Protecting wild fauna is a sovereignty challenge

Africa often makes headlines in the international media for poaching, which I deplore and strongly condemn. By 2015, a Minnesota dentist had provoked an international outcry by shooting down the famous Cecil lion in Zimbabwe during a “big game sport hunt”. But we forget that poaching does not only kill animals, it also kills our fellow citizens. A few weeks ago, famed South African elephant advocate Wayne Lotter fell in ambush in Dar Es Salaam, killed in cold blood by two hooded men. Wayne Lotter was an icon of the honorable fight for the protection of wildlife in Africa, but let us not forget that every day thousands of people are involved in this cause, sometimes at the risk of their lives.

The trap would be to believe that these events, although repetitive, remain only isolated incidents. One could imagine that they are the act of some scattered traffickers or hunters with the archaic mentality of cowboys. The development of reserves and the strengthening of wildlife protection laws would almost lead us to believe that everything has been done to avoid the extinction of certain species on the African continent.

On 7 September, the NGO TRAFFIC published a study on illegal ivory trade in five Central African countries [i]. This study is overwhelming for two reasons: not only are more and more powerful criminal networks at work, but they benefit mainly from the weak governance of some African countries. While states have actually passed stricter legislation against ivory trade with increased enforcement efforts, small retailers and sculptors are the main victims. However, these initiatives remain insufficient in a context where transnational underground criminal networks increasingly take up ivory trafficking.

One of the factors explaining in particular the virtual disappearance of the local markets where ivory was sold for clandestinity is the new takeover of Asian traffickers, essentially Chinese, present from end to end of the chain of this shadow trade. Asia is the central source of demand for ivory, but supply is mainly in Africa. Faced with these transnational crime networks, states must deploy all means to prevent poaching and arrest these criminals. Unfortunately, a member of the NGO, Sone Nkoke, explains that traffickers regularly “benefit from the weakness of state governance as well as from collusion, confusion and corruption of authority”. Without the complacency and corruption of high-ranking people, it is indeed difficult to imagine that such trafficking can take place.

The problem of the illegal trade in ivory is a perfect example to illustrate the complexity of acting in a globalized world. At the local level, states must effectively strengthen their governance and law enforcement, raise awareness and involve local communities in these issues, which are ecological and human disasters. But transnational crime requires, as the name suggests, a global response. Cooperating with Asian countries to dismantle these trafficker networks and incite them to prohibit ivory trade is fundamental to the hope of saving African elephants. Surely, Beijing’s commitment to close its domestic ivory market by the end of the year is going in the right direction.

Protecting African elephants from extinction is therefore more than an ecological issue. It is also a human drama unfolding before our eyes. Poachers and criminals do not hesitate to assassinate our fellow citizens by the greed of “white gold”. But it is also a matter of political sovereignty: as long as these traffickers are rampant in Africa, they will be a reflection of our failure to enforce and respect the law. Can a State that is not capable of protecting its wildlife be capable of protecting its fellow citizens? Surely, this is a question that all our governments must ask themselves today.

South Africa, Nigeria: turning growth into wealth for all

For the past few days, economists and analysts have been cautiously pleased that two economic locomotives in Africa are returning to positive growth rates. Nigeria and South Africa, which have competed for years as the continent’s leading economies, are experiencing a growth rate of 0.55% and 2.5% respectively.

These numbers are positive, but is that enough? These statistics are only a reflection of a situation at a given moment, the expression of some interesting performances in certain areas, in particular agricultural or mineral raw materials. The economic agency Bloomberg explains in this regard that “both economies had agriculture largely to thank: in South Africa, a bumper corn harvest following the worst drought in more than a century saw the sector surge 34 percent from the prior quarter, while in Nigeria, where farming vies with industries as the second-biggest contributor to GDP, it increased 3 percent from a year earlier despite the period being in the planting season”. In both countries, as in others, growth remains fragile. A slight change in world prices (cereals, oil, for example) can reduce the economy.

The political and security situation can also affect investment, and therefore growth capacity. And then the situation of these two countries is very different: Nigeria is the leading producer of crude oil and the most populous country in Africa today and needs at least 3% growth just to absorb the growth of its population. I am not even talking about creating enough jobs for all the young people who arrive every year on the labor market.

South Africa remains the most industrialized country on the continent, but its population, so its market, is not very large. The country already has important infrastructure, including nuclear power plants, and significant natural resources, but is it sufficient to maintain a high rate of growth that ensures a better standard of living for all?

The link between growth and the well-being of populations, which might seem obvious, is not an absolute rule. The example of Nigeria is enlightening, because if the country finally emerges from one of the worst economic phases of its history, it should be remembered that between 2004 and 2010, when its economy grew on average 8.32% per year, observers noted with surprise that the level of poverty was increasing from 54.7% to 60.9% of the population.

The growth of the economy does not mean an equitable distribution of wealth. Nigeria is no exception to a trend seen elsewhere, namely the widening gap between the very rich and the very poor, and the large increase of the very poor share of the population.

Only long-term growth-sustaining programs and equitable redistribution of the fruits of this growth can lead to an improvement in the situation over time.

The Africa we want cannot happen without African women

As we talk more and more about the second liberation of Africa and economic liberation, one cannot avoid thinking also of Africans who represent more than half of the continent’s population: Women. Should we also consider this question in terms of a new liberation, an emancipation? Would not it be more constructive to look at the situation of the 410 million African women today, and then to see how to help them more?

Recently, I was struck by a figure – according to UNICEF, if all girls in Africa went to primary school, maternal mortality would be reduced by 70 percent. That would be 50,000 lives saved each year. What would be the implications of this with regards curbing of sexually transmitted diseases, or improving children’s daily diet? The prospect is mind blowing.

Access to education for girls, which varies greatly from country to country, remains a priority. We need to identify weak links and bottlenecks in order to ensure access to education for girls and young women. More than a bet on the future, it is an economic and political necessity. That is particularly true when we take into account that about 28 million girls and teenagers, who are of school age, will probably never go to school for even a single day in their lives…

The issue is also economic because women represent half of our continent’s human resources. In agriculture, 40 percent of agricultural work is carried out by women, but yet they produce 80 percent of food in households. It should also be pointed out that unemployment affects them more than men: 10.6 percent of women are unemployed, compared with 8.2 percent men, according to the World Bank.

In Africa too, disparities are significant, for instance in Uganda, Tanzania and Malawi, where the number of women in the fields exceeds 50 percent. In Ethiopia and Niger, on the other hand, they account for only 29 percent and 24 percent respectively of the overall workforce. According to FAO, “Enabling women to participate more effectively in agricultural activities means reducing the number of people suffering from hunger and malnutrition in all its forms. It also improves the well-being of children and families, which contributes to training human capital for future generations and long-term economic growth.”

On the other hand, thanks to quotas such as those in Burkina Faso and Rwanda, the representation of women in parliament has increased significantly. In sub-Saharan Africa, women’s representation was 22.3 percent in 2015, compared to only 8 per cent in 1995. At the global level, the figure is 22.1 percent. This is a big step forward for Africa.

However, much remains to be done. Equality is not yet a reality despite the progress made. Violence against women, genital mutilation and forced marriages remain a reality. As the UN stresses, “Despite the adoption of innumerable international conventions and protocols that reaffirm gender equality, discrimination and prejudice hold back the emancipation of African women. In virtually every sector of activity, women on the continent are still struggling to gain recognition of their right to live in dignity.” This at a time when we are talking about the necessity to reduce births in Africa. How do we do it without involving women?

Initiatives exist to highlight and promote the role of women in this new phase of our history. The Women Advancing Africa Forum, organised by Mrs Graça Machel in Tanzania this summer, aims to celebrate the central role of women in shaping African development and their capacity to lead social and economic change. The aim is to ensure that women on the one hand are emancipated and participate directly, but also to ensure they are recognised, in the development of Africa, in making positive strides towards “The Africa We Want.”

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

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

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

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

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

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

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

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

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

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

Rencontres Économiques d’Aix-en-Provence

I thank the "Rencontres Économiques d'Aix-en-Provence" for inviting me to this new edition. Exceptional guests and exciting debate. The video of my speech during the round table: From a world of inequalities to a world of solidarity - coordinated by Pierre Jacquet, member of the Cercle des économistes, and moderated by Béatrice Mathieu, Deputy editor of L'Express, with Jacques Attali, President of Positive Planet, Pierre-André Chalendar, President and CEO of Saint-Gobain, Esther Duflo, Professor at the Massachusetts Institute of Technology and Geoffrey Lamb, Senior Advisor of the Bill & Merinda Gates Foundation, Is available by clicking here.

Leapfrogging Progress

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

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

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

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

Full article here

From Africa’s resource curse to Africa’s wealth

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

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

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

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

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

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

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

Africa: an emerging destination for investments

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

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

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

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

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

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

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

Formal sector versus informal sector: towards reconciliation

More often than not, particularly in Africa, we are used to opposing the formal and informal sectors. Shouldn’t we adopt for once a holistic approach of our economies and try to integrate more and more the informal sectors of our economies by the means of smart and fair policies?

Behind this somewhat negative word, the informal sector – understood as all activities that are beyond the control of the state, whether legal, social or fiscal – there are artisans, mechanics, tailors, merchants, taxi drivers, masons. In short, people who scrap a living. But in this logic of day to day survival, these men and women also walk down a precarious path in the medium to long term. What can you do if you get sick when you only have a small job to earn money to pay for the day’s food? What happens when the informal worker, one he is too old, no longer has the strength to work? It is easy to understand that above all, one must escape from the logic of survival in which too many of our fellow citizens are stuck, often against their will.

According to the African Development Bank (AfDB), the informal sector accounts for an average of 55% of cumulative GDP in sub-Saharan Africa. In some of our countries, the workers who produce this wealth sometimes count for the majority of the active population. Statistics are lacking, but in a report on the informal sector published last May, the International Monetary Fund (IMF)[1] indicated that informal employment accounts for between 30 and 90 per cent of non-agricultural employment in sub-Saharan Africa. Let us recall that there is no clear frontier between the formal and informal sectors: legitimate companies may indeed use informal contractors for certain matters, for example on a construction site.Even the IMF, a former vocal critic of the informal sector, in the report we have just mentioned, shows that times have changed and that the informal sector can be a growth opportunity for our economies.

While international experience indicates that the share of the informal economy declines as the level of development increases, most economies in sub-Saharan Africa are likely to have large informal sectors for many years to come, presenting both opportunities and challenges for policymakers”, the report says. This is all the more true as the number of jobseekers increases exponentially and as a “fight” against the informal sector will deprive our states of an important safety valve, especially for youth. Remember that to absorb new workers, Africa must create 122 million jobs in the next ten years. The IMF adds: The challenge for policymakers, therefore, is to create an economic environment in which the formal sector can thrive while creating opportunities for those working in the informal sector to maintain or improve their living standards”.

Bringing these individual or family businesses into common law is not an easy task, but there are ways and means to make it happen, and above all a strong argument in favor of this move: entering the system makes it possible to fight precariousness, especially if sound policies of health insurance and retirement pensions are accompanying this regularisation. Under no circumstances should policies appear to be a tax burden on micro and very small informal enterprises. Policies must promote access to banking services and improve productivity of these small businesses, so that they create more jobs, pay social contributions for employees, and, only in a second phase, provide tax revenues to the state.

 

[1] Regional Economic Outlook, IMF, May 2017.