Ibrahim Forum 2018’s roundtable on Public Services in Africa. Here is the link.

The 2018 Ibrahim Forum focused this year on public services in 21st century Africa: their key relation to good governance and effective leadership, new challenges and current shortcomings, the ways and means to strengthen them and make them appealing to the next generation.

 

Africa needs to reform public sector to ensure effective service delivery

Africa needs to reform its public service for effective service delivery to citizens, officials and experts said at a panel session on Saturday.

“We must address African public sector challenges adequately through reforms to ensure economic growth and accelerate development,” said Dr Ibrahim Mayaki, Chief Executive Officer of the NEPAD Agency

“The public sector is a key component of the economy, and it plays a major role in economic growth and development of any country. If Africa ignores its public sector, the continent won’t achieve its development agenda,” he said.

Dr Mayaki was speaking at a panel session of the Ibrahim Governance Weekend in Kigali, the capital of Rwanda. The Ibrahim Governance Weekend is the flagship event of the Mo Ibrahim Foundation, held every year in a different African country.

This three-day event convenes prominent African political and business leaders, representatives from civil society, multilateral and regional institutions as well as Africa’s major international partners to debate issues of critical importance to Africa.

The weekend begins with a Leadership Ceremony, where this year the event welcomed and celebrated the 2017 Laureate, Ellen Johnson Sirleaf of Liberia.

Dr Mayaki, who is also the former prime minister of Niger, emphasised that service delivery in Africa is still slow despite the fact that some governments have put in much effort to ensure that citizens access public goods and services.

“The whole of Africa’s public sector needs an overhaul in order to have that one that is delivering to its promise,” said Jennifer Musisi, executive director of the Kampala City Authority, Uganda.

“The mandate of the public sector is to improve the general welfare of society by delivering efficient and effective services to citizens, but this is lacking among African governments,” remarked Herman Mashaba, mayor of Johannesburg, South Africa.

“Poor management of finances, high levels of nepotism, corruption, incompetent public servants, lack of accountability, poor human resources practices, and a lack of leadership have taken toll in the Africa’s public sector,” he noted.

The three-day event held by Mo Ibrahim Foundation kicked off in Kigali, which convenes prominent African political and business leaders, representatives from civil society, multilateral and regional institutions as well as Africa’s major international partners to debate issues of critical importance to Africa, according to organisers.

Established in 2006, the non-grant making organisation focuses on defining, assessing and enhancing governance and leadership in Africa through its four main initiatives including Ibrahim Index of African Governance, Ibrahim Forum, Ibrahim Prize for Achievement in African Leadership and Ibrahim Leadership Fellowships.

Source: Adapted from Xinhuanet.com

Official visit of H.E Mr Mbagnick Ndiaye to the NEPAD Agency

The NEPAD Agency received a delegation from the Republic of Senegal, led by H.E Mr Mbagnick Ndiaye, Minister in charge of Regional Integration, NEPAD and Francophonie.

The Minister was accompanied by H.E Mr Baye Moctar Diop, Ambassador of Senegal in Ethiopia, Mrs Gnounka Diouf, Advisor to H.E Mr Macky Sall, President of the Republic of Senegal, Mr Mamadou Diallo, the representative of H.E Mrs Safiatou Ndiaye, Ambassador of Senegal in South Africa and Mr Babacar Ba, Director for NEPAD and Global partnerships, Ministry for Regional integration, NEPAD and Francophonie.

As Senegal is currently chairing the NEPAD Heads of State and Government Orientation Committee (HSGOC), the main purpose of the visit was for the Senegalese delegation to be briefed on the activities and achievements of the NEPAD Agency, and make key recommendations to help the Agency deliver its mandate towards the transformation of Africa.

H.E Mr Ndiaye expressed appreciation for the work conducted by the NEPAD Agency under the leadership of the CEO, Dr Ibrahim Mayaki. He assured the organisation of his country’s continued support towards the organisation’s programmes and their delivery.

Chair of the NEPAD Steering Committee, Mrs Gnounka Diouf also conveyed gratitude for the work and results that the NEPAD Agency is undertaking on the African continent, reiterating support for the organisation in its continued delivery.

In his welcoming remarks, the NEPAD Agency CEO, Dr Ibrahim Mayaki, acknowledged the continued support of Senegal to the vision of the founding fathers of NEPAD. He also highlighted the importance of making NEPAD and regional integration part and parcel of the daily lives of African citizens. He stressed the necessity for the Agency to work efficiently towards the tangible improvement of livelihoods.

During the visit, the delegation was briefed on NEPAD Agency’s results-based approach, which is aligned to its interventions through the First Ten Year Implementation Plan of Agenda 2063, African Union’s long-term vision and strategic framework for socio-economic transformation of the continent. The Agency’s new strategic plan (which will be implemented from 2018 to 2023), will see implementation of its programmes through the corridor approach, in order to trigger regional integration and augment economic development.

The Minister and his delegation also received a specific brief on the following NEPAD Agency interventions and programmes: Regional Integration, Infrastructure and Trade; Industrialisation, Science, Technology and Innovation; Natural Resources Governance and Food Security; Skills, Youth and Employment and NEPAD partnerships. The Agency’s current programmes and projects cover up to 95% of the continent.

Source: NEPAD Agency

The African Continental Free Trade Area – Another Significant Milestone Towards Africa’s Integration

As a relatively young Minister in the mid-nineteen nineties sitting within my Organisation of African Union (OAU) peers, I pondered deeply if Africa will pull itself together and forge ahead.

At that time, Rwanda was coming out of its genocide and most of West Africa was still experiencing military coups. Central Africa was somewhat calm but some countries there had subtle political tensions, with what is termed the “first Congo war” taking place in the former Zaire now Democratic Republic of the Congo (DRC). Whilst Somali’s civil war intensified, Ethiopia in Eastern Africa commenced the developmental-state experiment under Prime-Minister Meles Zanawi and Eritrea gained independence.

Norther Africa, pretty much intact with “strong” leaders steering the affairs of state and some of whom played a prominent role in the Israel-Palestinian peace process which resulted into the creation of the Palestinian National Authority. The end of apartheid and the ushering in of a democratic South Africa was the most positive highlight during this period for the OAU as it demonstrated that the OAU; as a Continental liberation movement, had achieved its ultimate goal of politically liberating Africa.

Full article

Africa needs ‘integrated approach’ to economies

Trade is essential for Africa’s development and liberalising it is key. But is a Free Trade Area the answer? Sceptics say it’s an addition to the African Union’s flagship Agenda 2063 and that Africa has too many programmes and protocols.

The BBC’s Lerato Mbele met with Dr Ibrahim Mayaki, Chief Executive of NEPAD (New Partnership for Africa’s Development), to find out if all of these programmes will add value for businesses and bring prosperity to ordinary people.  Full video here

World TB Day

It is unjust and unacceptable for 1.7 million people to die of Tuberculosis each year worldwide – a disease that is not only preventable, but can be treated and defeated. As we commemorate World TB Day on 24 March, we must reflect and begin to ask ourselves pertinent questions on how we fight TB in Africa.

Are we really winning the fight against TB? What are the lessons learnt and best practices and how can these be positively applied to energise current efforts to end TB in the world, and in Africa particularly? The answers to these symmetrical questions demand political and social commitment, both pre-requisites without which the fight to end TB will be lost. There is an urgent need to mobilise our political leaders to speak with one voice and to advocate for improved financial and human resources towards this cause, as well as hasten research and innovation to encourage scientists to find new regimens to treat TB – regimens that are cheaper, accessible and easier to use with shorter treatment timelines.

The NEPAD Agency is working towards this end by involving Parliamentarians to mobilise political support in Africa. Many African leaders have already made commitments to ending TB through the Catalytic Framework to End AIDS, TB and Eliminate Malaria in Africa by 2030. Our objective is to implement and reinforce this commitment with strategic partners.

This is a fight that requires working in unison for a common agenda. Hence, we have embraced multi-sectoral and multi-stakeholder approaches to combat the scourge of TB from all possible vantage points. A healthy Africa translates into a productive workforce, eventually advancing our agenda of socio-economic development.

In addition to political commitment, we have reached a stage where the civil society has to be actively involved in efforts to fight TB given the dynamics of our social structures. African social structures generally provide support to TB patients, support to affected families in times of difficulty and spread the messages of prevention, which is fundamentally as important to ending TB as is treatment.  It is time we begin to break myths and tell the unique stories of those who have defeated TB, the TB survivors. These powerful voices can no longer be underrated in behavioural change approaches, which is required to successfully address the challenges of TB mis-information in our communities.

No one should have to die from TB or lose their source of income or job because of TB. This is an injustice that we must endeavour to correct without fail. No one should be left behind in this fight against TB. NEPAD Agency is committed to the theme of this year’s World TB Day of Wanted: Leaders for a TB-Free World. You can make history. End TB.

We need to find the leaders who will make history by delivering a TB-free world. These leaders exist and are ready to be engaged. Many times we tend to look beyond ourselves, but YOU and I are these leaders, we can champion the cause to end TB and bring our contribution to eliminate this scourge for good in Africa, and the world by 2030. Stand up today and be counted among the leaders, you are wanted.

March 21 – Human Rights Day in South Africa

The commemoration of Human Rights Day in South Africa is a reminder to all of us on the African continent to ensure that no one gets left behind.

As we continue to make strides towards attaining the aspirations enshrined in Agenda 2063, our continent’s vision for ‘The Africa We Want,’ we first and foremost recognise the fact that all human beings are equal. This is echoed in South Africa’s Bill of Rights that protects everyone’s right to life, equality and human dignity.

On this day, South Africans are called upon to reflect on their rights and to protect their rights. South Africans are also asked to reflect on the rights of all people in their country from violation, irrespective of race, gender, religion, sexual orientation, whether they are foreign nationals or not, as human rights apply to everyone, and this application should be without prejudice or discrimination.

Africa’s Agenda 2063 defines the vision for a continent, whose development is people-driven, especially relying on the potential offered by its youth and women. It goes without saying then, that even as the African Union calls on everybody to commit to achieving the elimination of harmful cultural and traditional practices, and all other practices which are based on the idea of the inferiority or the superiority of either of the sexes, recognising the role played especially by women and youth, and upholding their rights is key to transforming our continent.

South Africa’s history – and  in particular the happenings of 1960 in Sharpeville when a group of 10 000 people peacefully marched and protested against the pass system – reminds us that human rights at times come at a high cost.  Peace and freedom should now be enjoyed by all in the country as well as in the rest of the continent, and not taken for granted.

Let us then continue to work together in building ‘The Africa We Want’ by first protecting and cherishing the human rights of each and every African citizen!

HUMAN CAPITAL IS THE VITAL ASSET OF NATIONS

GDP and GDP growth, often regarded as benchmarks when it comes to assessing the economic situation of a country, have long been controversial. Already in 1992, following the Earth Summit in Rio, several economists had begun to look at the notion of “sustainability”, believing that GDP did not take into account the stock of natural resources that is nonetheless essential to ensure economic growth over the long term. Similarly, the 2008 financial crisis reminded us of the extent to which our instruments for measuring the economic health of countries and businesses can be inaccurate or even misleading.

In a new study entitled “The Changing Wealth of Nations 2018”, the World Bank analyzes the evolution of the wealth of 141 countries between 1995 and 2014, taking into account four elements. The valuation of wealth is based on natural capital (mineral and natural resources, forests, etc.), capital produced (infrastructures, etc.), net foreign assets and, above all, human capital (income of a person throughout their life). This is the first time that human capital has been introduced into such a study, illustrating the importance of investing in individuals as an essential tool to create the wealth of nations.

We note that human capital represents not less than two-thirds of the world’s wealth. In high-income countries, human capital accounts for 70% of the wealth compared to only 40% in low-income countries. Thus, when we follow the trajectory of low-income countries that became middle-income countries between 1995 and 2014, there is an investment from the proceeds of natural capital toward infrastructure and education. Conversely, in ten of the 24 countries from the low-income group, natural capital still accounts for more than 50% of the national wealth.

Globally, global wealth has increased, including the catching up of high-income countries by middle-income countries. Nevertheless, inequality has persisted since, in OECD countries, per capita wealth continues to be 52 times higher than that of an inhabitant of a low-income country. Moreover, even though low-income countries show a near doubling of their wealth levels between 1995 and 2014, the demographic pressure felt in many countries, mainly from sub-Saharan Africa, has not allowed per capita wealth to increase as much as the world average.

By reading this report, we can conclude that Africa faces two main challenges: leading the transition from wealth based on natural capital to wealth based on human capital and better managing its demographic pressure. African countries that have too often been hit by the “commodities curse” need to massively reinvest their extractive industry revenues in infrastructure and education to create the necessary conditions for inclusive and sustainable growth. It is another evidence of the fact that African governments must reflect on their development strategies by harnessing the demographic challenge so that our youth truly becomes the first wealth of our continent.