African States’ Fragility and resilience

If we want things to move forward and improve, especially for the economic and social development of our people, we sometimes have to recognize our weaknesses. One of the most important today is the weakness of the State in most of our countries. This weakness can quickly turn into fragility, as we have seen with phenomena as different as the Ebola virus, or the progression of Boko Haram, not to mention the management of the consequences of global warming.

The weaker or fragile a state is, the more likely it is to be overwhelmed by events and unable to cope with the large-scale challenges it faces. The question of the resilience of our states is therefore very meaningful and relevant. It is necessary to give back to Caesar what is Caesar’s : the African Development Bank (AfDB) has been a pioneer in the field of fragility of States under the presidency of Donald Kaberuka by creating a Department directly responsible for these issues. Initially the focus was on States in transition, especially post-conflict, but gradually shifted to the concept of more general resilience and taking into account more scenarios that our States face.

In January 2017, the AfDB organized with success its first Forum on Resilience in Africa. It had made it possible to analyze various situations of fragility present on the continent, but also to note a major fact: the continent is progressing, and some extremely fragile states manage to consolidate. Another observation that logically follows the first is that fragility can precisely derive resilience that can therefore lead to the stability of our states. We just have to recognize our weaknesses.

Last year’s recommendations included the need to forge stronger, competency-based partnerships to make interventions more effective; and “to respond in a concerted manner to the needs of people at the bottom of the poverty pyramid by providing early interventions at the community level in situations of fragility, in order to ensure greater inclusion while giving hope to the most vulnerable”.

It is precisely on the theme “Building resilience – reaching those at the bottom of the pyramid” that the second edition of the African Resilience Forum (ARF), is to be held in Abidjan on February 8th and 9th, 2018. The objective of this new meeting is to share knowledge on new approaches to provide development support in fragile environments. It is also about designing a platform to present innovative solutions and new technologies to provide essential services to the communities that need it most.

The “bottom-up” approach is favoured here, in contrast to what is usually practiced, namely large and  highly centralized national programs whose effect is not always felt by the poorest. This approach is based on the needs of the grassroots to try to improve the situation of the most fragile communities by ensuring that they participate in the definition of solutions. To do this I think it is necessary to develop new types of partnerships, to better mobilize the national resources of each of our States towards a development at the community level, knowing that the reality of development is first local.

For my part, I would also like to see in this endeavour, the direct involvement of the private sector with which partnerships are also possible, to achieve these objectives.

Migratory challenge at the heart of Africa’s rural areas

Contrary to what many still believe, it is now Africa that dominates migration flows to Europe and not the Middle East. The 2016 agreement ratified between the European Union and Turkey contributed to reduce the number of migrants from the Middle East. Africa is the first land of global emigration.

According to the International Organization for Migration (IOM), Sub-Saharans represented 79% of the migrants that went to Italy between January 1, 2015 and June 30, 2017. Meanwhile, Spain has also become an important migration route as the number of migrants that crossed through the “Western Mediterranean route” has already doubled compared to 2016.

If some of our fellow citizens leave the continent to flee wars and political violence, we can not underestimate the weight of economic migrations. The causes are multiple and well-known: mass unemployment, especially among young people, political instability and bad governance, demographic pressure in urban areas, abandonment of rural areas by government, social injustice and a form of fantasy about the promises of Europe.

Among all the possible solutions, numerous econometric studies have demonstrated the relevance of agricultural development in the fight against poverty. In a continent that accounts for 65% of the world’s available arable land, for a population that is still more than 50% rural, this is the best way to provide people with training and employment, a decent income, and hence stabilization.

In a joint study, FAO and CIRAD estimate that nearly 380 million young people, including 220 million in rural areas, will enter the African labor market by 2030. If we do not offer professional opportunities to young people in rural areas, they will have no choice but to migrate to large African cities in precarious conditions or even to Europe. Agriculture and rural development are the pillars on which our response to the migration challenge in Africa must be based.

While 80% of farms in Africa are less than two hectares, linkages between smallholder farmers and agribusiness firms need to be strengthened to create a harmonious ecosystem. By setting up integrated value chains to capture a greater share of added value and by ensuring regional self-sufficiency for certain commodities, these agropoles will provide jobs for people, especially women and young people.

Within the framework of the perspectives defined by the African Union, the NEPAD Agency ensures the establishment of agropoles and infrastructure corridors at the heart of Agenda 2063 for the agricultural transformation of the continent. A better connection to regional markets is key to creating a sufficiently large pool of consumers to justify the necessary investments.

The demographic danger takes a second, more unexpected form: the agricultural labor force is ageing in Sub-Saharan Africa. On average, farmers are sixty years old in many countries while youth is massively affected by unemployment. This is an opportunity to carry out a generational transmission so that experienced farmers can transfer expertise to young people. I often say that a farmer’s life is no different from that of a business owner. Agriculture is particularly transformed by the digital era, which young people will better exploit than the current generation.

It is useless to look towards the Mediterranean when we want to talk about the migratory issue. It’s already too late. It is by acting directly on the causes of migration that the inhuman situations found in Libya and elsewhere will cease. Let’s start by offering a professional future to our fellow citizens and by creating the conditions for inclusive and sustainable growth.

Reform of tax systems one of the best ways to finance development

In early December, the European Union (EU) published  a list of 17 countries now considered tax havens. Among this list, only two African countries were pinned by Brussels: Tunisia and Namibia. Another list, the “gray” one, should be published soon with the countries that have made commitments to be followed, on which, it is said,  Morocco and Cape Verde should appear.

My idea is obviously not to name and shame this or this country, especially as this list compiled by the European authorities is subjective and is sometimes based on more than questionable criteria. It should also be noted that not one single European country appears on the list, considering that they are supposed to apply European law in the fight against fraud…

But I would like to draw attention to the fiscal issue African states are facing and to the scourge of tax evasion. While Africa is still too often perceived (for all the reasons we know), as a continent dependent on official development assistance, our continent has potential resources that it actually lets evaporate each year. This problem goes well beyond the African continent. For instance, the OECD has made the issue of transfer pricing a priority in recent years.

According to the high-level group sponsored by the Economic Commission for Africa (ECA) and the African Union (AU), it is estimated that illicit financial flows out of Africa amount to between $ 50 and $ 60 billion each year. And again, this estimate probably underplays reality, given the difficulty of evaluating these transactions and the lack of data on this subject. Between 1970 and 2008, illicit financial flows cost Africa between $ 854 and $ 1.8 trillion, according to estimates by the high-level group dealing with illicit financial flows from Africa. Another organization, the Independent Commission for the Reform of International Corporate Taxation (ICRICT), estimates that between $ 40 and $ 80 billion are lost each year in Africa. In any case, these figures are staggering.

These illicit flows include, of course, criminal activity of any kind and the transfer of funds from corruption, but they do not constitute the majority of these flows. The bulk of the flows actually come from traditional trade, a combination of tax evasion and avoidance. The first refers to the actual fraud that is illegal, while the second is for a company (or an individual) to take advantage of loopholes in the tax system of a state, to reduce the amount of its levies, which is supposedly legal though deeply immoral. The porous border between evasion and tax avoidance means that both strategies need to be fought hard.

The challenge is twofold. On the one hand, the establishment of increased inter-state cooperation to respond to this challenge is essential. Indeed, companies profit very logically from dissonances between different governments on the international tax system. Several countries are openly betting on a leveling down of tax incentives, to the detriment of many. On the other hand, public administrations too often suffer from a lack of technical expertise in the face of multinationals backed by international law firms helping them to implement aggressive tax avoidance strategies. In order to combat this phenomenon, the first step is the construction and drafting of strengthened legislation, taking into account the various tax avoidance practices, particularly the thorny issue of transfer pricing.

This legislation will only be worth the value of the ability of our tax administrations to implement them.

This is notably the fight of the Forum on African Tax Administration (ATAF), a platform dedicated to promoting mutual cooperation between African tax administrations (and other relevant and interested stakeholders) and aimed at improving the efficiency of their tax laws and administrations. The organization often cites the case of Uganda, which has become aware of this issue and has begun implementing the necessary reforms. In 2015, these reforms allowed Kampala to win a dispute with Heritage Oil for some $ 400 million before the United Nations Commission on International Trade Law (UNCITRAL).

Taxation is an essential element for the economic and social development of African countries. It enables the fair and equitable sharing of the costs and benefits of development, contributes to the creation of a stable environment for economic operators and finances infrastructure needs at the material and social level. This is why reform of tax systems is one of the best ways to finance development, making it possible to strengthen the autonomy of governments. African governments must therefore seize this project as a priority, in order to be able to rely on the fiscal pillar to collect the resources they need to finance their development strategies.

In memory of Pr. Calestous Juma

I would like to formally pay my respect one last time to my dear friend Calestous Juma who passed away last week. Of course, my first thoughts go to his family and friends. But I think they won’t be the only ones deeply affected by his passing.

For a whole generation, and maybe for future generations of leaders, he was an exceptional teacher and thinker as well as one of the shining lights of Africa in the intellectual sphere. Famous for his good spirits and readiness to help out others, he was as charming and charismatic as he was demanding. His vision was one of openness and sound debate.

But although he was one of the most optimistic people I had the chance to meet, he did not take a rose tinted view of Africa’s place in the world, be it from an economic or political standpoint. For instance, he was noticeably quick to pinpoint shortcomings in the conventional narrative about Africa, either overpessimistic or overoptimistic.

His greatest works such as In Land We Trust or Innovation and its Enemies revolved around fundamentals topics for a truly African-led revolution, both political and economical (biological diversity, technological innovation, property rights…). He charted the path to our true emancipation, keeping in mind the importance of taking a pan-African perspective if we want to overcome our challenges.

I remember a few particularly illuminating texts he wrote and that also helped me better define my views of the continent’s development and its place in the world.

For instance this one about industrialization and what he called “the misplaced promise of Africa’s mobile revolution”, helped to deconstruct a myth often played up in the media about the quasi-magical power of new technologies to industrialize Africa. Far from being idealistic, and though he was such a pioneering scholar, he was a very down to earth and dedicated proponent of pragmatic solutions.

Most of his business plan for Africa rested on the physical infrastructure and agricultural revolution he never ceased to promote. He placed them at the center of the continent’s long-term economic transformation but was particularly keen on innovation to achieve this, as he demonstrates in a fascinating book, The New Harvest: Agricultural Innovation in Africa.

For generations of students lucky enough to benefit from his teaching, he will remain one of the most humble and yet noticeable voices from our continent. His voice will be sorely missed but the ones he inspired will keep him alive and well among us. Let’s hope he inspired many vocations. This would be the best tribute we could pay to his memory.

African countries are building a giant free-trade area

They have long traded with the world, now they want to trade with each other.

“AFRICA must unite,” wrote Kwame Nkrumah, Ghana’s first president, in 1963, lamenting that African countries sold raw materials to their former colonisers rather than trading among themselves. His pan-African dream never became reality. Even today, African countries still trade twice as much with Europe as they do with each other (see chart). But that spirit of unity now animates a push for a Continental Free-Trade Area (CFTA), involving all 55 countries in the region. Negotiations began in 2015, aimed at forming the CFTA by the end of this year. In contrast to the WTO, African trade talks are making progress.

At a meeting on December 1st and 2nd in Niamey, the capital of Niger, African trade ministers agreed on final tweaks to the text. Heads of state will probably sign it in March, once an accompanying protocol on goods has been concluded (agreement on services has already been reached). But trade barriers will not tumble overnight. The CFTA will come into force only when 15 countries have ratified it. Even then, the deal only sets a framework, within which some details of tariff reduction have still to be worked out. Separate negotiations, covering competition, investment and intellectual-property rights, are yet to begin.

Nonetheless, technocrats are keen to talk up the agreement. Chiedu Osakwe, Nigeria’s chief negotiator and chairman of the negotiating forum, sees it as a “massive historical opportunity” to escape the colonial legacy. Some 82% of African countries’ exports go to other continents; they consist mostly of commodities. By contrast, over half of intra-African trade is in manufactured products. Supporters of the deal argue that it will create larger, more competitive markets, helping to ignite Africa’s stalled industrialisation.

African leaders also have an eye on relations with the rest of the world. No longer able to count on unilateral trade concessions from rich countries, they are instead being forced into reciprocal deals, which involve more give-and-take. A strong CFTA would give Africa extra weight in talks with Europe and America, argues George Boateng of the African Centre for Economic Transformation, a pan-African think-tank.

Yet political pressure to rush negotiations may weaken the final text. The CFTA aims to eliminate tariffs on 90% of products over five to ten years, which is less ambitious than it sounds. Much intra-African trade is already between members of smaller free-trade areas, such as the Southern African Development Community. The rest is concentrated in a small range of goods. Peter Draper of Tutwa Consulting, a South African firm, notes that, by retaining tariffs on just 5% of products, African countries could in effect exclude most of their current imports from liberalisation.

A study by the United Nations Economic Commission for Africa estimates that, with the CFTA, intra-African trade would be 52% higher in 2022 than it was in 2010. Since that assumes the removal of all tariffs, the actual effect will almost certainly be more modest. Research also shows that the largest gains come not from reducing tariffs, but from cutting non-tariff barriers and transport times. That will come as no surprise to drivers in the long lines of lorries queuing at a typical African border post. The World Bank estimates that it takes three-and-a-half weeks for a container of car parts to pass Congolese customs.

African countries have a mixed record on easing trade. A new one-stop border post has slashed the time taken to move cargo from Tanzania to Uganda by 90%. But even as tariffs have come down, east African countries are also erecting new non-tariff barriers, such as divergent standards for goods. Informal traders, most of them women, report harassment and extortion at borders. Meanwhile multiple deadlines have been missed on the road to the Tripartite Free-Trade Area, a separate scheme to link three regional blocs.

Free trade runs counter to political currents in many countries, including South Africa and Nigeria, where governments fear losing control over industrial policy. They also worry about losing tariff revenues, because they find other taxes hard to collect. Patience over the CFTA may be a virtue, if it gives countries more time to adjust. The technocrats are optimistic. “You create the foundation, then you can build the house,” says Prudence Sebahizi, the African Union’s chief technical adviser on the CFTA. “Even if it takes many years.”

Resetting the Africa-Europe Relationship

Africa faces a broad range of development challenges, and overcoming them will require huge sums of foreign aid and investment. But as Africa develops, its people will also need partners who recognize that there are mutual benefits to engaging with the continent’s mobile and highly-educated base of human capital.

JOHANNESBURG – In October, the European Union announced a plan to invest €40 billion ($47.6 billion) in Africa, a “Marshall Plan” for the continent that would boost economic growth, create jobs, and, ultimately, slow the migration of young Africans to Europe. “Words won’t convince migrants to stay at home,” European Parliament President Antonio Tajani said. “We must give them a chance to have a decent life.”Tajani is right. Unfortunately, his approach is not.

For almost 60 years, well-meaning foreign governments, many of them European, have poured huge sums of money into Africa, with little to show for it. Lasting solutions to Africa’s development challenges require funding, to be sure, but they also demand a significant recalibration in relations with foreign partners. And Africa’s relationship with Europe may require the biggest overhaul of all.

The problem goes much deeper than money; one might even say it’s philosophical. Africa and Europe have a very old relationship, marked by complexity and pain. Europe imposed its system of governance, values, and more recently, approaches to trade, long claiming that Africans need to be trained, to modernize, and to emphasize “capacity building.” This patronizing partnership has run its course, and it is crucial that we change the dynamic.

Meetings like the fifth African Union-European Union summit, which wrapped up last week in Abidjan, Côte d’Ivoire, are a good start. The meeting, which focused on “investing in youth,” put a spotlight on the complex links between the sides. One conclusion was clear: the EU’s current answer to addressing migration from Africa is outdated. If Europe’s strategy to solve its migration challenges relies on money alone, it will fail.

We are a long way from the lopsided dynamic that defined African-European relations during the colonial era. Today, Europe may need Africa more than Africa needs Europe, especially if one considers human capital.

Over the next 15 years, some 440 million Africans will enter the job market, compared to 72 million in Europe. Africa’s job seekers will need work, and Europe will have it. An aging population is already putting a squeeze on Europe’s growth, and vacancies are forecast to multiply amid a shrinking labor pool. There is even a strong possibility that, in the long run, it will be African young people who pay for the care of European pensioners. These demographic differences underscore the potential benefits of rethinking economic and political relations.

Without migration, the redistributive policies on which European welfare states depend will be unable to withstand the current rate of aging. Not only will finding the staff to care for an aging population become more difficult; obtaining sufficient revenue to fund social security systems will also become harder as the dependency ratio rises. Migration policies that emphasize mobility are essential to support European industries, household consumption and, ultimately, the financing of social benefits.

Because strategic competitors like China and India have already identified the human-capital potential of Africa’s youth, Europe must move quickly to attract and retain – rather than repel – African professionals. Of the 375,000 students from the continent who study abroad each year, many will establish businesses and find their own place in a globalized economy upon graduation. There is already growing competition in the US, Canada, China, the Middle East, and Africa itself to attract these highly educated and mobile students.

Just as sixteenth-century Europe needed African gold, twenty-first-century Europe cannot do without the African diaspora. Which other world region can offer similar market potential for European industries faced with declining demand and or subdued growth in both their domestic and traditional export markets?

That is why it is more important than ever that Europe not engage in an administrative bean-counting exercise, in which other economies will always appear stronger. Instead, the EU should commit to mutually beneficial employment schemes that maximize the strengths of people and cultures on both continents, notably through skills transfer.

Europe’s recognition of its need for Africa is a necessary paradigm shift, leading, one hopes, to reasoned collaboration. In an increasingly uncertain world, Africa and Europe can set the foundations for a smarter partnership by changing the basis of their cooperation.

Failure to do so will be costly. But most of that cost will be borne by Europe. With alternative partners already courting their talent, it is not Africa that will be hurt the most by the missed opportunity.

 

 

Women and Youth economic empowerment at core of NEPAD Agency discussions in Abidjan

Abidjan, November 27, 2017 – The NEPAD Agency in partnership with the Spanish Agency for International Development and Cooperation today hosted a high-level session, on “Technical, Vocational and Education Training (TVET) and Skills for African Youth” session.

The event which took place on the margin of the 6th EU-Africa Business Forum in Abidjan, Côte d’Ivoire brought together representatives of African Union and European Union Member States and various stakeholders involved in women and youth empowerment and skills development- development partners, private sector, civil society, business leaders and other stakeholders including women and youth entrepreneurs and networks.

In his opening remarks, the NEPAD Agency CEO, Dr Ibrahim Mayaki highlighted that skills development remains a crucial factor in unlocking the potential of African women and youth.

“We need to move away from business as usual because we are already aware of our shortfalls therefore we need to focus on strategies that show impact. In order to do this, it is crucial to adopt a multi-sectoral approach when implementing projects and our job creation initiatives must have a multi-sectoral outlook. The NEPAD Spanish Fund has managed to do this well, by establishing the needs on the ground, creating projects that cater to those needs and capacitating women to empower themselves,” said Dr Mayaki.

Africa is home to some of the world’s fastest growing economies but its’ women and youth still remain the greatest untapped assets. African leaders are recognising the urgency of investing in these women and youth in order to accelerate inclusive economic growth and achieve the objectives set out in the

AU’s Agenda 2063 and the Global Vision 2030, which both call for people centred strategies that identify education, skills development and economic empowerment as key drivers of development.

Recent studies show that one fourth of the world’s population will be African by 2050 while almost half of the world’s youth will come from Africa by 2100. By 2035, the continent will have a larger working age population than India or China and a labour force, 3 times larger than Europe’s by 2050. Meanwhile, women represent more than half of Africa’s population and 60% of Africans are under the age of 25. The continent therefore needs to manage its demographic dividend in order to ensure growth and poverty reduction.

Representing the Government of Germany, Mr Guenter Nooke, German Chancellor’s Special Representative for Africa, elaborated on the German support towards youth empowerment.

“Germany has decided to support the African Union and the NEPAD Agency in its endeavours for training and employment of young people. Today we pledged 28 Million Euros for the Skills Initiative for Africa project and 3 Euros for the implementation of the African Policy Framework of Migration which has a link to labour migration,” he said.

The event showcased targeted interventions that contribute to women and youth economic empowerment resulting in employment opportunities and sustained livelihoods.

Lessons were also drawn from the NEPAD Spanish Fund for African Women’s Empowerment flagship project which to date has empowered over 1.2 million women.

“ Our current Master Plan continues to prioritise gender equality as one of the fundamental goals for development, the NEPAD Spain Fund for the empowerment of African women with the aim of improving African women’s life and specially to speed up the improvement of their economic situation,” said Christina Diaz Fernandez-Gil, Representative of the Ministry of Foreign Affairs and Cooperation, Spain.

NEPAD WOMEN EMPOWERMENT PROGRAMME

The NEPAD Spanish Fund (NSF) for African Women’s focuses on Women’s economic empowerment. To date, the Fund has implemented 77 projects in 35 countries in Sub Sahara Africa. More than one million women have benefited directly from the Fund in areas such as business and vocational skills training, enabling environment for women entrepreneur, access to finance and job creation. In many cases, these interventions brought structural changes in the promotion of women and youth entrepreneurship business in Sub Sahara Africa.

SKILLS AND EMPLOYMENT FOR YOUTH PROGRAMME

The NEPAD Agency has developed a Skills and Employment for Youth Programme (SEFY). As a central pillar, the SEFY uses existing African Union sector policy development frameworks (e.g. Infrastructure-PIDA; Agriculture- CAADP) to stimulate public and private sector investments to generate economic opportunities and critical quantity and quality of jobs along national priority productive sectors. Programmatic actions aim to provide support to strengthen evidence based national development policy and strategy development; enhancing youth skills development including harmonisation of Technical Vocational and Education Training (TVET) frameworks; as well as strengthening policy and institutional support for supportive entrepreneurial ecosystems.

Africa: Rural Employment, Innovative Financing and Agricultural Development to Accelerate Sustainable Growth in Africa

Following our session “High level on Technical, Vocational and Education Training and Skills for African Youth” I am sharing with you a very relevant article from Fati N’zi Hassane, the  Head of Program, Skills and Employment for Youth, NEPAD.

Africa is often described as the world’s youngest continent: 220 million Africans are between 15 and 25 and are expected to be around 350 million by 2030. Such youth is certainly a great opportunity but it is also a challenge, especially considering that certain factors, if not managed properly, like youth employment, have the potential to become strong threats for our societies. We therefore urgently need to find sustainable prospects for these new generations in order to take advantage of their fantastic energy and prevent them from becoming a challenge.

Like anywhere else in the world – the UN estimates that 66% of the world’s population will be living in urban areas by 2050 – young Africans living in rural areas are virtually connected to the outside world. They dream of leaving their villages and aspire to modernity. However, many of these young people from the rural exodus quickly find themselves caught up in a very precarious situation, which is often due to poorly controlled urban development.

Just like urban policies are key for the continent’s growth, employment and rural development are crucial elements, even though their importance tends to be overlooked. Let us recall that a considerable number of young people will be entering the labour market in the coming years: nothing less than 440 million young Africans aged between15 to 35 by 2030, two thirds of whom will be coming from rural areas.

Full article here

Climate smart agriculture in the context of COP 23

While COP 23 is currently being held in Bonn, I thought it was interesting to present an update on one of our programs to support the fight against global warming, and aims to increase resilience to this phenomenon, which unfortunately our countries are facing as the first victims although they are in no way responsible for this situation.

Launched in 2014, this program, named Climate Smart Agriculture (CSA) is derived from the policies defined and put in place by the African Union, including the ComprehensiveProgram for Agricultural Development in Africa (CAADP). Our organization, NEPAD, is in charge of coordinating and implementing this platform, which should directly benefit the States involved.

Climate Smart Agriculture* is an agriculture that increases productivity, resilience and adaptation over the long term, while helping to reduce greenhouse gas emissions. This program is therefore aimed at global food security and improving nutrition in the face of climate change. The CSA program plans to strengthen the capacities of agricultural stakeholders at all levels, especially small farmers and concerned institutions. It has an ambitious goal: to reach the target of 25 million African farmers practicing climate smart agriculture by 2025.

To this end, Africa and NEPAD are leading a country-driven and regionally-integrated initiative that provides the tools and platform for hosting partnerships that deliver tangible results. The structure has borne fruit: today we have developed several successful alliances with international NGOs like CARE International, Catholic Relief Services, Concern Worldwide, Oxfam and World Vision, but also with four technical partners including FAO, and the Forum for Agricultural Research in Africa (FARA), for example.

Every year for the past three years, NEPAD has been bringing together experts, representatives of our Alliance’s countries and regions, and our partners to discuss and adress the important role of agriculture in combating climate change. Today, through this program, NEPAD is seen as a source of information, innovation and knowledge production on climate change in Africa. Our platform also helps to find international funding and partnerships for states that wish to develop effective resilience policies to climate change, based in particular on agriculture. We are therefore enrolling in a concrete action that is bearing fruit.

It remains to create the tools to measure the results of this new approach in the field. The transition of agriculture sectors (including crops, livestock, forestry, fisheries and aquaculture) to more sustainable and climate-smart production systems is indeed starting and without doubt on the ground. We therefore first need to assess the current and future impacts of climate change in each African state, identify current and future adaptation strategies, and create a favorable environment for farmers. We must continue our efforts and launch new projects as we have done already with success in states like Ethiopia, Kenya, Malawi, Niger, Uganda, Tanzania and Zambia.

We are facing a long struggle, but the time has not come to give up. It’s about our future and the future of our planet.

* From the English term smart agriculture, this is an agro-ecological agriculture that not only adapts to climate change but also emits low greenhouse gas.

Banking on African Infrastructure

Africa faces a yawning gap between its infrastructure needs and its ability to attract the foreign investment required to finance projects. The continent’s leaders must recommit to creating a more favorable investment climate, one that can attract capital while limiting investors’ risk exposure.

JOHANNESBURG – As the US Federal Reserve embarks on the “great unwinding” of the stimulus program it began nearly a decade ago, emerging economies are growing anxious that a stronger dollar will adversely affect their ability to service dollar-denominated debt. This is a particular concern for Africa, where, since the Seychelles issued its debut Eurobond in 2006, the total value of outstanding Eurobonds has grown to nearly $35 billion.

But if the Fed’s ongoing withdrawal of stimulus has frayed African nerves, it has also spurred recognition that there are smarter ways to finance development than borrowing in dollars. Of the available options, one specific asset class stands out: infrastructure.

Africa, which by 2050 will be home to an estimated 2.6 billion people, is in dire need of funds to build and maintain roads, ports, power grids, and so on. According to the World Bank, Africa must spend a staggering $93 billion annually to upgrade its current infrastructure; the vast majority of these funds – some 87% – are needed for improvements to basic services like energy, water, sanitation, and transportation.

Yet, if the recent past is any guide, the capital needed will be difficult to secure. Between 2004 and 2013, African states closed just 158 financing deals for infrastructure or industrial projects, valued at $59 billion – just 5% of the total needed. Given this track record, how will Africa fund even a fraction of the World Bank’s projected requirements?

The obvious source is institutional and foreign investment. But, to date, many factors, including poor profit projections and political uncertainty, have limited such financing for infrastructure projects on the continent. Investment in African infrastructure is perceived as simply being too risky.

Fortunately, with work, this perception can be overcome, as some investors – such as the African Development Bank, the Development Bank of Southern Africa, and the Trade & Development Bank – have already demonstrated. Companies from the private sector are also profitably financing projects on the continent. For example, Black Rhino, a fund set up by Blackstone, one of the world’s largest multinational private equity firms, focuses on the development and acquisition of energy projects, such as fuel storage, pipelines, and transmission networks.

But these are the exceptions, not the rule. Fully funding Africa’s infrastructure shortfall will require attracting many more investors – and swiftly.

To succeed, Africa must develop a more coherent and coordinated approach to courting capital, while at the same time working to mitigate investors’ risk exposure. Public-private sector collaborations are one possibility. For example, in the energy sector, independent power producers are working with governments to provide electricity to 620 million Africans living off the grid. Privately funded but government regulated, these producers operate through power purchase agreements, whereby public utilities and regulators agree to purchase electricity at a predetermined price. There are approximately 130 such producers in Sub-Saharan Africa, valued at more than $8 billion. In South Africa alone, 47 projects are underway, accounting for 7,000 megawatts of additional power production.

Similar private-public partnerships are emerging in other sectors, too, such as transportation. Among the most promising are toll roads built with private money, a model that began in South Africa. Not only are these projects, which are slowly appearing elsewhere on the continent, more profitable than most financial market investments; they are also literally paving the way for future growth.

Clearly, Africa needs more of these ventures to overcome its infrastructure challenges. That is why I, along with other African business leaders and policymakers, have called on Africa’s institutional investors to commit 5% of their funds to local infrastructure. We believe that with the right incentives, infrastructure can be an innovative and attractive asset class for those with long-term liabilities. One sector that could lead the way on this commitment is the continent’s pension funds, which, together, possess a balance sheet of about $3 trillion.

The 5% Agenda campaign, launched in New York last month, underscores the belief that only a collaborative public-private approach can redress Africa’s infrastructure shortfall. For years, a lack of bankable projects deterred international financing. But in 2012, the African Union adopted the Program for Infrastructure Development in Africa, which kick-started more than 400 energy, transportation, water, and communications projects. It was a solid start – one that the 5% Agenda seeks to build upon.

But some key reforms will be needed. A high priority of the 5% Agenda is to assist in updating the national and regional regulatory frameworks that guide institutional investment in Africa. Similarly, new financial products must be developed to give asset owners the ability to allocate capital directly to infrastructure projects.

Unlocking new pools of capital will help create jobs, encourage regional integration, and ensure that Africa has the facilities to accommodate the needs of future generations. But all of this depends on persuading investors to put their money into African projects. As business leaders and policymakers, we must ensure that the conditions for profitability and social impact are not mutually exclusive. When development goals and profits align, everyone wins.