Through the purchase of carbon credits, corporations can immediately reduce their global carbon footprints while also serving their long-term economic interests to expand their market bases. That is in part because, by purchasing high-quality carbon credits in voluntary carbon markets, these companies can support the sustainable growth of low- and middle-income populations in the world’s fastest-growing regions—including across the African continent.

Voluntary carbon markets allow entities like corporations and individuals to buy carbon credits entirely at their discretion to offset their emissions. These markets differ from compliance markets, which feature legally binding emissions-reduction obligations, often under cap-and-trade structures like those in the European Union and California. Carbon credits are not intended to replace corporate emissions-reduction efforts; rather, they can serve as an additional mechanism to accelerate transitions to net zero, offset unavoidable emissions, and direct capital to regions with insufficient local investment.

Although still relatively immature, voluntary carbon markets have grown considerably—in 2022, their overall value surpassed two billion dollars, a fourfold increase from 2020, and African credits have grown 36 percent on average over the last five years. However, this rapid growth coupled with a lack of underlying structure has led to various issues, including concerns about the quality and legitimacy of many carbon credits sold, which cast doubt on the credits’ actual contributions to climate-change mitigation and stall market growth. Additionally, some carbon credits, which are primarily purchased by corporations based in the Global North, have hindered development in the Global South. For example, some governments in the Global South have forced local communities to sell land for the purpose of creating carbon credits. Organizations such as the Integrity Council for the Voluntary Carbon Market are working to solve the various issues related to the voluntary carbon market; in March, it released the first part of its “Core Carbon Principles,” outlining standards around carbon credits to ensure that offset efforts create verifiable impact.

Carbon-credit prices currently lack standardization, with prices being determined by the type or specific characteristics of the credits. They typically range from under four dollars per ton for lower-quality credits, often renewable energy projects, to over one hundred dollars for higher-quality credits, mainly tons removed from the atmosphere through carbon-removal technologies such as direct air capture. However, with large-scale removal technology still in development stages, removal projects accounted for just 3 percent of all projects issuing credits in 2022. In recent years, low-priced or “junk” credits have flooded the market, enabling dozens of companies to claim carbon-neutral status while only making limited environmental impact. At the twenty-seventh United Nations Climate Change Conference of the Parties, Kristalina Georgieva, head of the International Monetary Fund, asserted that unless carbon credits are priced on a trajectory that attains a seventy-five-dollar average price per ton by 2030, climate goals will remain out of reach. While Georgieva’s comments were likely targeted at compliance markets, pricing between the two markets is inherently connected, and there’s interest in formalizing that connection. By adopting thoughtful carbon-credit-purchasing strategies, including by supporting higher-quality credits that accurately reflect the value of a carbon ton, corporations can strengthen the voluntary carbon market and help it integrate it with compliance markets, rather than delegitimize it.

As rating agencies in the industry mature, corporations will need to take it upon themselves to work with these players and do their own due diligence to ensure that the carbon credits they purchase are high quality, as determined by key characteristics. For example, high-quality credits are “additional”: In other words, the emission reduction would not have occurred without the offset financing activity, an increasingly difficult hurdle for renewable energy credits. A high-quality credit is also quantifiable, in that it is produced by a project that can properly track resulting emissions reductions, and brings other environmental benefits such as improving air quality or enhancing biodiversity. Corporations may need to hire teams to analyze and determine the best partners to purchase credits from or work with trusted brokers with shared values. It will require collaborating with governments, banks, and other industry players to help build the necessary infrastructure and integration with compliance markets.

Thoughtful participation comes at a price, leaving open the question of why corporations should, if not mandated, participate sincerely or meaningfully in voluntary carbon markets at all. Engaging cheaply just to claim carbon-neutral status, what many call “greenwashing,” will likely become meaningless to consumers soon. While corporations may be incentivized to invest in credits to get ahead of regulatory risk or to appease investors, another often unmentioned reason is to support and grow their future consumer bases. Many opportunities for high-quality carbon credits are in the Global South, which will be disproportionately affected by climate change—and also host the largest urban centers and burgeoning middle-income populations. By the end of the century, Africa is projected to be the only continent experiencing population growth and will be home to thirteen of the world’s twenty largest urban areas. India’s population just surpassed China’s. If the Global South is not supported in its sustainable growth, achieving climate goals will become nearly impossible, and economic environments will become less prosperous.

Instead, by purchasing high-quality carbon credits, corporations can help build a sustainable future that expands economic opportunity in the Global South. For example, corporations can purchase reduction credits by supporting organizations like KOKO Networks, which developed a bioethanol cooker and fuel dispensary service in the hopes of transitioning the third of the world’s population that currently cooks on charcoal or wood (particularly in Africa and Southeast Asia) to a less carbon-heavy and less pollutive fuel source. By integrating hardware (their cookstove) with software (data collected at their dispensaries) KOKO Networks is able to properly measure its carbon impact and issue carbon credits to account for the reduction in emissions. Other such organizations are LifeStraw, which prevents carbon-dioxide emissions generated from boiling water via wood or charcoal by offering a drinking straw that filters water, and Mauto, which recently closed a five-million-dollar transaction to deploy electric two-wheelers across Africa. While more advanced technologies for carbon removal may prove fruitful in the future, corporations should not overlook the credits available today via initiatives like these that can have an immediate impact on ensuring Africa and other regions’ low- and middle-income populations grow sustainably.

Carbon-reduction credits (in contrast to carbon-removal credits) can help shift high-polluting consumer behaviors to sustainable practices in the world’s fastest-growing markets. When purchasing a bioethanol cookstove or an electric vehicle is not financially feasible in African markets, the sale of carbon credits could effectively subsidize these products and make them available to consumers at competitive prices. On the individual level, a mother in Nairobi can cook cleanly in her home, improving her family’s health, resulting in possibly lower medical costs or fewer days of missed work. On a larger scale, avoiding deforestation can help lessen the local impact of climate change because forests regulate weather conditions and help to avoid massive droughts or monsoons that can destroy crops and livelihoods. It is in corporations’ best interest to ensure African consumers are increasingly economically advantaged, a reality that is only possible through sustainable expansion, and carbon credits serve as one tool to support this growth.

By participating in the voluntary carbon market and purchasing high-quality carbon credits, corporations can contribute to sustainable development in the urban centers of tomorrow, while serving their own business interests. Rather than turning away from carbon credits due to the difficulties involved, corporations should lean in and consider which credits can best support their future customers.

Aubrey Rugo is co-president of the London Business School Tech & Media Club.

Further reading

AfricaSource Dec 2, 2022

The Africa investment imperative: Diversification and resilience amid economic downturns

By Aubrey Hruby and Guillaume Arditti

At a time when investors are faced with high risks due to a global economic downturn, African markets are a viable investment opportunity.

Africa Democratic Transitions

AfricaSource Jul 8, 2022

Europe’s Green Deal plan is Africa’s green finance opportunity

By Emilie Bel

Can natural gas and nuclear power be green? “Sometimes, and for a limited period of time,” said the European Parliament on July 6, as part of an ongoing negotiation over the EU taxonomy, a key component of the European Green Deal (EGD). The EGD is the European Union’s ambitious plan to create the first emissions-neutral […]

Africa Climate Change & Climate Action

AfricaSource Apr 23, 2021

Climate change will not be fixed without Africa

By Rama Yade

When Congolese President Félix Tshisekedi spoke at the virtual Leaders Summit on Climate this week, he had the force of the continent behind him. And his message was that developed countries must do more. As the summit comes to a close, the world still has so much to learn from Africa about how to tackle the climate crisis—if the world would only listen.

Africa Climate Change & Climate Action

The Africa Center works to promote dynamic geopolitical partnerships with African states and to redirect US and European policy priorities toward strengthening security and bolstering economic growth and prosperity on the continent.

Learn more

The post Through carbon markets, corporations have a role to play in Africa’s development. They should take it seriously. appeared first on Atlantic Council.

The summit and recent visits by high-ranking Biden administration officials to Africa were the culmination of an effort led by the White House to strengthen the relationship between the United States and the African continent in a wide variety of aspects.

This approach by the Biden administration is quite different from the one adopted by the Donald Trump administration, which saw the continent as a playground for superpower rivalry between China, Russia, and the United States. As part of this great power competition, the Biden administration seeks to enhance diplomatic, economic, and security cooperation to block Chinese and Russian influence in Africa.

However, one area both administrations completely ignore is Iran’s growing influence on the continent and the need to formulate a policy that will work to limit Tehran’s freedom of action in Africa.

Since the Islamic revolution in 1979—and even more so following the heavy political pressure on Tehran—Africa has become an attractive continent for the Islamic Republic. Iran views the African continent as a “battleground” for influence, power, and territory against Saudi Arabia, and has also sought to counter Western influence—particularly that of the United States—within Africa, working with elements that are opposed to colonialism and seeking to chart a more independent course.

Moreover, Iran seeks to utilize their worldwide network of religious and cultural organizations, including universities and charities, to increase its influence over the vast Shia minorities in Africa, using them for political support, fundraising, and even to recruit to terrorist cells.

But Iranian terrorist activities in Africa are not the only problem. Iran is not hesitating to interfere in the internal affairs of many African countries to preserve its interests and protect the individuals who serve its policies. A prominent example is the unprecedented Iranian involvement in 2019 to free Shia cleric Sheikh Ibrahim Zakzaky from his detention in Nigeria, with Iran using its control on Hausa TV to push for his release.

The Iran-West Africa Economic Summit in Tehran, which was held on March 7, is another indication that Iran is seeking to enhance its relations with African countries and strengthen its foothold, especially in the west of the continent. This is part of President Ebrahim Raisi’s vision regarding relations between West African countries and Iran, which was exemplified in his visit to Guinea-Biassau in August 2021, when he pledged to continue expanding ties between Iran and the continent. In many regards, this activity resembles the policy of President Mahmoud Ahmadinejad in Africa, which sought to improve relations significantly.

Apart from Iran’s traditional interests in Africa, several new ones have emerged that must be considered in the context of preventing Iran from consolidating its interests in the continent.

First and foremost is the campaign that Tehran is waging against US allies in Africa that dared to take part in the normalization efforts with Israel: Sudan and Morocco. In order to achieve this goal, Iran has enhanced its military and diplomatic ties with Algiers and increased military aid to the Polisario Front in Western Sahara. The latter contribution has improved the front’s ability to inflict severe damage on the Moroccan army and challenge Moroccan control over the territory. Iran is also working in Mauritania and sees this country as a priority zone for its influence schemes in the Sahara region, which is extremely important for Moroccan security.

In the case of Sudan, Iran’s bid to further its influence in the strategic Horn of Africa suffered after Khartoum joined the Abraham Accords. In order to change this negative trend, Iran is blaming Israel for causing political instability in Sudan’s domestic issues. Furthermore, Iran is still actively trying to spread its Shia doctrine in the country while conspiring to create a political vacuum in Sudan that will weaken the forces who agreed to sign a normalization agreement with Israel.

Through its actions, Tehran is demonstrating that there is a price for joining the Abraham Accords and that it can pose a direct or indirect threat to Sudan and Morocco. Iran is also conducting a powerful political campaign to prevent Israel from enhancing its relations with other African countries and improving its diplomatic presence in various African institutions, such as the African Union.

In addition to the illegal arms smuggling network that Iran managed to build in the Horn of Africa, which allows Tehran to smuggle weapons to the countries of the continent, it also appears to be planning to significantly increase its sales of Unmanned Arial Vehicles (UAVs) to the African continent. Evidence of this can be seen in Iran’s involvement in the civil war in Ethiopia and the sale of Mohajer-6 UAVs to the Ethiopian army.

Against the background of Iranian involvement in Ukraine and Tehran’s desire to increase sales of its military equipment in the war in Ukraine, Africa is a natural continent for this desire, and the transfer of these capabilities to the Polisario Front constitutes another indication of that.

Third, there is a need to pay close attention to the plots that were revealed in several African countries after the assassination of Quds Force Commander Qasem Soleimani in January 2020—the foiled plot to assassinate the US ambassador in South Africa, chief among them. During the past year, several plans were discovered in which Iran sought to harm American or Israeli interests in Africa or use its presence in the continent to recruit terrorists.

In order to protect its allies in Africa and preserve its interests in the continent, the Biden administration cannot focus solely on the growing presence of China and Russia. It must also consider Tehran’s deepening foothold in Africa, which is a growing challenge to US policy on the continent. The administration must prepare an orderly work plan with the cooperation of African countries—and possibly Gulf countries—that are very disturbed by Iranian expansion. The goal of this would be to reduce Iranian influence in Africa and prevent Iran from using African countries to achieve its interests.

Looking to the future, Africa will continue to be an attractive target for Iranian policy under Raisi. Without a well-thought-out action plan, the US will have minimal ability to push Tehran out of Africa and prevent it from coordinating with China and Russia, with the latter having engaged in an unprecedented rapprochement with Tehran in recent months. Thus, countering Iran’s influence in Africa must become a priority for the Biden administration sooner rather than later.

Danny Citrinowicz is a nonresident fellow with the Atlantic Council’s Middle East Programs. He served for twenty-five years in a variety of command positions units in Israel Defense Intelligence (IDI) including as the head of the Iran branch in the Research and Analysis Division (RAD) in the Israeli defense intelligence and as the division’s representative in the United States. Follow him on Twitter: @citrinowicz.

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Summits are about announcements. In the days and months prior to these splashy events, there is always a mad dash to gather success stories and draft up new—at times purely aspirational—funding commitments. The recent US-Africa Leaders Summit in December is a case in point, featuring a large number of announcements, some new and some repackaged. It also included some sizable financial commitments to African markets, albeit with a little creative accounting that makes it difficult for even the most assiduous US-Africa policy watchers to make sense of what’s new and what is repackaged. (See one attempt in the chart below.)

Two solid successes and continued momentum

The three-day US-Africa Leaders Summit in December brought together high-level delegations from forty-nine African countries and the AU, along with business and civil society leaders. The summit was part of an overall new Africa strategy authored by Judd Devermont, the special assistant to the president and senior director for African affairs at the National Security Council. The strategy has returned US-Africa policy to the basics, including consistent high-level diplomatic engagement between US and African leaders—and US President Joe Biden pledged at the summit to continue to make that engagement a priority.

The Biden administration is thus far making good on this promise. Treasury Secretary Janet Yellen and Ambassador to the United Nations Linda Thomas-Greenfield have already made official visits to the continent in 2023. Vice President Kamala Harris will travel to Ghana, Tanzania, and Zambia from March 26 to April 1, and Commerce Secretary Gina Raimondo will visit the continent this summer. Devermont has long argued for this type of consistent, high-level engagement, and it is refreshing to see it operationalized. Regular, high-level engagement has long been a staple of how the United States approaches other regions of the world and it is important that African nations continue to be integrated into the broader, day-to-day practice of US diplomacy. He reiterated this view during his recent visit at the Atlantic Council. “If we are going to solve problems in the world, if we are going to come up with creative solutions, it is going to be with our African partners,” he said. “The summit was just a kick off.”

Biden’s focus on the diaspora was another important aspect of the US-Africa Leaders Summit, with diaspora interests and concerns highlighted across sectors and in multiple fora. The African diaspora in the United States distinguishes and enriches US-Africa ties from those of global competitors and should remain a centerpiece of US policy toward the continent. The summit also served as the launching pad for the President’s Advisory Council on African Diaspora Engagement in the United States, a new initiative that follows in the footsteps of the Obama administration–established President’s Advisory Council on Doing Business in Africa. The new initiative should help ensure the diaspora has a seat at the table in shaping US policy toward the continent.

The summit also gave additional momentum to US efforts to support digitization in African markets. While hugely important and widely supported across the US-Africa policy community, Biden’s new flagship Africa initiative—Digital Transformation with Africa—simply builds on old programs such as the US International Development Finance Corporation’s Connect Africa and the US Trade and Development Agency’s Access Africa (among others with overlapping mandates). In its new form, the initiative intends to invest $350 million in the digital sector, but it will require congressional support.

Big ideas for US-Africa policy

The Biden administration’s summit could have been a launch pad for big, bold ideas, but here it fell short. Instead of repackaging existing programs, the Biden administration, working with Congress, should champion new initiatives that match US competitiveness with African opportunity while deepening US-Africa relations. Here are three ideas:

• Create a US Commercial Corps as a corollary to the US Peace Corps that would send recent graduates or retired volunteers to emerging markets to work alongside Prosper Africa embassy deal teams on commercially related engagements. The potential benefits of such a program are numerous, including advancing people-to-people diplomacy, supporting US government personnel across the continent with business acumen and commercial expertise, and creating a cadre of US business professionals with working experience in emerging markets who will enhance long-term US competitiveness on the international stage. Six decades of the Peace Corps has yielded CEOs, members of Congress, and community leaders with lasting ties and relationships across the Atlantic. A Commercial Corps could do the same for US-Africa commercial relations.
• Prioritize partnerships in the creative industries by establishing an advisory council modeled on the Presidential Advisory Council on Doing Business in Africa and the newly minted President’s Advisory Council on African Diaspora Engagement. This new council would link company executives from the music, film, and fashion industries in the United States and across Africa with financiers and key US government stakeholders to drive investment into Africa’s creative industries. Building on the work of the Africa Center’s Task Force and efforts being made by Afreximbank, the council could focus on creating the linkages needed–particularly around financing growth in the sector.
• Support sustained capacity-building in climate finance. The Atlantic Council’s Millennium Leadership program runs an accelerator for climate finance leaders, for example. Additionally, the International Finance Corporation and Milken Institute are now in their seventh year of a unique training program that brings mid-career professionals from finance ministries, central banks, and stock exchanges to the United States to deepen their experience with capital markets. Since 2016, 160 professionals have participated in the program from nearly fifty countries, the majority in Africa, and strong working relationships have been created that deepen regional integration. The Biden administration could partner with them to expand the effort to focus on climate finance or bring others to the table such as Bloomberg Green, the Rocky Mountain Institute, and leading US and European universities to design a best-in-class program. African countries are home to some of the world’s most important natural assets, including the Congo Basin, and they need to ensure that their finance executives—both in the public and private sectors—have access to the best thinking and skills when it comes to ensuring sustainable growth.

The Biden administration’s return to summit diplomacy is a welcome development, and the commitment to consistent, high-level engagement with African leaders is being demonstrated month by month. Still, given the potential of the world’s youngest continent and the growing role African nations will play in global affairs in the coming decades, the United States needs to be bolder and more creative with initiatives that create lasting structural change in US-Africa relations.

A summary of key summit takeaways–some old, some new, some questions remain

The chart below is a first effort by the author to track and categorize the summit commitments in order to stimulate further discussion. 

Aubrey Hruby is a co-founder of Tofino Capital, a senior fellow at the Atlantic Council’s Africa Center, and an adjunct professor at Georgetown University.

The post The US has gotten the day to day right in Africa policy. Time to think bigger. appeared first on Atlantic Council.

Yet this is also a moment of rare opportunity for the AU. It is expected to play a crucial role in the new geopolitical order. This new role will require responsibilities and a vision. How the Union responds could shape the future of the AU and whether it emerges as a continental actor on par with other international blocs.

Like the outgoing AU chair (Senegalese President Macky Sall), the new chair will be confronted with many short-term hotspots from Bamako to Addis Ababa. Sudan remains suspended from the AU. Meanwhile, Mali, Guinea, and Burkina-Faso remain suspended from both the AU and the Economic Community of West African States (ECOWAS). These three West African countries will have to manage tough political transitions after experiencing coups—especially as they all sit in a region where jihadist movements continue to destabilize large areas of the Sahel. Months after the signing of ceasefire agreements between the federal government and rebels in Tigray, Ethiopia still needs to progress toward peace. Nongovernmental organizations continue to face difficulties accessing and distributing food and medical supplies in Tigray. War-crimes investigations remain difficult. The withdrawal of Eritrean troops is happening slowly. And over in the African Great Lakes, Rwanda and the Democratic Republic of the Congo (DRC) are clashing around the M23 rebel group’s role in the region as presidential elections in the DRC quickly approach.

In addition, Assoumani will also need to help the continent manage pressing challenges such as food security, climate change, energy access, and global-governance reforms—and the implementation of the free trade area. The management of these challenges depends on regional and worldwide cooperation with global powers.

Comoros will also be the AU’s primary point of contact for the follow-up and implementation of multiple commitments emerging from a slate of summits over the past two years, including the US-Africa Leaders Summit, the China-Africa Summit, the Europe-Africa Summit, the Tokyo International Conference on African Development, the Confederation of Indian Industry-Exim Bank Conclave, and, soon, the Russia-Africa Summit. At the summits that have taken place, participants have pledged billions in investments for Africa and support for African seats in various international bodies, including the Group of Twenty (G20) and the United Nations (UN) Security Council.  

Individual nations cannot or should not solely address many of the challenges that lie ahead. In addressing issues such as supply shortages due to the war in Ukraine, representation at the next UN climate conference, access to finance, or Bretton Woods Institutions reforms, African nations must speak as a team to secure the best outcomes for all of them. That also applies to Africa’s relationship with the United States; the continent will need to collectively voice its priorities in regard to Washington’s plans for digitalization, trade (with the forthcoming expiration of the African Growth and Opportunity Act), and more. The AU must draw on its collective agency to harmonize national positions and face these continent-wide issues together. This will require strong leadership from the new chair.

Being a group of four islands with less than one million inhabitants, Comoros may seem a minor player in comparison to the African powerhouses that typically chair the AU, with the Union representing a continent of 1.3 billion people. The country has the opportunity to make its mark and turn its apparent weakness into a strength: African island diplomacy can be vital for advancing the continent’s defense and climate priorities. The United States recently launched an Indo-Pacific Strategy, and the Indian Ocean Commission, of which Comoros is a member, could serve a strategic role—especially as the West becomes increasingly concerned about the region, most recently because of ongoing joint naval exercises between China, Russia, and South Africa near Durban. An island strategy could have an impact beyond Africa, benefitting all small-island developing states. Comoros could advocate for alleviating island states’ financial problems—since 2008, the external debt stocks of small-island developing states have more than doubled. And, islands feel the brunt of climate change, as President of Seychelles Waval Ramkalawan explained at the Atlantic Council in December; Comoros has the opportunity to use its leadership in the AU to advocate for addressing the continent’s climate challenges.

Africa is at a crossroads. The African Union needs to be strong inside to be strong outside. It cannot request global governance reforms without exploring its own organization, identity, role, and means.

The African identity

The Union’s identity inevitably depends on the question of what it means to be African. Europe’s experience with understanding its own identity holds lessons. For example, Europe has wrestled with whether Russia and Turkey should be included. In the same vein, where does Africa begin and end? What does it mean to be African?

Some Africans even deny this word any legitimacy, preferring the terms “Kemit” or “Katiopa,” as they claim their ancestors would never have called themselves “African.” In Africa, people often refer to themselves first by the community to which they belong. In fact, most Africans know little about each other on the continent. Yet institutions are bringing African nations—or at least regions—together. For example, the African Cup of Nations, the continent’s premier soccer event, is as famous in North Africa as much as it is in Sub-Saharan Africa. And even though the Maghreb is sometimes lumped into the Middle East (as if being African means being black), Morocco is joining African institutions in an attempt to connect with other countries on the continent, having applied to join ECOWAS and having rejoined the African Union in January 2017 after thirty years of absence. After rejoining, Morocco’s king said “it is so good to be back home.”

Pan-Africanism

Africa, for all the diverse ideas around its identity today, has long had a pan-continental impulse. Inspired by the father of Ghana’s independence, Kwame Nkrumah, the Pan-Africanist movement has paved the way for the creation of the Organization of African Unity, the African Development Bank, the airline Air Afrique (which has since ceased operations), and a range of monetary, customs, and economic unions. Today, the African Union is twenty years old. Pan-Africanism created not only institutional change; it fueled an unprecedented cultural wave that inspired the first International Congress of African/Black Writers and Artists in Paris and Rome in the 1950s, the first World Festival of Negro Arts in Dakar in 1966, the Pan-African Festival of Algiers in 1969, the second World Festival of Negro and African Arts and Culture in Lagos in 1977, and similar seminal events.

Even though it is less vibrant today, the Pan-Africanist movement continues to inspire the African Renaissance. The African Continental Free Trade Area (AfCFTA), established in 2018 and launched in January 2021, is the latest illustration of this. As the largest free trade area in the world, it aims to establish a dynamic market, its consumers and customers already attracting the appetite of the global private sector. Beyond technical considerations such as tax harmonization, lowering customs tariffs, and the construction of viable infrastructure, the AU’s next mission will likely be to remedy the balkanization of the continent that unfolded in the 1950s and 1960s as colonial empires dissolved and the continent was broken up into countries. At the thirty-sixth AU summit, the next steps for the AfCFTA were a topic of debate.

Missed opportunities

Many of Nkrumah’s proposals never took off. Those include the idea of an African constitution and a continental parliament with two chambers, one of which would represent the population while the other would have all states, regardless of size or population, represented equally. Africa still doesn’t have a joint army (the African Standby Force is still on standby) or a universal passport (which has only been ratified by four countries). The Great Museum of Africa, planned by the AU, was initially supposed to open in 2016. Many of the AU’s continental institutions have no effect on the ground. Documents such as the African Charter on Human and Peoples’ Rights adopted in June 1981 or the Peace and Security Council Protocol adopted in July 2002 have not been implemented either.

Despite the very effective presidency of Paul Kagame, which improved the Union’s financial autonomy in 2016, the AU still needs the means for its economic sovereignty as it is still too dependent on foreign subsidies: In 2021, 65 percent of the AU’s 650-million-dollar budget was funded by international contributors. The African share, meanwhile, is concentrated in the hands of five countries. To finance the budget, the AU introduced in 2016 a 0.2 percent tax on all eligible goods imported into the continent. But only seventeen countries have actually implemented it as of June 2020. There is an urgent need to achieve budgetary sovereignty for the AU so that it can make its own choices freely. Otherwise, it will never be able to independently demand the seats Africans covet in the G20 or the UN Security Council.  

The future

It is, above all, for the sake of its citizens that the African Union must raise its ambitions. The AU has a historical responsibility to foster a community of African nations coming together in a shared voice, as dreamed by Nkrumah and fellow Pan-African leaders.

Going forward, among numerous AU flagship projects, the new chairperson will need to lead two major and urgent initiatives—the accomplishment of them would impact a generation of Africans.

First, he’ll have to help craft an African vision for the climate and an African green bank, a necessary response to today’s climate challenges that will compensate for the shortcomings of the international community and unsuccessful UN climate convenings. Each year, the world incurs a fifty-five-billion-dollar debt to the African continent: This debt is the value of the carbon-absorbing service provided by the Congo Basin, the largest carbon sink in the world, covering six countries (Cameroon, the Central African Republic, the DRC, Equatorial Guinea, Gabon, and the Republic of the Congo). But Africans have never monetized it as a service. African countries should work together to raise the issue of the world’s debt to the African continent at the next UN climate conference.

Second, to limit the migration movements to Europe and strengthen people-to-people ties inside the continent, they’ll have to address free movement across the continent, which will require renewing the old physical infrastructure (roads and rail), building the Single African Air Transport Market, and fostering access to digital infrastructure through the reduction of data costs. This transition will require discussing an African passport on a continent where more than half the people have neither identity documents nor birth certificates. Creating such a passport would be a strong signal of unity. It is also critically important to negotiate the next steps of the Free Trade Area.

This is no small charge for the Union’s next leader. But anything less would do a disservice to 1.3 billion citizens who are ready to emerge on the world stage.

Rama Yade is the senior director of the Atlantic Council’s Africa Center and a senior fellow at the Europe Center. She is a professor at Sciences Po Paris and Mohammed 6 Polytechnic University in Morocco. She was a member of the French cabinet, serving as deputy minister for foreign affairs and human rights and ambassador to UNESCO.

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Dear colleagues, ministers, members of Congress, ambassadors, representatives of the private sector, the academia, and civil society; dear guests.

I would like to thank the [chairman] of the Atlantic Council, Mr. John Rogers, and its CEO, Mr. Frederick Kempe, for their kind invitation, as well as my compatriot, Ambassador Rama Yade, who has been following up on this for several weeks. I greet and thank all the colleagues, personalities, and other guests gathered here.   

I appreciate the efforts that the Atlantic Council has been making for several decades in the analysis and reflection on global issues and challenges facing the world. In my opinion, the place of Africa in contemporary international relations is one of these issues.

More than sixty years after our independence, Africa is still hemmed in on the world stage, and prejudices against the continent remain tenacious. We must therefore continue to advocate, explain, deconstruct unfounded narratives, demand justice and equity, and re-establish historical truths.

Sixty years ago, the vast majority of African countries gained their independence after five hundred years of slavery and colonization. This handicap is unparalleled in the history of humankind. But Africa is still here, alive and resilient.

My view is that despite this historical wrong and the challenges of the day, Africa is moving generally in the right direction. It is true that the cumulative effects of the COVID pandemic and the war in Ukraine have seriously slowed down the dynamics of African growth, which has been regularly higher than the world average in recent years, but the momentum of Africa’s emergence seems irreversible to me. 

It is up to us to support this ambition for progress in the fully assumed responsibility of an Africa that does not have any complexes, that makes its own story, carries its own vision of the world, makes its choices in its best interests, and builds its own destiny.

In a way, I can echo here what the founding fathers of the United States Declaration of Independence affirmed 246 years ago, by saying the time has come for Africa to assume among the powers of the earth, the separate and equal station to which the laws of nature and of nature’s God entitle her. 

And Africa has the potential to assume that station, with its thirty million square kilometers, 1.4 billion inhabitants, large water reserves, 60 percent of the world’s undeveloped arable land, 40 percent of the world’s gold reserves, 85-95 percent of the world’s chromium and platinum group metal reserves, 85 percent of the world’s phosphate reserves, more than 50 percent of the world’s cobalt reserves, one third of the world’s bauxite reserves, 12 percent of the world’s oil reserves, and a world-class new gas calling.

What we need today is to work on improving the conditions for exploiting these resources. 

This requires qualified human capital in sufficient numbers, by further developing technical and vocational training at all levels so that our countries can have human resources capable of supporting the structural transformation of their economies. Without quality human capital, the demographic dividend will be more of a handicap that hinders our development efforts than a force that supports our economies.    

The pursuit of Africa’s integration seems to me to be just as fundamental, not only at the political level, but also at the economic and commercial levels. This has been the purpose of the gradual establishment of the African Continental Free Trade Area, to which the African Union devoted an Extraordinary Summit on November 25.

But beyond the texts, it is also through infrastructure that we will be able to enable the free movement of people and goods, which is essential for integration. With the Program for Infrastructure Development in Africa (PIDA), we want to invest more in the construction of roads, highways, ports, airports, and railroads in order to catch up in this area. 

I must say that for a long time, several countries and partner institutions showed little interest in this strategic sector. Today, everyone realizes that the development of such profitable infrastructures is an important niche of opportunities for investors and host countries, especially through PPPs. 

All our partners, old and new, are welcome on these projects. While keeping their traditional friendships, our countries are also opening up to new horizons. Openness is the very meaning of history.   

Beyond our national and continental responsibilities, Africa’s place in the international system also depends on fairer and more equitable global governance. This is what the advocacy that I have been leading since the beginning of my mandate at the head of the African Union on several fronts is all about.

First, for the consistent financing of African economies, we believe it is necessary for the OECD to reform the conditions of access to export credit, by relaxing the rules on credit rates and the duration of grace periods and repayment periods. This would make it possible to mobilize more resources for the financing of development projects, including through private investment and public-private partnerships.  

Second, we need to do more to combat abusive tax holidays, tax evasion, and tax optimization, which deprive our countries of significant financial resources, even though taxes should be paid where the activity generates wealth. It is fortunate that, at the initiative of the United States, the OECD adopted in October 2021 a landmark agreement on a 15 percent global minimum tax. This is a significant step in the fight against irregular tax practices that contribute to tax base erosion. 

In addition, we need to do more on improving the assessment methods of rating agencies. It has been noted that African countries continue to be penalized by an exaggerated perception of risk that increases insurance premiums and the cost of investment. 

The 2022 Financing for Sustainable Development Report published last April by some sixty international institutions, including the IMF and the World Bank, also noted the limitations of these assessments and recommended that the assessment criteria better reflect the real situation of each country. 

Finally, we want a fair and equitable energy transition that enables our countries to use their own resources to address their industrialization needs at competitive costs and ensure universal access to electricity, of which more than six hundred million Africans are still deprived. As noted at COP27, when it comes to climate change adaptation, it is our countries that tend to finance their green projects, including infrastructure, through debt, as agreed financial commitments to support developing countries’ adaptation efforts have been slow to materialize.

In addition to these economic, financial, and environmental considerations, we are advocating for a more equitable representation of Africa in global governance bodies such as the United Nations Security Council and the G20, so that its interests are better taken into account.

Finally, what Africa is calling for in terms of a different vision of the world is not a revolution, but a simple evolution for more justice and equity in international relations. It is a legitimate demand to which we want to associate all our friends and partners. I hope that the Atlantic Council will help to amplify this advocacy.

These are the few remarks I would like to make here, while waiting to deliver Africa’s message to our summit. Thank you for your attention.

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What was the Queen’s diplomacy?

As the state funeral of Queen Elizabeth II draws to a close, Senior Fellow Ben Judah spoke with Professor Philip Murray, Director of History and Policy at the Institute for Historical Research, to discuss the legacy she leaves behind.

What role did the Queen play in the end of the British Empire? How did the Queen’s involvement shape the Commonwealth of Nations? What can we expect from King Charles III and his relationship with the Commonwealth?

You can watch #BritainDebrief on YouTube and as a podcast on Apple Podcasts and Spotify.

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The Europe Center promotes the transatlantic leadership and strategies required to ensure a strong Europe.

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On June 14, Kelly Grieco and NRSF Marie Jourdain wrote in World Politics Review on why the wrong framing for the Ukraine War is democracy versus autocracy. They point out that while this strategic narrative has been very effective in mobilizing the United States, European Union, and other like-minded democracies, it has fallen flat in the rest of the world.  As the war continues, the West needs a new strategic communications strategy to recast Russian aggression as a violation of sovereignty and territorial integrity. 

“As the war continues, then, the West needs a new strategic communications strategy,” Grieco and Jourdain argue. “Instead of appealing to values, it needs to make the hard-nosed realist case for why other countries need to stand up to Russian military aggression—one that recasts Russian aggression as a violation of sovereignty and territorial integrity, undermining global stability.”

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Kelly A. Grieco

New American Engagement Initiative Scowcroft Center for Strategy and Security

Conflict Defense Policy

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Marie Jourdain

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On June 7, an article co-authored by Mathew Burrows was published by the Wilson Center’s New Security Beat, which discussed the dangers of a growing cohort of youth who feel disillusioned by political failures.

“Failing to examine youth engagement trends may be a serious blind spot— and thus a threat to democracy. It is a question that merits closer examination. When youth disengage, they are often saying they don’t have a high level of confidence or trust in existing economic, political, or social entities,” said Burrows and his co-author, Steven Gale of the US Agency for International Development’s Bureau for Policy, Planning and Learning.

“They may also want to “opt out” because they perceive that their generation is not being heard or treated fairly. Whatever their reasons, youth disengagement will ultimately have negative impacts beyond democratic engagement with potential shockwaves on social stability, the well-being and mental health of individuals (youth and their families), and individual and country-level economic productivity and quality of life.”

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The Atlantic Council’s Freedom and Prosperity Project, on January 11, 2022, in collaboration with the Centre for Development and Enterprises Great Lakes, Burundi, hosts the third in a series of virtual workshops on strengthening economic freedom, rule of law, and representative government in different regions across the world.

This workshop focuses on Africa, and convenes a small group of former senior officials, civil society leaders, and scholars from across the region to discuss the credibility of the project’s message and how to communicate the message to stakeholders in the region.

Here are the key takeaways:

Why the message is needed

Many Africans feel they are not free. Repressive governments across the continent stifle individual freedom and, in many cases, deny citizens their most basic civil liberties. Conversely, African elites enjoy tremendous wealth from resource extraction and go to great lengths to defend a status quo that excludes the vast majority from meaningful participation in economic and civil life.

Poverty remains endemic in many parts of Africa. Without greater economic freedom, this is unlikely to change. Poor Africans need to be empowered to start businesses, trade freely, and search for work in an open and competitive labor market. Without greater access to economic opportunity, millions of people will stay mired in subsistence farming.

Many Africans lack the political voice to fight for greater economic freedom. Ruling politicians routinely silence and discredit opposition figures that call for political and economic liberalization. The rule of law is weak, and ruling regimes can easily punish dissenters. When elections do occur, they are often fraudulent, allowing leaders to maintain their grip on power under the guise of democracy. Civil society on the continent is often too weak to meaningfully hold politicians accountable or widely promote alternative policy measures.

The situation has been made worse by COVID-19. Repressive governments have used the crisis to insert themselves more forcefully into the lives of their citizens. In Nigeria, for example, the government routinely blocks social media posts, and the police are given free rein, in many cases terrorizing and extorting the citizenry. Likewise, restrictive economic policies have become even harsher through mandatory lockdowns and increased surveillance.

What can be done

Civil society must work hand-in-hand with citizens to promote the message of greater economic and political freedom. For this to be possible, young people across the continent will have to support the message of freedom and look to form partnerships with civil society groups that advocate liberal policies. As things currently stand, civil society is too underdeveloped to reach a critical mass of people or seriously affect government policy.

A first step in this process is to rally support for the message of freedom by promoting it on social media. Young people across the continent are technologically savvy and respond well to infographics and audio-visual messages. These messages should be educational and convince viewers of the personal benefits that greater freedoms provide.

Activists and organizers should also seek to revive and bolster programs about freedom at universities across the African continent. For instance, the organization Students for Liberty promotes the ideas of freedom among university students, and could serve as a model for similar programs to introduce younger generations to the benefits of a freer society.

Framing the message

For the message of economic and political freedom to resonate in the region, people must come to identify with the personal benefits that accompany greater freedoms. Many voters do not fully understand the effect of free-market policies and choose not to support them. Greater freedoms should be presented as policies that make starting a business easier or reduce the amount citizens pay in taxes.

Moreover, any appeal to Africans should be framed in light of existing African culture and values, not as an import from Europe or the United States. For instance, there is a traditional saying that “a chief is a chief by the will of the people.” Likewise, in Nigeria, classical government involved the people directly giving their opinions to the king. The roots of representative government can be found in indigenous African political traditions, and these links should be emphasized in messaging campaigns.  

Success stories on the African continent should also be highlighted. Botswana presents perhaps the best example of development on the continent. When it became independent, Botswana was among the poorest countries in the world and the poorest in Africa. The country’s first president, Seretse Khama, set about transforming the country through free-market policies, strong anti-corruption measures, and a commitment to elections and the rule of law. Additionally, Khama established an independent judiciary and maintained the professionalism of the civil service, endowing the country with strong institutions that have held up over time. In the years following Khama’s reforms, Botswana has seen exceptional growth and now ranks among the countries in Africa with the highest GDP per capita.

Finally, messaging must accommodate the current political climate. Governments in the region may fear a loss of control from disruptive political messaging. Messages in support of freedom should be expressed in such a way that governments do not feel threatened; rather, governments must be reassured that by allowing greater freedom, their people will become more satisfied with their rule.

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Driven by our mission of “shaping the global future together,” the Atlantic Council is a nonpartisan organization that galvanizes US leadership and engagement in the world, in partnership with allies and partners, to shape solutions to global challenges.

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On January 22, Forward Defense nonresident senior fellow Margarita Konaev was quoted in Vox’s article, “Can Russia back down in Ukraine?” In the article, Konaev discusses the potential humanitarian impacts that full-scale invasion would create in Ukraine.

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Forward Defense, housed within the Scowcroft Center for Strategy and Security, generates ideas and connects stakeholders in the defense ecosystem to promote an enduring military advantage for the United States, its allies, and partners. Our work identifies the defense strategies, capabilities, and resources the United States needs to deter and, if necessary, prevail in future conflict.

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Introduction

Economic shocks affect young and older age groups disproportionately and highlight the insecurity of the youth labor market and volatility of older people’s savings. The COVID-19 pandemic exacerbated youth labor market challenges and caused young people to either lose jobs or work fewer hours. It also undermined the financial security of older people who tend to own small businesses given that half of the small businesses either closed down or lost significant revenue during lockdowns. Furthermore, COVID-19 exacerbated the digital divide between generations. While younger people are more likely to be technologically savvy, older generations often lack digital literacy to adapt to online work or virtual communications platforms. Dr. Goldin argues that to alleviate the disproportionate suffering experienced by young and elderly age groups during the pandemic, policymakers should increase targeting of social-protection measures, facilitate private-sector investment in education and training, invest in improving digital services and infrastructure, ensure access to financial services, and collect age-disaggregated data on economic and COVID-related indicators.

Implemented policies

Although low-, middle- and high-income countries all introduced direct payments, food assistance, and other types of social protection programs, they targeted all age categories equally, without factoring in the heavier toll the pandemic had on young and elderly citizens. These two age groups also lacked access to government demand-side relief through the private sector. Measures to improve digital infrastructure and implement digital skills training programs have proven more successful.

Suggested improvements

Moving forward, the targeting of policy interventions should ensure that young and elderly age groups benefit from social protection measures. Policymakers should incentivize the private sector to invest in the training and reskilling of its own employees and to participate in systems preparing future workers. They should also make general and targeted interventions to improve digital affordability and access for young people and computer literacy for the elderly.

Another area of improvement is access to financial services and credit, which can be useful for older people who are more likely to be owning small businesses. Targeted programs can also help young people who might be less knowledgeable about special lending relief. Finally, it is important to increase rigorous research and make available age-disaggregated data on economic and COVID-related indicators.

At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.

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While the LFRP declined among both working-age men and women in China, India, and the United States, six other G20 economies have experienced declining LFPR only among their working-age men from 2000 to 2019: South Africa, Mexico, Argentina, Brazil, Indonesia, and the United Kingdom (Figures 2a and 2b).

Depending on the country, several factors could be contributing to these trends — especially among the working-age male population. These include a changing attitude towards work, opting out for early retirement because of increasing wealth, a growing informal economy in emerging markets and developing economies, the rising ratio of female to male LFPR (Figure 3) – except for India, China, and Russia – which has made it financially possible for more men to drop out of labor force. As well, an increasing dependency on social programs because of disability laws and chronic medical conditions, the increasing cost of child care, and an increasing number of discouraged workers due to declining job security and tenure are driving LFPRs down. Many of these factors were exacerbated by the pandemic, pushing the LFPR even lower across all G20 economies — but the pandemic is not the root cause

In addition to generally declining LFPRs, female LFPR rose relative to that of men in most G20 economies before the pandemic (figure 3). However, in all G20 economies, LFPR for working-age women remained lower than men’s LFPR (Figure 4). This difference is especially stark in Saudi Arabia (57 percentage points difference), India (57 percentage points difference), Turkey (39 percentage points difference), Mexico (33 percentage points difference), Indonesia (28 percentage points difference) and Argentina (20 percentage points difference). Among the G7 countries of G20, Italy has the largest gap between working-age male and female LFPR, followed by Japan: 18 and 14 percentage points differences, respectively. The preliminary 2020 data coming from many of the G20 economies suggests that the pandemic has increased the gender gap in LFPR in many of the G20 economies, as large number of mothers were forced to leave the labor force to care for their children at home when schools and child-care facilities shut down.

Labor force participation rate for the working-age population is an important indicator measuring the health of the labor market in an economy. Many of the G20 economies have struggled to maintain LFPRs even before the pandemic, a challenge exacerbated by the pandemic. Though the 2021 G20 meetings are over, labor market challenges continue to threaten the well-being of these economies, especially given recent shortage of labor supply and rapid wage increases. Will labor market challenges be part of the next G20 meetings’ agenda? They should be, for the benefit of their economies and citizens.

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But the festive mood shouldn’t overshadow the need to address the entrenched inequality of the quota-based allocation of special drawing rights (SDRs)—an International Monetary Fund (IMF) composite currency unit that member countries can convert into a freely usable currency to finance imports and other needs.

The G20, which accounts for around 80 percent of global GDP, must enhance the impact of SDRs where they are most needed, such as in low-income countries (LICs). That would set the world on a path toward synchronized recovery in the short-term and global income convergence in the medium- and long-term.

“A historic decision”

In both size and scope, the $650 billion SDR allocation is the international community’s most ambitious response to the pandemic, increasing fiscal space and fortifying global financial stability. It has benefited all member countries and represents the largest such allocation in the IMF’s history—around triple the amount it injected into the international financial system during the 2008 financial crisis.

Across the developing world, the newly issued SDRs will reduce countries’ exposure to exchange-rate volatility and mitigate liquidity constraints associated with elevated balance of payment pressures. This will be especially impactful in Africa, where the allocation could help countries confront myriad challenges, including weathering currency gyrations, replenishing dwindling foreign-exchange reserves (which declined by 27 percent in 2020), and financing essential imports, such as COVID-19 vaccines.

In addition to preventing liquidity crises from morphing into insolvency crises, the SDRs will help sustain investor confidence and enhance the prospects for an inclusive global recovery.

By indiscriminately injecting liquidity into the global economy, the unconditional and countercyclical SDR allocation was always the most cost-effective and low-risk response to the pandemic-induced economic downturn. As IMF Managing Director Kristalina Georgieva said in August: “This is a historic decision—the largest SDR allocation in the history of the IMF and a shot in the arm for the global economy at a time of unprecedented crisis.”

A distribution dilemma

But there is a problem: The global distribution of this financial shot in the arm is just as skewed as the supply of inoculations against COVID-19.

High-income countries that have drawn on effective advance purchase agreements and hoarded vaccines have also received nearly 60 percent of SDRs (or 65 percent when including China). This is despite the fact that they do not genuinely need SDRs, since most enjoy the exorbitant privilege of issuing a reserve currency. Conversely, LICs that do not enjoy the same privileges have been wildly disadvantaged: Only 0.5 percent of vaccines worldwide have been administered in LICs, compared to 77 percent in high- and upper-middle-income countries.

In practice, the effect of the allocation is expected to be more significant in LICs, where limited fiscal space and prohibitively high borrowing costs have limited the size and scope of government stimulus measures. Individually, these countries received a very low volume of SDRs and collectively a lower share (around 3 percent) of the total allocation, setting the stage for a two-speed recovery. Africa, which is home to most LICs, received just 5 percent of the total allocation (around $33 billion). That’s less than Japan and South Korea, which together received more than $37 billion (6 percent), or the European Union, which received $139 billion (21 percent).

The low allocation of SDRs to LICs is commensurate with their share of global GDP, which ultimately determines their IMF quotas. Currently, these nations account for less than 1 percent of global GDP; this partly reflects invariance in the drivers of growth and trade, which remains heavily dependent on commodities. The latest United Nations Conference on Trade and Development’s Commodities and Development Report classifies nearly 80 percent of the seventy low-income countries as commodity-dependent. This production structure exposes these nations to global volatility and adverse commodity terms of trade shocks.

A few high-income countries have pledged to recycle their unused SDRs to increase the volume of concessional lending to the most vulnerable LICs. More countries should support such efforts. A reallocation of around four hundred billion dollars in SDRs to countries that need them most would make a huge difference in terms of economic recovery and structural transformation. By injecting large amounts of investments to set these countries on a robust and long-run growth trajectory, it could also engineer a Big Push green growth development model which would narrow interregional income inequality and accelerate global income convergence.

Big push, big help

Operationally, a shift towards a Big Push model, supported by the effective redeployment of unused SDRs, would help LICs overcome several development challenges, including the unhealthy low-savings and poverty traps. At sufficient scale, this would provide long-term capital to finance the necessary massive investment in critical infrastructure to boost productivity and crowd-in private investment, which will help alleviate supply-side constraints and diversify sources of growth and trade.

The needs of these poorest countries are acute and their financing gaps have been exacerbated by the pandemic, which caused governments to dramatically raise social spending as fiscal revenues shrank. According to IMF estimates, LICs will need around two hundred billion dollars annually until 2025 to bolster their pandemic response—and an additional $250 billon to keep pace with advanced economies that are on a stronger recovery path. Under the best-case scenario of the effective mobilization of resources, LICs would be able to return to their pre-crisis convergence path with advanced economies no earlier than 2023.

In addition to rebuilding external buffers for greater resilience in the face of the looming tightening global financial conditions triggered by heightening inflationary pressures and expectations, the reallocation of unused SDRs could also provide the minimum level of resources for infrastructure investment required for self-sustaining growth. Over time, the growth of public investment and the expansion of industrial production will accelerate the development of regional value chains and create complementary demand—which will ignite a virtuous cycle of sustained and robust per-capita income growth.

The opportunity of injecting large-scale resources in LICs under the proposed Big Push model could transform the collective goodwill borne out of the pandemic into a more inclusive, global economic integration model that blurs the historical divide between developed and developing nations, and between high-income and low-income countries. It has the potential to alleviate climate-related challenges and reduce global income inequality, especially interregional inequality shaped by structural factors, such as sticky colonial development models of resource extraction that sustain commodity dependence.

The Big Push green growth development model engineered by the effective reallocation of unused SDRs could also rebrand the IMF not just as the world’s lender of last resort—but one that engages effectively with regional development banks to meet sustainable development goals.

Hippolyte Fofack is chief economist and director of research at the African Export-Import Bank (Afreximbank).

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These days, the continent is proving that soft power is the new hard power.

On Friday the Atlantic Council brought together Africa’s brightest cultural minds—and the policymakers who’ve helped make their achievements possible—for the Africa Creative Industries Summit, to understand how this transformation can reach far beyond the creative and cultural realms to foster collective security and prosperity.

Here’s what they had to say:

Forging Africa into a “powerful tool for change”

As the cultural revolution takes hold, “the stakes are high” for Africa’s emerging markets, said President Roch Marc Christian Kaboré of Burkina Faso. He explained that promoting African soft power through its creative industries can create jobs for young Africans, revive the economy, and play a role in the continent’s development. Thus, he called for African governments to prioritize the “inclusion of the creative industries in our development and industrialization policies,” and for investments from development agencies and the private sector to propel the sector’s growth. The end goal is for Africa to be not just a “source of inspiration” but also “a powerful tool for change.”

American culture, African roots

Relaying a message from US Vice President Kamala Harris, Jessica Davis Ba, senior coordinator and special advisor for Africa in the office of the vice president, said that while the United States is the global leader in the creative industries, “American culture is rooted in African culture.” She credited these roots to African people who passed down cultural traditions “even through slavery.”

Davis Ba said that this shared African-American cultural history connects people, while also creating jobs and economic opportunities for millions. Thus, “we must do more to support the heroes and sheroes of our creative industries,” she said, including by protecting intellectual property, advancing human rights so that people “can express themselves freely and without fear,” and forming partnerships to employ new technologies that connect cultural industries to markets worldwide.

A “remarkable opportunity” for the United States

Dana Banks, special assistant to the US president and senior director for Africa on the National Security Council, said that with Africa’s integration into global markets and its demographic boom, there is “a remarkable opportunity” for the United States to “build back better at home and abroad” by investing in Africa’s future. Creative industries will be at the core of the strategy.

Banks discussed how the Biden administration is working with policymakers, the private sector, and creative industry leaders to bolster Africa’s economic growth. With the African Growth and Opportunity Act forum approaching, Banks highlighted how the act provides a tax exemption for certain cultural goods. Banks also explained that the administration has a specific focus on the US-based African diaspora and their businesses in its reimagined Prosper Africa Initiative. Such initiatives and investments “are critical for reflecting the diverse nature of the United States” and for recognizing the “unique historical connection between the United States and the African continent,” Banks said. “We believe it is important to foster and prioritize these ties by helping to bring African countries, their talents and their businesses, and their youth and their products forward into the global market.”

An investment for future creative industries

“It’s time that we convert some of the ways we’re thinking about assistance,” said US Representative Sara Jacobs (D-CA-53). While funding Africa’s creative industries is important, Jacobs said the United States can’t assume it knows all the answers or simply throw money at the continent. Instead, it should figure out “how we really partner with countries to build up these industries.”

Boosting quality education is a top priority, Jacobs said, particularly because some education systems are “still very rooted in the colonial experience,” focusing on memorization over thoroughly understanding concepts. Plus, the pandemic has proven how critical digital literacy is. “We need to make sure that those young people are getting educated with the skills that they’re going to need to be successful.”

With Africa being the world’s youngest continent with the fastest population growth, Jacobs explained that quality education is critical to fuel functioning and innovative governments to export African goods, arts, and ideas to the rest of the world. In the long term, “we’re really making sure that it’s getting to other markets,” Jacobs noted.

On turning potential into success

Former Chelsea striker and Ivory Coast national football team captain Didier Drogba recalled returning to his home community to focus on digital literacy. He noted it was an important issue for him as an athlete because “60 percent of the [African] population is under twenty-five, and they’re the ones who are watching the games, they are the ones always on social media… [and] they are the future of the continent.”

Africa’s cultural strength will determine its resurgence

To keep up with its growing population, Africa needs to create one million jobs every month, said Ambassador of the African Union to the United States Hilda Suka Mafudze. And Africa’s creative industries may be up for the challenge, as the quickly growing sector will be a “key employer,” boost the continent’s gross domestic product, and spur a digital transformation, she said.

But African Union member countries need to “get a grip” and realize that creative industries “are more than just business sectors with a growing economic value,” Suka Mafudze said. They’re also “key soft-power tools” conveying the values of the continent. “This can be one industry that can make a difference” to Africa’s development and diplomacy, she said.

In its Agenda 2063, the African Union declared that it would strive for an Africa with a strong cultural identity, common heritage, shared values, and ethics. At Friday’s event, Suka Mafudze added that the strength of Africa’s cultural identity will be a “critical factor of Africa’s reemergence on the global stage.”

This free trade agreement may change the game

“Every aspect of Ghanaian life tells an imaginative story,” said Ghanaian President Nana Akufo-Addo. “We have a lot to tell the world.” In order to spread those stories, Akufo-Addo said that the government is creating an environment in which artists “get recognition and good value for their work.” It comes from improving copyright laws, building infrastructure such as arts warehouses, and setting up opportunities for people to experience art such as photography exhibitions and film screenings.

But Akufo-Addo noted that this moment in the cultural revolution is significant: Instead of arts and culture “being limited to the expression and display of customs, practices, and values,” he said, they’re now powerful “interconnected tools” that can “bring about the attainment of economic power and dignity for peoples of African descent.” Now, he said, governments will need to fold creative industries “into the broader development agenda” by sustaining their investment and addressing hurdles that cut them off from wider markets. “The Africa we want may never be realized if we turn our backs on our arts, culture, customs, and heritage,” he said.

The president praised the African Continental Free Trade Area for its potential role in supporting the continent’s creative industries, saying that by entering the market, producers of cultural goods and arts “have the opportunity to address a market of 1.2 billion people.” He called the agreement “one of the most important decisions that we on the continent have taken.”

Governments: Here’s how you can help

Cabo Verde’s Minister of Culture and Creative Industries, Abraão Aníbal Fernandes Barbosa Vicente, said that while there is a cultural “revolution” afoot in Africa, there are challenges that governments will have to address in support of their creative industries. Governments will need to set up copyright management entities because without copyright protections, “the African culture would soon be in the hands of other nationalities,” he said. African countries will also need to build infrastructure that supports national and international artistic events. It will require the government to “put culture in first place,” he said.

Vicente also explained that when working with the United States, Europe, and China, African countries are building education and health systems, but not supporting creative industries. The countries will need to start thinking about global tools to support artists and cultural leaders, like international agreements to facilitate visas for travel or even deals to bring more technological capabilities to the continent that help artists gain access to markets.

Creative industries as “levers of influence and power”

“Culture eats strategy for breakfast,” noted Akunna Cook, US deputy assistant secretary of state for African affairs. For example, people turned to arts, sports, and culture—not government policy—during the pandemic to make sense of the moment. “The creative industries, therefore, influence and shape policy and events,” she said, adding that they are “important levers of influence and power.”

Cook also explained that African creative industries have the power to transform how others, particularly investors, perceive and interact with the continent. So often, images of Africa focus on death, disease, and despair. “We have to change that to understand that Africa is really a place full of opportunity, full of innovation, and full of creativity,” Cook said. And industries like Nollywood—Nigeria’s film sector—have a major role in changing that.

Another source of power: the African diaspora. “The ties that bind us together are our strength,” Cook said. So telling better stories about Africa, but also stories about the movements that have shaped the African diaspora community, “is the power that’s going to shape our future for Africans around the world.”

Reclaiming Pan-Africanism

Barbadian Prime Minister Mia Mottley touted a number of her Caribbean country’s creative industries, including the sport of cricket. Barbados’s global recognition for cricket has reaped rewards by allowing young people to get involved as nutritionists, personal trainers, stadium managers, and more. Creative industries have “transformative power,” Mottley said.

But she reminded the audience not to look “at our creative industries in terms of economics and profits alone,” because they also have “immense power and influence… above and beyond the contributions to the economy.” For example, Mottley explained that cricket has helped children “overcome prejudice, discrimination, cultural differences, and intolerance,” as they share the pitch with teams from around the world.

As the prime minister of a country with a large population of African descent, Mottley said her island nation carries a spirit of Pan-Africanism. Expanding creative industries could help enliven that spirit. “We have to remove the middleman that has continued to refuse to allow us to deal with each other directly,” Mottley said. “It is through the creative industries that that commonality of purpose and mission will be found between our populations.”

Shoot your shot

Amadou Gallo Fall, president of the Basketball Africa League, said he believes that there is “something truly powerful about the game of basketball,” in contributing to economic development in Africa. Not only has the league created jobs—everything from players and coaches to videographers and sports reporters—but Fall said that the “entire creative industry is going to be brought to life.” Singers, artists, and athletes will use sports to connect with young people, inspiring them to be innovative and contribute to Africa’s future growth. But Fall says that there’s still work to do to solidify the league’s economic role. The Pan-African league needs infrastructure like easier options for travel to succeed, “and this is where policymakers and governments are going to play a key role,” said Fall.

Watch the full event

Katherine Walla is the assistant director of editorial at the Atlantic Council.

Further reading

AfricaSource Oct 14, 2021

For Africa to go green, the private sector must step up. Could COP26 provide an answer?

By Emilie Bel

The continent possesses an abundance of renewable-energy-production capabilities—but capitalizing on its potential remains a challenge.

Africa Climate Change & Climate Action

New Atlanticist Sep 10, 2021

Gregory Meeks: For counterterrorism and economic opportunity, turn toward Africa

By Katherine Walla

After the US withdrawal from Afghanistan, it has become clear that “terrorism now is global, and we’ve got to work in a multilateral way to combat and fight that,” said US Representative Gregory Meeks.

Afghanistan Africa

New Atlanticist May 25, 2021

Linda Thomas-Greenfield on Africa’s most overlooked crises and opportunities

By Katherine Walla

Thomas-Greenfield spoke about US President Joe Biden’s outlook on Africa with Ambassador Rama Yade, director of the Atlantic Council’s Africa Center, at an event celebrating Africa Day and introducing the Africa Center’s new team and mission.

Africa Crisis Management

The post Africa’s cultural revolution is here. Meet some of its movers and shakers. appeared first on Atlantic Council.

Most unbanked people live in emerging and developing economies (EDEs), with half of those people living in just seven countries: China, India, Indonesia, Pakistan, Bangladesh, Nigeria, and Mexico. Nonetheless, account penetration rates — the share of people aged 15 or older who have an account at a formal financial institution or mobile money services — have increased substantially in EDEs, causing a decline of around 800 million in the unbanked population of the world between 2011 and 2017. Specifically, the median account penetration rates among EDEs increased from 24 to 45 percent between 2011 and 2017 (Figure 1).

Women still represent a larger share of the unbanked as compared to men, composing 56 percent of all unbanked adults. While the gender gap in account penetration rates has remained small and constant in high income economies (HIEs), it has increased among EDEs. The median gender gap in account penetration rates in EDEs went up from 5 to 10 percentage points between 2011 and 2017 (Figure 2), highlighting the need for targeted efforts and policies to increase account ownership among females in EDEs.

More than half of the world’s unbanked are from the poorest 40 percent of households. While the median gap in account penetration rates between the rich and the poor declined in HIEs, it remained roughly the same in EDEs between 2011 and 2017 (Figure 3). To reduce inequality in financial inclusion across income lines, financial inclusion policies in EDEs should focus on increasing account ownership among poorer individuals in each country.  

Low educational attainment is correlated with being unbanked. Over 60 percent of unbanked adults have only a primary education, or less. Moreover, the gap between the less educated and the more educated remained largely constant between 2011 and 2017 for both HIEs and EDEs, indicating the need for including less educated adults in the formal financial systems. This is especially true in EDEs, where the median gap in account penetration rates across educational lines remained above 20 percentage points between 2011 and 2017.

Finally, a larger share of the unbanked population resides in rural areas, especially in EDEs. While the available Findex data points to the narrowing of the urban-rural gap in financial inclusion across all regions of the world, in some countries, despite substantial improvement between 2011 and 2017, the gap remains to be significant. For example, while the rural account penetration rates in China increased from 58 percent to 77 percent between 2011 and 2017, still 200 million Chinese adults in the rural areas remain unbanked.

Education is the most important determining factor for financial inclusion, followed by gender, income, and age. By applying Probit probability regression models to individual level micro data from the 2017 round of Findex database, similar conclusions and a more complete picture are achieved (Table 1). Being female reduces the probability of having an account in all regions, but the results are statistically more significant for developing countries of LAC, MENA, SA, and SSA regions. The estimated regression coefficient for female variable is largest in the MENA region, followed by the SA region, referring to the larger inequalities in financial inclusion across gender lines in these regions. Education and income level have a positive and statistically significant correlation with probability of account ownership in all regions. Being older is also positively correlated with a higher probability of account ownership; however, the results are not statistically significant across all regions and the impact is considerably weaker when compared to education, income level, and gender

The size and level of significance of the regression coefficients in the above models indicate that education is the strongest determinant in probability of account ownership, followed by gender, income level, and age. In addition to increasing economic wellbeing and prosperity, greater educational attainment across a population would increase financial inclusion — defined here as account ownership. Next, to increase financial inclusion, policies must target the female population, as gender is the second most important factor influencing rates of account ownership. Finally, policymakers should pay attention to households in lower income quantiles and younger adults, as these groups are less likely to have an account when compared to richer and older individuals.

The introduction of central bank digital currencies (CBDCs) could help increase financial inclusion. Many positive developments in financial inclusion over the past decade can be attributed to the role of technology, especially mobile financial services. Mobile banking makes it easier to provide financial services — mainly mobile payments — in areas with minimal or no physical banking infrastructure. Central bank digital currency (CBDC) is the most recent technological innovation with the potential to increase financial inclusion by reducing disparities across the dimensions highlighted above.

There are several challenges facing the unbanked population that could be ameliorated with the introduction of CBDCs. First, most banks and formal financial institutions have minimum balance requirements for having a bank account, making it hard and costly for the poor to have a bank account. At the same time, having a digital form of payment — such as credit card — is dependent on having a credit history. These services often come with annual fees, making digital forms of payment unattainable for many people in lower income deciles, especially those with poor or no credit history. Finally, with the recent coronavirus government stimulus serving as an example, in times of economic crises, government stimulus often has a hard time reaching the most vulnerable families — specifically the unbanked — in a timely and effective manner. That challenge lead to delays, lost mailed payments, and other complications for millions of unbanked American families. FDIC data suggest that as of 2020, 5.4 percent of American families — over 7.1 million households — were unbanked. Even in HIEs, challenges facing the unbanked are widespread.

With the introduction of CBDCs, everyone in a given central bank jurisdiction could potentially have a free and non-interest-bearing account with the central bank linked to a secure app on their cellphones or other devices. In the United States, this would increase account ownership and enhance access to savings and digital forms of payments as 97 and 85 percent of the US adults own a cellphone or smartphone, respectively. The same is true in many other economies around the world as cell phone penetration rates are nearly universal, with 80 to 90 percent of adults around the world having access to mobile phones or smartphones.

However, it is important to note that the potential benefits of issuing a CBDC could differ from one country to another. Considering the near-universal account ownership in formal financial institutions in HIEs, CBDCs are mainly seen as increasing the efficiency and speed of payments in these economies. They would also bridge the digital gap in payment systems by enhancing access to digital forms of payments across the entire population with access to smart devices. This impact is especially significant among individuals who cannot acquire credit or debit cards through their financial institutions for various reasons such as adverse credit history.

In addition to the above benefits, in EDEs, CBDCs could also increase financial inclusion across the entire population by reducing gaps in financial inclusion across education, gender, income, and age lines. In a CBDC jurisdiction, adults would be eligible for a direct account with central banks, removing the barriers and discrimination that are usually present when interfacing with formal financial institutions. This does not mean that financial institutions have no role to play in a CBDC environment. In fact, most countries that are exploring the idea of a CBDC, have sided with a two-tier system design where the CBDC is a direct liability of the central bank but real-time payments are processed through financial intermediaries.¹ World Bank’s Findex dataset identifies the main reasons for being unbanked according to respondents as: insufficient money, expensive accounts, distance from financial institutions, lack of necessary documentation, and lack of trust. CBDCs, by design, have the potential to reduce or remove these barriers and increase financial inclusion, especially among women, poorer individuals, and those with less education residing in EDEs.

CBDC is not the only player in the realm of mobile payments and e-money that could promote financial inclusion. M-PESA, WeChat Pay, Alipay, Zelle, various Stablecoins and many other platforms make mobile payment and digital forms of money possible, and have already contributed to financial inclusion around the globe for nearly a decade. From a strictly payment point of view and consumer’s perspective, CBDCs are simply another mobile, digital form of payment alongside many pre-existing ones. However, when processing government-citizenry monetary transactions such stimulus checks, unemployment benefits, and even paying taxes, CBDCs could make these transactions much more efficient.

Moreover, private mobile payment systems operate based on a claim framework, where transactions are not settled immediately and require a complex banking and clearing infrastructure to operate. CBDC or cash payments operate based on an object-based system, where the transaction is settled immediately given that both participants validate the payment. Finally, like cash, CBDCs are government-issued fiat currencies and are backed by issuing governments. Given the ability of CBDCs to cater to different preferences of the users and the improved efficiency of CBDCs in government-citizenry financial transactions, CBDCs could be a welcomed addition to the current mix in digital payment system infrastructure. 

According to the Atlantic Council’s CBDC Tracker , 81 countries around the world — representing over 90 percent of the global economy — are experimenting with a CBDC, pointing to its immense potential. To ensure CBDCs are interoperable across borders with strong privacy and security standards in place, the US Federal Reserve should help lead the global standard setting discussions on CBDCs alongside other central banks, international fora like the OECD, and institutions including the Bank of International Settlements (BIS). At the same time, it is important for the financial inclusion community to pay close attention to the technical and regulatory developments on this front and keep alive the discussion on the financial inclusion aspects of CBDCs.

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The post Inclusive growth needs financial inclusion. Can Central Bank Digital Currency help? appeared first on Atlantic Council.

Another hub for that fight is Africa, where terrorist groups like al-Shabaab in Somalia have spurred violence. And the United States, along with African and NATO allies, should not hesitate to strike against any threats to US security, said Meeks, the chairman of the House Foreign Affairs Committee, on Thursday.

“Through our engagement with allies, we can fight and defeat terrorism,” he said. “That’s what we will continue to do, without being occupiers.”

Appearing at an Atlantic Council Front Page event hosted by the Council’s Africa Center, Meeks discussed strategies to make Africa a US priority and to beef up investments in Africa’s infrastructure, businesses, and people. Here are some more highlights from his conversation with Africa Center Director Rama Yade:

Counterterrorism: Over the horizon, all hands in

• Meeks, who has served in the House since 1998, recalled the vote on the Authorization for the Use of Military Force twenty years ago that aimed to uproot and prevent further attacks from al-Qaeda. “We accomplished that,” he said, but attempting to nation-build in Afghanistan landed the United States in a twenty-year war. “It shows that everything does not have a military option, [and] the military does not dissolve all issues,” he said. “Diplomacy has to play a role in it.”

• Now it is up to the United States to ensure that the Taliban holds true to its commitments, particularly about the welfare of Afghan women and girls, Meeks said. “We need to do what we can do to support and make sure that our interests are taken care of and work globally [on] counterterrorism.”

• US Secretary of State Antony Blinken will appear before the House Foreign Affairs Committee to discuss Afghanistan on Monday, and Meeks said he will bring others in to testify about the various phases of US involvement in Afghanistan, from the invasion to the withdrawal.

Watch the full event

Investing in a future powerhouse

• Terrorist threats and instability across Africa are calling into question the roles that the United States and other global powers play there, noted Meeks. But he maintained that the international community should lend economic support, particularly by “investing in stabilizing governments and reducing poverty,” which can disincentivize people from joining terrorist groups.

• It will also be important for the international community to speak up in support of democratic values after events like Sunday’s coup in Guinea, which unfolded after President Alpha Condé won re-election for a controversial third term. “The people of Guinea expect and deserve much more,” Meeks said. He explained that “when you grow economies… they lessen the opportunity to have coups, [and creating jobs] helps to create a strong democracy.”

• With its rising youth population, Africa is predicted to hold increased economic sway in the future. So the United States “better look at how we are investing in [and] working in a collaborative way with the continent of Africa.”

• Meeks said that as he encourages American companies to invest in Africa, he also plans to work with the Biden administration to “build a coherent, all-government strategy… [to] harmonize our efforts in trade and investment,” and fuel the development of better infrastructure, technology, schools, and energy projects. Meeks also mentioned supporting initiatives like Prosper Africa, which aims to create jobs and contribute to growth on the continent: “I want to make sure that we get engaged.”

The United States: A friend that can do better

• As Africa struggles to recover from the pandemic-driven economic crisis, Meeks said that the United States must ensure that Africans have access to the COVID-19 vaccine. The Biden administration is currently delivering twenty-five million doses to the continent, but “when you have over a billion people, twenty-five million [doses is] just not enough,” he said, explaining that “if anybody is unvaccinated, all of us are unsafe, so the whole world has to focus on making sure that everybody has access to the vaccine.”

• Another crisis is creating worry for the world: climate change, which is bringing about dire consequences everywhere from the Sahel to Meeks’ New York City district, which recently bore the brunt of hurricanes Henri and Ida. But as international bodies make commitments on cutting emissions or boosting renewable energy, “they’re not talking with and hearing from the African people… That’s got to stop,” Meeks said. “We can’t tell the continent to do one thing when it doesn’t have the resources” to do so. Thus, it is important for the rest of the world to “put the resources—collectively and multilaterally—into accomplishing the goals so that Africa can have the energy it needs,” Meeks said.

• What else can the international community do? Meeks said investing in Africa’s women and youth is a good start. “Africa has lost 50 percent of its brainpower by not utilizing the women on the continent… If you don’t invest in them, we’re going to lose the future.”

• More than anything, Meeks said Africans need a seat at the global power table: “I’m telling Secretary Blinken and the president of the United States to make sure African voices are heard and taken into consideration. Don’t just talk to [them], work with them.”

Katherine Walla is the assistant director of editorial at the Atlantic Council.

Further reading

New Atlanticist Aug 31, 2021

To build lasting peace, you can’t ignore militant groups

By Imran Bayoumi

Efforts to stabilize conflict-ridden countries sometimes fail in large part because of their inability to constructively engage armed non-state groups.

Afghanistan Africa

New Atlanticist Jul 7, 2021

How rich countries can help Africa respond to the third wave of COVID-19

By Vasuki Shastry and Jeremy Mark

When the G20 finance ministers and central bank governors meet July 9 and 10 in Venice, Italy, they have an opportunity to respond to Africa’s third-wave crisis in a meaningful way. Will they take it?

Africa Coronavirus

AfricaSource May 25, 2021

Africa is America’s greatest geopolitical opportunity. Does the US know it?

By Rama Yade

Biden can further build ties with Africa: He should do so not only because these countries have long been underrepresented within leading multilateral organizations, but also because they offer innovative solutions to global challenges including terrorism, climate change, migration, debt, and COVID-19.

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The post Gregory Meeks: For counterterrorism and economic opportunity, turn toward Africa appeared first on Atlantic Council.

“We’re not really going to have what is [a] sustainable recovery” as long as vaccine scarcity continues, Okonjo-Iweala said at an Atlantic Council Front Page event hosted by the Council’s GeoEconomics Center. “The supply scarcity is driving behavior,” she said, not only fueling countries to competitively bid on vaccines, but also to “bid away vaccines from COVAX,” the global coalition tasked with improving COVID-19 vaccine access. “That’s why COVAX has been struggling to deliver what it should.” 

Okonjo-Iweala outlined ways the WTO can alleviate the scarcity problem across the supply chain for COVID-19 vaccines: by encouraging the removal of trade restrictions while working with manufacturers to unlock bottlenecks and spread their production expertise. “Without the transfer of technology and know-how, you also cannot manufacture or increase output,” she said. Members of the WTO are negotiating a proposal to waive intellectual property rights for COVID-19 vaccines, and Okonjo-Iweala hopes “they will come to a conclusion that is pragmatic, allowing developing countries to have access but also [protecting] research, development, and innovation.” 

Meanwhile, the WTO, International Monetary Fund, World Bank, and World Health Organization proposed a $50 billion plan to end the pandemic, foster a sustainable recovery, and generate an estimated $9 trillion in global economic returns by 2025. Okonjo-Iweala said the plan includes $10 billion allocated to boosting preparedness for and prevention of future pandemics. 

Here are some of the highlights of Okonjo-Iweala’s vision for the WTO, from her plans to revive trust among its members to her philosophy on bringing the trade body into the digital era. 

A trust-building exercise ahead 

• Among the WTO’s challenges, “there is a trust deficit between members: between developed countries and developing countries, between China, the US, the EU… You name it, in any configuration,” said Okonjo-Iweala. “[Trust] is something that we really need to build up.”  

• She suggested that one way to build trust is to revive the WTO’s original purpose set out in the organization’s founding document, the 1994 Marrakesh Agreement. The “WTO is supposed to help enhance living standards for people, create employment, and support sustainable development. This is all about people,” Okonjo-Iweala said. If the organization aims to “make things better for people, then it wouldn’t take twenty years to negotiate an agreement” that benefits people. 

• The comment alluded to the WTO’s twenty-year negotiations on prohibiting fishing industry subsidies that contribute to global overfishing. Trade ministers will meet to discuss the issue on July 15, and Okonjo-Iweala noted that this meeting may “kick us along the path towards agreement” by the end of 2021. The leader of the negotiations, Permanent Representative of Colombia to the WTO Santiago Wills, has produced a draft agreement “that so far, nobody has thrown out,” Okonjo-Iweala noted. 

• If WTO members can strike deals such as a fisheries subsidies agreement and “work in these multilateral ways together,” Okonjo-Iweala said, that can begin “to build the trust that you can work together and you can deliver together.” 

Watch the full event

A mission to get with the times 

• The WTO will also have to “update its rules and move with the times” to build trust among its members, said Okonjo-Iweala. “The world is going digital,” she noted, but she also acknowledged that “the WTO does not yet have an agreement” on digital trade and e-commerce regulations.  

• With her vision focusing on inclusive growth, Okonjo-Iweala said that a WTO approach to digital is key. She noted that during the pandemic, small- and medium-sized enterprises with digital access avoided shutting down entirely. Women specifically own many of these enterprises, “and when they do have access to the Internet, they can directly connect with their customers, and this is very helpful.” Thus, she concluded, “in order to have a fair, transparent, and level playing field for digital trade, and to solve many of the issues about cross-border data flows, you need some agreement.” 

• Okonjo-Iweala admitted that, while trade lifted people out of poverty, “people have been left behind.” She partially attributed that to protectionism and to technological changes in economic sectors. Weeks after the Biden administration released a plan for a new US industrial policy in an Atlantic Council speech, Okonjo-Iweala noted that industrial policy can be helpful in building infrastructure (like internet access) but cautioned that “industrial policies that lead to protectionism [are] something we need to watch,” and could be “against WTO rules” depending on their approaches. 

• Okonjo-Iweala said that eighty-three WTO members are participating in plurilateral negotiations to modernize trade rules for a digital world. “We’re very hopeful that… [by] the next [ministerial], we would be able to come up with an agreement with a set of rules that can help us underpin digital trade.” 

• But in equipping the WTO to deal with modern challenges, she acknowledged that helping to solve trade’s health and environmental issues, alongside digital issues, will be urgent, too. “I believe we can do it. We can’t do them all at once, but we can sequence what we want to do.” 

Support for Africa’s largest trade endeavor 

• Okonjo-Iweala is both the first woman and the first African to lead the WTO. The Nigeria native hailed the African Continental Free Trade Area (AfCFTA), which came into effect in January, as “one of the best things I think the continent has done. … The WTO has been a foundation for putting these rules together and, I hope, will be a companion as we try to implement [it].” 

• She noted that the WTO is ready to partner with the AfCTFA on issues like digital trade and improving Internet access. “We have a lot of work that we can do together to breach the digital divide,” she said. 

• Among the ways the WTO can support the AfCTFA, Okonjo-Iweala mentioned that the trade organization can help reduce barriers to the movement of goods and services across borders and encourage investment to create value-added exports and keep jobs on the continent. 

Time for reform? 

• When asked about differences in opinion among WTO members over issues like the benefits of free trade and the role of the dispute-settlement system, Okonjo-Iweala pushed back by saying that members “believe that trade and trade liberalization is the right way to go,” but that they differ on the way “they put this into practice.”  

• And while the differences in opinion may pose challenges for the WTO, they don’t erode the organization’s utility, said Okonjo-Iweala, arguing that instead of labeling the WTO as dysfunctional, members should come together to make it work better. “Is the best answer to walk away and say this doesn’t work? This organization, the WTO, has worked for the US, has worked for China, has worked for the UK and the EU, and lifted hundreds of millions out of poverty and enriched economies. It is still the same organization,” she said. 

Katherine Walla is the assistant director of editorial at the Atlantic Council.  

Further reading

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The post Ngozi Okonjo-Iweala on how the WTO can tackle vaccine scarcity and global recovery appeared first on Atlantic Council.

Watch the full event:

Public Event Fri, October 16, 2020 • 8:00 am ET

Investing in Africa’s Future

Investing in Africa’s Future is a premier public forum jointly hosted by the Atlantic Council and the U.S. International Development Finance Corporation (DFC) to promote US trade and investment in African markets.

Event transcript:

Featuring Keynote Remarks From:

Robert C. O’Brien
US Assistant to the President for National Security Affairs

A Presidential Panel Featuring:

H.E. Macky Sall
President, Republic of Senegal

H.E. Filipe Nyusi
President, Republic of Mozambique

Ouhoumoudou Mahamadou
Chief of Staff to H.E. Mahamadou Issoufou, President, Republic of Niger

With Moderation and Remarks From:

Adam Boehler
Chief Executive Officer, US International Development Finance Corporation

Welcome and Introductions By:

Frederick Kempe
President and CEO, Atlantic Council

Rama Yade
Senior Fellow, Africa Center, Atlantic Council

FREDERICK KEMPE: Ladies and gentlemen, your excellencies, bonjour, ola, hello to you all. We have seldom had such interest in an event that we’ve done at the Atlantic Council. And it’s such a pleasure to bring you together virtually across myriad platforms and across time zones all over the world. Welcome. I’m Fred Kempe, President and CEO of the Atlantic Council. Thank you for joining us today for investing in Africa’s future. It’s an honor to host this premier public forum in conjunction with the US International Development Finance Corporation to promote increased cooperation between US and African financial institutions.

Informed by the Atlantic Council’s near six-decade-old mission of working with friends and allies to shape the future, and DFC’s objective to reach a wide audience of US investors interested in African markets, our convening today brings together remarkable voices from across the Atlantic and around the world. We have an extraordinary panel of leaders with us all, as well as more than twenty experts and high-level officials who will provide their unique perspectives throughout five bespoke sessions over the course of the day.

I’m delighted to begin our first session this morning, where we welcome His Excellency Filipe Nyusi, president of the Republic of Mozambique; His Excellency Macky Sall, president of the Republic of Senegal; and His Excellency Mahamadou Issoufou, president of the Republic of Niger; and Robert O’Brien, US national security adviser, who will kick off the conversation with keynote remarks. Later today, in our fourth session, former president of the Republic of Liberia and Nobel Laureate—and my fellow DFC Development Advisory Council member—Her Excellency Ellen Johnson Sirleaf will provide keynote remarks on the integral role of African women in building a stronger, more resilient, and more prosperous Africa in communities across Africa.

I’d also like to extend my gratitude to Adam Boehler, the remarkable chief executive officer of the DFC, who has, along with his excellent team and my colleagues at the Atlantic Council’s Africa Center, made today possible. Founded in 2019, the DFC—the DFC has made Africa a key region for future investment, as evidenced by a swath of projects across the African continent, some three hundred in total valued at more than $8 billion. These projects range from health care and energy improvements to technology and financial inclusion for women entrepreneurs—and entrepreneurs. The DFC has matched its innovative game-changing vision with the funds needed to make investing in Africa easier than it’s ever been.

It is our hope that key conversations, like those which you will have today, will draw the attention of American investors to the outstanding opportunities waiting for them on the—on the African continent. I also want to congratulate you, Adam, on the release this morning of DFC’s first Global Development Strategy, which you’ll all hear more about at the end of the day in a conversation that includes Senator Chis Coons and others.

The DFC’s initiatives in Africa are part of the Trump administration’s efforts to increase trade and commercial ties with the region. Programs such as Prosper Africa, whose officials you will hear from later, are helping to make the shift from aid to 100 percent trade a reality. The US government has made a bilateral effort to boost trade in Africa. As such, we are honored, as I mentioned before, to welcome Senator Chris Coons, Democrat from Delaware, to our fifth session this afternoon.

I’d like to thank each of you for joining us from around the world for these critical conversations. I encourage you to join the conversation by using the hashtag #InvestingInAfrica on Twitter.

With that, Adam, it’s my pleasure to pass to you.

ADAM BOEHLER: Well, thank you very much, Fred. It’s a pleasure to be here. And Fred, the Atlantic Council has been such a wonderful partner to DFC as we have changed from OPIC and grown over the last year.

It’s a real pleasure to join with such three unbelievable African heads of state in Senegal, Mozambique, and Niger. And I’m sorry we weren’t able to join in person. I want everyone to know here that the president of the United States asked me multiple times to pull together a state dinner for our leading allies in Africa, of which all three of these presidents would, of course, be invited. And it is only COVID that stops us from doing that. And so I want everyone to know the importance that the president puts on this continent and in his direction to us in investing. So it’s very nice to have you all here.

Our main topic today is investment in Africa. And I will tell you that the African continent represents over half of the Development Finance Corporation’s investments. And there’s a very clear reason for that.

First, let me start a little bit talking about DFC. Some of you know our predecessor organization, OPIC, or O-P-I-C. DFC became the new OPIC about a year ago. And so let me tell you what’s different.

One, Congress doubled the size of our base from $30 billion to $60 billion.

Two, Congress allowed us to invest with three products—reinsurance, debt, and equity. We are now able to invest in equity also.

And finally, Congress allowed us to back projects that were both American-led projects as well as projects from other countries, including the countries in which we invest. And that also lets us invest in building domestic capability, which I think is so important. So next time when we’re looking at a project in Senegal, for example, we can look at American companies, but we can also look at Senegalese companies as well to invest. And we’ll be looking domestically in countries as well as with allies. So I think that was a very important difference for us.

We currently have over $8 billion in Africa. And I want to say Senegal itself, we have over half a billion dollars. It’s been a great partner for us. And just last month in Mozambique, my board approved $1.7 billion of new projects. So you can tell we mean business. And my job is to figure out a way to invest in countries like the three countries where we have our heads of state sitting with me who are great friends, because our foreign policy in the United States is to back up our friends and it’s to invest in sustainable investments to build strength in countries. And I think that’s a very important thing to note.

Our number one foreign policy in the United States is investing in private market and transparency and in competitiveness, because we believe a competitive, transparent, private market strengthens countries. We invest alongside partners. And we invest to ensure that a country maintains its sovereign strength and status.

There are others that sometimes invest to have undue influence over a country. We don’t believe that works. That was called colonialism. And there is sometimes a new form of economic colonialism that others try. But I want to tell you the United States, in focusing on competitive, free markets, is ensuring that a country remains free of foreign influences and maintains their own sovereignty and strength. And that is our foreign policy, which I think is important.

We are a new government agency, and we do have some topics we’re going to cover and new announcements related to Africa as we really start to put out our resources to make sure that we invest significantly in an opportunity here across African nations, with each nation being distinct and strong in their own way.

The first is we have a new Prosper Africa deal unit. That’s a very specific unit within DFC that is focused on Prosper Africa. So Prosper Africa, of which I am the chair, is an all-of- US-government effort to invest and drive trade between the United States and Africa. This was just stood up recently. Our COO will be speaking later today, and our goal is to expand massively on the currently $8 billion portfolio to invest significantly across US government agencies.

We’ve also created a regional DFI joint communique between the DFC and the other leading DFIs, and that’s because we believe that it’s very important to partner together. I’ve built a great relationship with the individual that runs the African Development Bank. We love partnering together. It doesn’t have to be choice. We’re not competitive; we have the same goals. And I want to congratulate him on his reelection. But we’ve been working together in order to create a facility in the midst of this pandemic so people have access to liquidity.

We recently signed a letter of intent for nuclear power in South Africa. Over the summer, I decided, after lots of consultation with Congress and stakeholders, to eliminate the DFC’s prohibition on nuclear projects. We were one of the first DFIs to do that, and we believe it’s important because nuclear technology today is very different from nuclear technology twenty years ago. It’s safer, it’s clean energy, and some of the innovative technologies we believe can make a difference in providing low-cost energy. So we’ll be looking at that because one of my key aspects is can we provide clean, low-cost energy to people across Africa, so we’ll be looking at nuclear where countries want to look at nuclear.

We have an Africa deal team that now is hired throughout Africa, and they are partnering with Asoko Insight, which is a deal sourcing and market intelligence platform focused on Africa, and that is to help us source deals because I will tell you our doors are open, and as a new agency, our main job is to get the word out that we want to drive further investment. We are looking for reasons to say yes, not problems to say no.

And then finally I want to note that we announced today our new road map for impact. This is our first ever development strategy. This is not mandated by Congress. We weren’t forced to do this. We did it because it was the right thing to do and because we wanted to show everyone where we want to put our investments for maximum impact. And our goal is to invest 25 billion (dollars) over the next five years, which would mobilize $50 billion, with a key focus on low- and lower-income countries to invest in sectors like health care, food security, agriculture, and women.

I’d also note that the road map encourages us to diversify the types of firm that we work with. I know that, at the end of the day, there are big infrastructure projects that are very important, and they’re big checks, and we’ll look at those. But just as important is getting a $500 loan to a small business in Africa that’s going to perform. And so I’d emphasize for my team the key is what is the impact; not the dollars. And we’re united in that.

The one other thing I’d note, too, in this environment now, obviously, as we move to election—I’d note that when I went through my confirmation by the US Senate, I’m one of the only candidates that was confirmed unanimous by voice vote as a political appointee. And why is that? Maybe it’s my great personality. I’m not—I’m sure that played in. But the truth is I was confirmed by voice vote unanimously because investing in our allies in emerging countries is not a Democratic of Republican sentiment—it’s an American sentiment. And it shows the strength and focus on Congress in what the Development Finance Corporation does.

So I’m very happy to be here. I asked our national security adviser, who is a great friend and a wonderful leader, Robert O’Brien, to record some remarks for us about Africa. So let me turn it to Robert O’Brien, our national security adviser.

ROBERT O’BRIEN: Good afternoon. Thank you, Adam, for hosting this summit, the first ever of its kind.

I bring you greetings from the 45th president of the United States, Donald J. Trump. I join you as a friend of Africa. I’ve visited almost every region of your continent—from Algeria in the north, to Niger and Mali and Burkina Faso in the west, to Rwanda and the Great Lakes, to Zambia, Botswana, Namibia. I’ve been to the great capital cities from Nairobi to Cape Town. This is a special event for me.

This summit is a critical opportunity for US firms, our African partners in the private sector and government, to meet and explore areas of cooperation. And this summit reflects President Trump’s approach to Africa, one that seeks equal partnership with African countries built on principles of mutual respect, accountability, transparency, trade and investment, and all that underpinned by the rule of law. The American people are always ready and willing to provide assistance when we’re needed—whether by responding to national disasters, vaccinating millions of children, or investing billions to combat HIV/AIDS, Ebola, and now, sadly, COVID-19 on the continent.

We want to see all nations, especially in Africa, and people thrive—peaceful, prosperous, sovereign, and free. We train doctors, teachers, and government leaders. We invest in good governance, the rule of law, and in strengthening democratic systems. We help nations make crucial reforms, open their markets, and establish the regulatory systems needed to attract private capital. We partner with businesses to solve societal problems. We know that private enterprise is the surest pathway to sustainable development. US economic growth and outward foreign direct investment, which total $6.5 trillion, has done even more good for the globe than our humanitarian assistance.

US economic growth and investments in developing nations create jobs that are long term, high-paying, and in skill-intensive industries, creating tangible benefits for many countries worldwide. To increase US private sector investment in Africa, the Trump administration has taken decisive action. President Trump launched the Prosper Africa initiative, which works across the US government to harness more than sixty trade and investment support services—such as financing, advocacy, feasibility studies, and advisory services to assist US and African businesses and investors identifying closed deals.

The Trump administration, together with Congress, overhauled the Export-Import Bank, which in the last year and a half has authorized more than forty deals in sub-Saharan Africa. In March 2019, Ex-Im approved $91.5 million in loan guarantee financing that supports US design, engineering, and construction services for Senegal. The transaction’s expected—is expected to bring electricity to approximately 330,000 Senegalese in more than 400 villages. In September and May of 2020, Ex-Im authorized what became a $4.7 billion direct loan to support the development and construction of an integrated liquified national gas project in Mozambique. The project helped displace Chinese and Russian financing as expected to boost Mozambique’s economy and support close to 17,000 jobs here in the US alone.

Under the Millennium Challenge Corporation, the United States has invested more than $13 billion supplying electricity so businesses can operate and students can study after dark, providing clean drinking water so women don’t have to walk long distances—sometimes at great personal risk—to get water for their families, and building roads so farmers can get their goods to market and children can get to school, and many other examples that help foster economic growth in Africa. President Trump’s Global Development and Prosperity WDGP initiative, works to remove barriers to women’s equal participation in the economy. With our partnership, the governments of Côte d’Ivoire and Morocco have already reformed national laws regarding women’s access to credit, property rights, and land rights respectively.

President Trump has expanded and empowered the US International Development Finance Corp., which we call the DFC. The DFC utilizes its unique private-sector financing tools, from debt and equity finance to political risk insurance and technical assistance, to drive private-sector investment and provide development finance solutions to the most critical challenges facing the developing world today.

The DFC has $11.6 billion total active commitments in Africa. The DFC is investing in cargo shipping logistics to improve reliable transportation and connectivity across Southern and Central Africa. It has provided debt financing to the Meridiam Africa Infrastructure Fund, which invests in a variety of infrastructure projects including in Senegal, Côte d’Ivoire, and Madagascar. This debt financing will address the real shortage of critical infrastructure on the ground in the continent.

The DFC is supporting the construction of a 100-megawatt thermal power plant in Togo. This is the first international financing project to ever be completed by the Togolese government, tripling Togo’s energy-generation capacity and spurring investment and development in that country.

Finally, the DFC has launched a new Africa Investment Advisor Program. This program establishes a team of investment advisors located across the African continent to allow the DFC to more aggressively advance investments and expand its portfolio in Africa. The DFC is confident in the investment prospects on the African continent and looks forward to putting capital to work in the region.

America’s goal on the continent is to support locally-led problem solving for enterprise-driven growth; inclusive societies; and transparent, accountable governance. This approach reflects our values as a nation under the leadership of President Trump. We are a nation of free people who believe deeply in the right of all people to govern themselves. We are a hardworking and entrepreneurial nation that believes in the dignity of work and the power of economic growth to eradicate poverty more effectively than any government program could ever do. We want to see all people, especially in Africa, enjoy the right to life, liberty, and the pursuit of happiness as they define it.

These values and our approach to Africa stand in stark contrast to those of the Chinese Communist Party. Whereas Beijing promotes a journey to China dependence, the US promotes a journey to self-reliance. Whereas China seeks to create dependencies that can be exploited to serve their geopolitical goals, the United States works to enhance the sovereignty and self-sufficiency of developing nations. Whereas the United States government provides grants and transparent financing, the CCP pushing unsustainable and opaque loans. The result is the erosion of national sovereignty.

One thing is clear: The Chinese Communist Party’s international economic programs are not designed to free nations from (subsistence ?), debt, and foreign influence; rather, they are designed to make them more dependent on the Chinese Communist Party—CCP capital, CCP corporations, CCP networks, and CCP strength. President Trump has a strong message for you today: Choose a different path for your great nations. Choose independence. Maintain your sovereignty. Embrace self-sufficiency and true partnership. And above all, control your own future. History is clear: Free societies and free people are more peaceful and they’re more prosperous.

We look forward to working with you all in true partnership to unleash the growth and opportunity in all of our nations. I know that this summit will provide a unique opportunity to engage on investment opportunities in Africa and power forward on tangible deals that will have a real impact on your continent.

May God bless you, and as the South African national anthem so beautifully states God bless Africa, and God bless the United States of America. Thank you.

RAMA YADE: Thanks to Ambassador O’Brien with his remarks.

Good morning, everyone. I am Ambassador Rama Yade. As a senior fellow to Atlantic Council’s Africa Center, I’m honored to introduce our distinguished panel of presidential speakers.

It’s my pleasure to welcome His Excellency Macky Sall, president of the Republic of Senegal. (Continues through interpreter.) Mr. President, as always, great pride for your fellow countrywoman to be in company of leaders like you. (Continues in English.) What impresses me the most about you, I think, your bold and ambitious vision of the African continent.

His Excellency Filipe Nyusi, president of the Republic of Mozambique, welcome. President, you are at the head of a beloved country by all pan-Africanists who know the high price your country paid for freedom on the continent. We wish you future of prosperity this country deserves.

His Excellency Mahamadou Issoufou, an emergency will drive him away and he will be replaced by his chief of staff. But Niger has been carrying on its shoulders a large part of the security of the Sahel, but also the world. As President Issoufou told me—one day we met in Niamey—may a maximum of us understand that and support Niger.

This distinguished panel has remarkable successes in promoting the development of—not only of their own nations, but of the region, and with us today to inform our audience, many of whom are American investors, about the tremendous opportunities awaiting them on the African continent.

This conversation will be moderated by the CEO of the US International Development Finance Corporation, Mr. Adam Boehler. President Sall, President Nyusi, President—(inaudible)—and Issoufou and his chief of staff, we thank you for joining us and sharing your profound experiences on this topic.

Adam, it’s my pleasure to turn this panel over to you.

ADAM BOEHLER: Thanks so much, Ambassador. And I have to say it’s a real pleasure to be together with such friends and allies of the United States. So thank you, all three of you, for being here. And I only wish we were in person to be together, because friends like to be in person more. But we’re under our present circumstances.

President Sall, maybe I’ll start the first question with you. And let me also note and thank you for our relationship, President Sall, between Senegal and the United States. For you, President Sall, the pandemic—I’ll start there, because it’s what’s separating us in person—where do you see private-sector investment as having the most important role in shoring up economic resilience and recovery?

(Note: President Macky Sall’s remarks are made through an interpreter.)

PRESIDENT MACKY SALL: Thank you very much. Thank you.

First of all, I’d like to extend my greeting to my brother, President Filipe Nyusi, as well as President Mahamadou Issoufou and his representative, and also extend my greeting to Mr. Adam Boehler, CEO of DFC, and Mr. Frederick Kempe, CEO of Atlantic Council. He’s just given an extremely important message. I’m really happy with these discussions between African and American partners.

Before that, before answering your question, allow me to thank OPIC, that supported Senegal through the implementation of important projects, especially in the power sector, through electric plants, thermal plants in Cap des Biches, also through solar plants as a part of the fight against greenhouse-gas emissions in Ten Merina. Also, a wind plant of 160-megawatt in Taibe Ndiaye. They also—(inaudible)—hotel projects through the Sheraton-Aloft hotels. This means that we are a partner with OPIC. And I believe that with DFC and the new philosophy that I just heard, we were happy. We believe we’ll go further, further with the African continent.

First of all, I would like to say that if we to—(interpreter off mic)—we need to work with mutual trust in the spirt of partnership. As the African continent is celebrating around sixty years of independence, Africans today know exactly what their priorities are. And I’m very happy to see that Americans are concerned about the sovereignty of African countries. I can assure you that we are keen, our sovereignty is dear to us, and in any case the projects that we implement with our partners will not suffer from any encroachment on our sovereignty.

I’m saying this because we need to find the right mechanism in our partnerships. It should be—(inaudible)—partnership because, as you said, the United States is the first economic power that can support through DFC $25 million a year, next one 25 billion (dollars) for investment and trade. I think this is extremely important. Africa is a vast, broad continent, not only through its population but also through its opportunities. If we succeed in bridging the gaps and setting up the good links, this would be good because Africa is a democracy that’s getting stronger and stronger, and the citizens are now expecting the leaders to do the right thing.

Through the three mechanisms that you developed—I mean, reassurance, debt, and equity—I think through those three pillars we’ll have a very good partnership between Africa and America—and the US, I mean. Africa very often suffered from procedures designed by its partners and imposed upon Africa. And due to the human resources difficulties that Africa faces, but also due to complex procedures that we have and we observe with each partner—you know, through multilateral ties, we observe that. And even through bilateral ties, we observe that.

But I’m really, really happy that with the DFC we can now change things, a little bit like what was done with Millennium Challenge account, a project that I really was really happy with. I would like to commend the US Congress and the US government for that, for all the support provided to Senegal. But we want to move further, further in Africa.

I have a request that we will need to work on together. It’s to change Africa’s risk perception. The perception people have on the risk in Africa is not real. It is fictional. It is simply because people think Africa is a poor, poor country. So this puts higher interest rate on debts and loans. If we work together in trust and confidence, I’m convinced that through PPP—public-private partnership—we’ll be able to develop better infrastructure and services in Africa in the interests of both parties, the American and African party.

I recently launched a fully Senegalese IPP in partnership with General Electric, 300-megawatt plant with the support of the American firm, but it has been implemented by a Turkish company. This is a win-win partnership. And in such cases, DFC can come in. And it’s an African bank that funded that. We have American material and other inputs from other partners. That partnership will be developed through a gas plant. We also want to develop a gas network. It is very, very important for us, for our development.

So Senegal is a country that is open to all partners, to all continents, which is the reason why I’m just saying that we have no exclusivity and no exclusion whatsoever. It’s important we are open to all partners. We have some additional partners that you know. We want to strengthen those partnerships. But we are obliged to open up to the world.

We don’t want our friends to see China’s intervention and China as a threat to the partnership with them, no. When Chinese people—what do Chinese people give us? They come with long-term funding. And Africa has never received a Marshall Plan. You reconstructed Europe with Marshall Plan, long-term loan. That enabled to build infrastructure—railroads, power plants, even nuclear that you talked about. When we have long-term loans over twenty-five, thirty, or even more years with interest rates that are not over 2 percent, yeah, we will accept that. But if we’re limited to the capital market, of course we won’t be able to build those hydroelectric powers. We won’t be able to build the gas power plant that we talked about. That’s an issue.

So, you know, Chinese people give us long-term loans. And I think that the other partners will gain a lot in listening—listening deeply to Africa and Africans. The Prosper Africa initiative is welcome. You know, it’s only—(inaudible, technical difficulties). You have a level of development that is very hard. We can gain a lot from technology transfer. And your companies will gain through the development of Africa. This is a win-win partnership that we want.

And I’ll stop here for now. Thank you.

ADAM BOEHLER: Well, thank you very much for those comments. And I’m very excited to expand Prosper Africa, it’s new throughout Africa, to really provide the types of long-term loans and ensure that there’s a very significant alternative to all African countries. So I really appreciate that and agree on the massive potential and possibility in each African country. So thank you, Mr. President, for those thoughts.

Let me turn it now to President Nyusi. Mr. President, Mozambique is in exciting times, wonderful opportunity in the discovery of gas. And I know we as the United States and some of our companies have been working very closely with you and your administration. Thank you for your leadership. I’m curious, Mr. President, how do you ensure that this energy sector can transform Mozambique instead of kind of dominate Mozambique? How do you kind of harness this for the good of the country to drive other sectors as well? How do you think about that, Mr. President?

PRESIDENT FILIPE NYUSI: Thank you, Adam. But I can give you my vision in Portuguese.

(Note: Further remarks by President Filipe Nyusi are made through an interpreter.)

First of all, allow me to thank the Atlantic Council and the Development Finance Corporation, the DFC, for this invitation to participate in this—on this important panel. This will contribute to strengthening the economic collaboration across the African continent, and in this case specifically between Mozambique and the United States of America.

Before answering your question, please allow me to start by speaking about, first of all, our profound thank you to the DFC for their encouragement, for their active engagement in our country, specifically in the areas of natural gas, where they are financing concrete structural projects that will improve our economy. I also want to—I look forward to granting new projects. And the previous speaker spoke of other projects, and we would like to say that we are open to applying these investments in our country, as I said previously.

I will speak about gas, but I wanted to approach it along another line, if you allow me. The gas projects are already consummated, but there are other sources, of course, and there are other areas with respect to gas. And we already have strong partnerships with the United States and with European countries also. But our country decided to utilize these resources, and of course they are in the beginning stages.

But we want to take these investments and apply them to other areas, among them agriculture, which is an area of great importance. We selected agriculture because it is such an important and traditional industry for our country. We’re blessed with an environment that allows us to produce different crops, many different crops, so we want to apply the gas and energy investments and the results from those investments into other areas that can strengthen our economy as a whole.

Why agriculture? Eighty percent of our population depends on this activity. Our administration is working to assure that agriculture not only stops being a subsistence form, but that it will improve the quality of life in our communities, it’ll add food safety and food security through all the production chain.

And I will talk also about your question, but we recently launched the agrario program, a program called Sustenta, and this program first of all wants to train human capital, the medium and small farmer. We also want to provide inputs, create adequate infrastructure for capturing water and irrigation so that our agriculture will not only be seasonal but can also evade the cyclical nature of these different crops.

But also, we want to trade. So we’re looking at that, which has been a problem for certain communities to bring their products to market.

Also, we want to add value to our products by processing these foods. Always, we have been exporting in bulk, which has added jobs. But our goal with Sustenta is to allow aid to reach those small farmers and also to transfer technology to them. That is an immediate goal to empower them.

I could also talk about why am I talking about agriculture. We want to diversify our economy. Your question was specifically about gas, but I mentioned agriculture because it is an important industry. But our ultimate goal is to diversify our economy. That’s why we want to provide access to the logistic and regional chains and international chains, as you well know.

In the Southern African zone, we have a market of over 345 million people, and over 1.3 billion people on the continent as a whole. So that is a significant market, and we want to tap into that market and into the regional markets. Our agrario Sustenta project is working in the entire country, and we want to export. And we want to also reach the entire production chain with quality production which will create a dynamic trade, tapping into the international market, and also to tap into existing markets like the United States. The United States will find a quality market, abundant produce in our country. And through our Sustenta project in 2020 to 2024, we will try to overcome the challenge of unemployment, which is a problem for many youth. We want to acquire 1.2 million new jobs and 200,000 new jobs specifically for women and youth.

Why are women so important? So many Mozambican families are headed by women, and if we strengthen women, we will be able to help many more families. That’s why we want to increase our agricultural sector and strengthen it—it’s approximately 2.3 percent—but we want to see if we can reach 4 to 5 percent, creating an impact—a substantial impact on our economy. And also with the goal of feeding our population with a Hunger Zero goal in Mozambique.

You asked—to try to make these goals viable, which many of them would be reached for the first time, but 10 percent of our budget will go into our agricultural sector. That’s in keeping with the African Union’s goals, so we want to improve this sector. We’re also trying to train and improve the quality of our production.

So I wanted to invite our friends from the private sector of the United States to come to our country to invest, and I thank them for their interest, and I’m sure—I want to thank Roger Morales. And please relay to our friends in the private sector that agriculture should be examined as an area of great opportunity which can bring results for everybody. These investments, as I said, can be done in partnership with local business people and entrepreneurs who have plenty of experience, but furthermore, are measures of transparency, good governance, the peace, the tax breaks that we offer, a stable legal framework, and the trade free zones that we’re creating—all of these show that there will be a return on investments.

Mozambique has a great area for producing soy and many other crops. We’re extremely fertile land, and we want to offer opportunities to investors. So all of this is to say that we’re not simply looking at the opportunities we have in the area of gas—we can talk about that in more detail—but yes, we have received all of these investments in gas with total transparency and the traditional measures, but always keeping in mind the benefits it will bring to the Mozambican citizenship, respecting local content, which has to be respected. But with all of this, we are keeping in mind that gas you can’t eat, you can’t smoke. Gas is excellent, but we want to use it to improve the other industries in our country.

Thank you very much, and I am available for any further questions.

ADAM BOEHLER: Thank you. I think that was extremely well said, and I really appreciate your focus on using gas to drive dollars and sustenance into the hands of the average person in Mozambique, which I think is absolutely correct. And you’ve done a wonderful job on the agricultural side through Sustenta and a wonderful job on the women’s-inclusion side. And as you know, in the United States Ivanka Trump has led massive efforts. In partnership together with us, her W-GDP is very focused on that. And I think you guys have been fantastic in that area, so thank you.

Well, let me direct a last question to Niger. As, you know, this pandemic hits us, I’d love to know your thoughts on what DFC and other development institutions can do to support and build up health-care clinics and health-care-related facilities in Africa to help people on the ground.

OUHOUMOUDOU MAHAMADOU: Thank you, Mr. Kempe. My name is Mahamadou Ouhoumoudou. I’m the minister chief of staff at the office of the president of Niger. And I would like to apologize for the fact that president is not able to be here today due to urgent matters, but he asked me to represent him and I’m going to deliver the message he has prepared for you. Thank you very much.

(Note: Further remarks by Ouhoumoudou Mahamadou are made through an interpreter.)

I will speak in French if you allow me.

ADAM BOEHLER: Sure.

OUHOUMOUDOU MAHAMADOU: Allow me to first thank DFC, US International Development Finance Corporation, and Mr. Adam Boehler for his invitation to today’s event as a guest speaker. I would also to extend my thanks to the director of Atlantic Council, co-host of this conference.

I would like, on behalf of the president of Niger, Mahamadou Issoufou, who was a vaunted champion of the AfCFTA, the African free-trade area, for all that he’s doing for the African continent in terms of investment.

And particularly, as you said, in the area of health, COVID-19 is a pandemic that had important impact, not only at health level, but also at economic level in the whole of African continent. As regards the health, we know that many people have been affected and many people died. But also, and most specifically, at economic level we’ve observed very important impact because for the first time for twenty-five years Africa went into recession. And to get out of that recession, it’s important that a reconstruction program be established. And that is what we have developed within African continent, is post-COVID recovery programs that cover not only the health area but also the economic area.

Now, regarding health, Africa showed its strong resilience and its preparedness regarding COVID-19. And it is Africa’s preparedness and its anticipation—(inaudible)—the full impact of the pandemic, and also anticipation in supplying of medicine and equipment. All these enabled Africa to also have lesser disaster regarding the pandemic. And I said also, Africa joined pharmaceutical projects supply platform, and that organization that has been set up at continental level enabled Africa to suffer less from the pandemic and to enable us to see the results that we can see on the field.

But at the economic level, we need to prepare the recovery because COVID-19 created a situation whereby poverty got exacerbated, and also unemployment and underemployment, amongst others, it so happened is exacerbated. And as I said earlier, we also have a recession. So Africa needs to recover from this situation, insofar as Africa is lagging behind regarding SDGs—Sustainable Development Goals—especially in the fight against poverty.

Now, in order to get out of this situation, Africa evolved recovery plans, but comply with the Vision 2063 of the continent that is an integration development economic recovery vision—a vision that will enable Africa to move out of what we have always known about Africa, which is a continent whereby all the raw materials are produced. The vision that we have, that African states have developed, is a vision that is based on all the sectors, a vision that will enable Africa to have fast growth. Of course, to do so we need to draw American investors, for that matter.

You observe that there’s enthusiasm from other countries to invest in Africa. You know, that’s the case for Asian countries like China, Japan, even Europe and Russia. Of course, America, the United States, should also contribute to that investment in Africa. Africa has an extremely important potential with regard to raw materials, our natural resources, our potential in mining products, resources. It is a reason why people even consider Africa as a geological scandal. All this potential can be tapped into to develop the industry, to develop infrastructure, to develop all this to make the African continent a continent that will emerge after this COVID-19 pandemic.

2021: we will organize an Africa trade fair that will take place in Kigali in March 2021. And during that fair, that will bring together all investors, all Africa companies, we would like to also see American companies participate in that trade fair.

I would like to remind here that the president of Niger is the champion of the African Continental Free Trade Area, which is a flagship project of the African continent. That meant a lot of progress. Through the AfCFTA, Africa will become an integrated market of 1.2 billion inhabitants, with a lifting of customs barriers, artificial barriers between the various countries. And this will enable the trade exchanges, and this will start within the framework of AfCFTA—services, goods—trade in services and in goods. This is a good opportunity for America as well.

Thank you very much.

ADAM BOEHLER: (Off mic)—African development institutions, our partners too, because this is—we like to partner with others. So that’s going to be in just ten minutes. That will be coming up. Fred, do you have any concluding remarks that you’d like to make? I guess not. Well, with that, let me note—let me thank all three countries. Thank you for being friends and allies of the United States. I would love to continue our relationship but grow it substantially to invest in your country. So thank you so much for being here. And in just ten minutes we’ll be starting a panel focused on all the African development institutions, so we can invest together in your three countries and in Africa beyond. So thank you so much. Thank you.

(END)

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Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham provided opening remarks and welcomed Madame Ouattara back to the Atlantic Council for her second visit since 2015.

In her remarks, Madame Ouattara discussed progress and obstacles to eliminating child labor in Côte d’Ivoire, addressing recent calls from Senators Ron Wyden (D-OR) and Sherrod Brown (D-OH) to put an embargo on imports of Ivorian cocoa to the US market due to the prevalence of child labor on cocoa farms. Child labor has long been an issue in the industry, and chocolate and confectionery companies have failed to meet decades-old promises to solve the problem.

Although intolerable, the First Lady specified that “recent studies undertaken by the US-based non-governmental organization (NGO) Verité and the Walk Free Foundation estimate the number of children victims of forced labor in cocoa production at 0.17 percent of the total population of children working in cocoa farming.” 85 percent of children involved in cocoa farming attend school and “occasionally accompany their parents to the fields after school hours and on weekends,” she said. The remaining 15 percent do not attend school and “need all our attention.”

Madame Ouattara is Chair of Côte d’Ivoire’s National Oversight Committee of Actions in the Fight against Child Trafficking, Exploitation, and Labor. In an effort to root out abusive labor practices in the cocoa supply chain, the Committee has implemented three National Action Plans to combat child labor in Côte d’Ivoire since 2012. The current Action Plan (2019-2021) has a budget of US $127 million to fight the root causes of child labor, of which poverty is a key concern. Efforts to date include the construction of 30,000 classrooms, a micro-credit program that has reached 200,000 women, and the imprisonment of 220 human traffickers, who have targeted children from neighboring countries. 

Madame Ouattara also underscored that the health of Côte d’Ivoire’s economy is critical for the West Africa region. The cocoa industry is responsible for approximately two thirds of the country’s trade revenue, and the proposed ban would be severely damaging for the Ivorian market. Thus, she closed by calling on attendees to support the prevention of the embargo and opened the floor to questions.

In attendance and participating in the ensuing discussion were H.E. Patrick Achi, Secretary General to the President of the Republic of Côte d’Ivoire; H.E. Mamadou Haïdara, Ambassador to the United States; The Honorable Dwight Evans, Congressman (D-PA); and senior representatives from several US government agencies, chocolate and confectionery companies, and relevant NGOs. 

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Last month’s African Cup of Nations has generated global enthusiasm and an outpouring of African patriotism, and other important sporting events are taking place on the continent, from South Africa’s hosting of the 2010 FIFA World Cup to Senegal’s hosting of the 2022 Summer Youth Olympics. Next year, the prestigious American National Basketball League (NBA) will be launching an Africa League comprising twelve teams from around the continent.

African countries are adapting to take advantage of the economic opportunities associated with global sporting events. Côte d’Ivoire has a law to improve sports governance, Togo has hosted the first African Sports Forum, and Senegal has inaugurated several world-class sports facilities, including a 50,000-seat Olympic stadium in the new city of Diamniadio. But African nations need to regard sports as more than a form of entertainment and a physical discipline: it can be an important vehicle for both economic development and social cohesion, and one that is especially accessible to Africa’s burgeoning youth population (70 percent of Africa’s population is under the age of thirty).

In the United Kingdom, it is estimated that sports activities add 1.7 percent to GDP (comparable to that nation’s automotive industry), contributing 29 billion euros to the UK economy between 2010 and 2015 and supporting around 400,000 full-time jobs. There are budget benefits as well: people who regularly participate in sports cost between £1,750 and £6,900 less in health care costs per year. And English students engaged in sports activity achieve an average 8 percent higher academic results than their sedentary peers. Globally, sports contribute approximately 2 percent to GDP. Some countries, such as Brazil, have even succeeded in turning sporting events into a driver of tourism. International sporting events shine a global spotlight on host countries and can generate enviable profits: for example, UEFA Euro 2016 cost France around $200 million to host, but generated nearly €1.22 billion in return, about half of which came from increased tourism. The Olympic Agenda 2020, which was adopted in December 2014, explicitly encourages cities to account for economic and human development benefits when constructing their bids to host future games. And yet, with few exceptions, nations and multilateral institutions alike have been slow to adopt strategies that embrace sports as a vehicle for development.

African nations (especially South Africa, Nigeria, Ethiopia, Côte d’Ivoire, and Senegal) can lead in this regard, but they need institutional and regulatory frameworks that support them. Sporting components need to be integrated into international development programs and politicians needs to promote private investment in nations where the central government is the sole provider for national teams. School federations and leagues would greatly enhance educational outcomes, too, and could provide a vehicle for correcting regional infrastructure imbalances and mentoring to vulnerable populations, like girls. But the full economic benefits (in education, job creation, tourism, marketing, and so forth) will be only be realized when sport starts being treated as the important market that it is.

En Français :

« Le sport a le pouvoir de changer le monde. Il peut créer de l’espoir où il n’y avait avant que du désespoir. », Nelson Mandela.

C’est peu dire que la Coupe d’Afrique des Nations, déjà réputée pour sa qualité sportive, a atteint cette année une réputation universelle, déclenchant un enthousiasme digne de celui suscité par la Ligue des Champions et les grandes manifestations sportives internationales. Non pas tant à cause de l’affiche -certes exceptionnelle autour de deux grandes nations africaines du football que sont le Sénégal et l’Algérie- mais surtout parce que, depuis plusieurs années, évoluent dans ces équipes des joueurs évoluant dans les plus grands clubs professionnels du monde. Le fait qu’ils choisissent de porter le maillot national, là où, il y a quelques années, les joueurs, pour des raisons pratiques et financières, préféraient la naturalisation, a ajouté à la ferveur qu’ils ont déclenchée auprès des supporters. A travers eux, c’est l’Afrique qui s’affirme sur la scène sportive internationale.

Cette consécration de l’Afrique par le sport, en particulier le plus populaire à travers le football, fait écho au réveil économique et culturel d’un continent, qui après avoir été longtemps à la remorque de la croissance mondiale, en est désormais le moteur.

 Au-delà de la Coupe d’Afrique des Nations, des événements sportifs internationaux de plus en plus importants et variés s’organisent sur le continent, comme les Jeux de la Francophonie, l’Africa Tour en cyclisme, la Coupe du monde de la Fifa 2010 par l’Afrique du Sud et les Jeux Olympiques de la Jeunesse par le Sénégal en 2022. La très prestigieuse Ligue américaine de basket-ball, la NBA, lance à partir de 2020 une Basket Africa League, un championnat de basket africain autour de 12 équipes venues de toute l’Afrique, promettant de grandes retombées économiques. Toutes ces initiatives démontrent la capacité des pays africains à accueillir des événements de grande envergure et la volonté du continent noir de faire émerger progressivement un marché du sport africain plus conforme aux standards internationaux. La Côte d’Ivoire a ainsi adopté en 2014 une loi visant à favoriser de nouveaux modes de gouvernance, d’organisation et de financement du sport ivoirien, afin de l’adapter aux enjeux du sport professionnel. Le Togo a accueilli en août 2017 le premier Forum Africain des Sports pour valoriser le potentiel du sport africain dans le développement humain. Le Sénégal a inauguré l’année dernière des équipement sportifs dernier cri comme l’Arène nationale de lutte de Pikine, l’Arena Dakar et bientôt un stade olympique de 50.000 places dans la ville nouvelle de Diamniadio.

 Le sport ne saurait être limité à sa dimension de simple divertissement. Il n’est pas qu’un loisir ou une pratique physique. Il est aussi une activité de santé, un mode de formation, un espace de compétition, un marché économique, un moyen d’aménagement du territoire, un instrument de mobilisation pour un pays. Véhiculant des valeurs de discipline, de tolérance, d’effort, de respect, il s’affirme comme un outil crucial de cohésion sociale, un moyen éducatif puissant et un levier de transformation économique prometteur capable de contribuer à la résorption du phénomène massif d’exclusion des jeunes.

 Aussi, il a le potentiel pour constituer un puissant levier de développement sur le continent le plus jeune de la planète où 70% de la population a moins de 30 ans. Parmi eux de grands passionnés de sport et de potentiels champions qui pour les plus talentueux finissent par migrer vers les pays du Nord, sans faire bénéficier leurs pays d’origine de leurs mérites, y compris les centres de formation qui les ont détectés.

Au-delà des champions, l’enjeu reste le sport de masse et ses débouchés économiques. Ceux-ci dépendront bien évidemment de la capacité du continent africain à garantir à cette jeunesse, qui représente 60% des chômeurs africains, une formation dans laquelle le sport peut jouer un rôle non négligeable et des emplois dans ce domaine via la création d’un marché économique.

Pour faire face, les initiatives à destination de la jeunesse ne manquent pas : service national de la jeunesse (Ghana), enseignement technique et formation professionnelle (Maurice), fonds pour les jeunes entrepreneurs (Sénégal, Zambie), programme d’acquisition de compétences et d’aide à la création d’entreprise dans le cadre du Service national de la jeunesse (Nigéria) et bien d’autres encore.

 Et le sport ? L’idée que le sport soit un levier de développement ne fait l’objet d’aucune prise de conscience sérieuse, y compris dans les pays riches à l’exception de certains pays anglo-saxons comme les Etats-Unis ou la Grande-Bretagne, où le sport est traditionnellement un vecteur d’excellence et de promotion sociale dans la formation universitaire. Ainsi, selon la dernière étude en date sur le sujet (juillet 2015), on estime que la valeur ajoutée des activités sportives au Royaume-Uni représente 1,7 % du PIB, le chiffre d’affaires du secteur sportif étant comparable à celui des secteurs automobile et alimentaire. Selon cette étude, l’ensemble des activités sportives ou en lien avec le sport aurait contribué depuis 2010 pour environ 29 milliards d’euros à l’économie britannique et supporté la création ou le maintien de 400.000 emplois à plein temps, soit 2,3 % des emplois nationaux. En matière de santé, la pratique d’une activité sportive régulière pourrait ainsi permettre d’économiser entre 1.750 et 6.900 livres par personne (2.500 à 10.000 euros). Sur le plan scolaire, les jeunes Anglais pratiquant une activité sportive obtiendraient en moyenne des résultats scolaires de 8 % supérieurs aux résultats des non pratiquants.

 A l’échelle mondiale, un cran a été franchi : avec près de 1 200 Mds €, le sport génère aujourd’hui à lui seul près de 2% du PIB mondial pour une croissance moyenne de 4%, selon Etude Statista 2017. Selon cette enquête, le fort développement s’explique notamment par l’émergence de nouveaux marchés en Asie-Pacifique (+4,6 % de croissance moyenne annuelle sur la période 2014 -2015) avec des pays extrêmement actifs comme la Chine dont le marché enregistre une croissance annuelle moyenne de + 6,1 % et l’Inde avec + 7,6 %.

Certes, le sport n’a jamais, à lui seul, développé un pays mais il peut être, associé à un marché dynamique, un secteur d’exportation voire le premier comme il l’est au Brésil, porté par des grands événements sportifs de ce marché en pleine expansion. Ainsi, toujours selon l’étude citée plus haut, avec plus de 16 mds$ investis au Brésil pour les JO2016, 30 mds$ estimés pour celle de 2018 en Russie et plus de 187 mds$ d’investissement attendus pour la coupe du monde 2022 au Qatar, ils permettent aux pays organisateurs de rayonner dans le monde et d’enregistrer des opérations économiquement très rentables. Si l’Euro 2016 a coûté à la France environ 200 millions d’euros, il lui a rapporté près de 1,22 mds€ dont 625,8 millions d’euros pour le tourisme.

 La communauté internationale, elle, est en retard. Au cours de l’année 2018, la visite du Président Obama au Centre sportif kenyan Sauti Kum ou l’initiative française « Plateforme de transformation par le sport » de 15 millions d’euros ont certes mis en lumière ces vertus liées au sport. Mais il a fallu attendre décembre 2014 avec l’adoption de l’Agenda olympique 2020, qui encourage les villes à prendre en compte le développement économique et humain, au-delà de la dimension strictement sportive de leur candidature à l’organisation de Jeux olympiques, pour qu’une prise de conscience s’affirme timidement.

 Les Objectifs du Millénaire pour le développement (OMD) des Nations-Unies dans les années 2000, le rapport de l’ONU sur le sport au service du développement et de la paix en 2003 et enfin la prise en compte du sport dans les Objectifs de développement durable à l’horizon 2030 ont constitué de lentes avancées, bien en-deçà du potentiel inexploité du sport en matière de développement.

 L’utilisation du sport comme outil de développement peut être une chance pour l’Afrique mais suppose néanmoins de nombreux préalables dépendants de la volonté politique des dirigeants et de l’organisation sportive de leurs pays.

 Or, l’on observe des différences notables entre pays africains, de grandes nations sportives se distinguant dans les grandes compétitions internationales (Afrique du Sud, Nigéria, Ethiopie, Côte d’Ivoire, Sénégal notamment). Mais même pour celles-là, seules des politiques publiques vigoureuses permettront de faire du sport un outil sérieux de développement.

 A commencer par l’institution d’un cadre institutionnel et réglementaire permettant par exemple d’intégrer, du côté des bailleurs de fonds, un volet sport dans les programmes de développement et, du côté des Etats eux-mêmes, un code du sport permettant d’organiser les missions des acteurs du sport (Etat, collectivités locales, fédérations, clubs, associations etc) et de favoriser les investissements privés dans des Etats où, souvent, le pouvoir central est le seul à financer le sport (au demeurant les équipes nationales qualifiées).

Ensuite, au regard des effets favorables du sport dans les politiques éducatives, il apparaît fondamental d’organiser des fédérations scolaires et de les aider dans leurs missions (en facilitant l’accès à des infrastructures sportives notamment au sein des établissements scolaires).

Par ailleurs, le sport est utile à la correction des inégalités, territoriales d’abord (via le développement d’infrastructures régionales), physiques (par l’encouragement du mentoring et des bourses vers les publics vulnérables notamment les filles).

Enfin, la dimension économique du sport n’apparaîtra que si l’on encourage la création d’un marché économique du sport, levier de croissance et de créations d’emplois (via les métiers du sport dans la médecine du sport, marketing, gestion privée d’infrastructures sportives, média sportifs etc) pour les jeunes Africains passionnés de sport.

Rama Yade est l’ancienne secrétaire d’Etat aux Droits de l’Homme puis aux Sports en France et senior fellow au Centre Afrique de l’Atlantic Council.

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The court case, which was presented by a university student and a Motswana advocacy group for sexual minorities, challenged the court to repeal section 164 of the penal code that criminalized homosexual relations with up to seven years in jail. The Botswana ruling comes on the heels of a similar case presented before the Kenyan high court in May. Contrary to what many thought would be a new dawn for human rights in Kenya, that court ruled against repealing the penal code, upholding the colonial-era laws that criminalize same-sex relations.

This ruling by Kenya’s high court, and now the appeal against Botswana’s landmark case, are significant setbacks for LGBT progress in Africa, where homosexuality and gender nonconformity tend to be regarded as “unnatural” Western behaviors that have been imported from abroad, and threaten traditional African cultural values. In reality, laws criminalizing homosexuality were imposed on Africans by the colonial authorities, and some indigenous cultures have historically tended to accept homosexuality as commonplace. But the framing of LGBT rights as a form of neocolonialism has proven an effective tool for local politicians and religious leaders who wish to prevent progress on the issue – and who often form alliances with foreign religious groups and governments in the process. This dynamic makes it difficult for foreign actors – even popular ones, like President Barack Obama – to visibly promote the rights of sexual minorities in Africa.

A Long Walk to Equality
Thirty-two of the fifty-four African nations still criminalize homosexuality and target gender non-conforming and transgender individuals. Challenging discriminatory legislation against freedom of association and assembly is one of the first stepping stones towards LGBT equality, yet there are still many countries with laws that bar LGBT organizations from official registration.

There has been a recent surge of progress: since 2012, Lesotho, São Tomé and Príncipe, Mozambique, Seychelles, and Angola have all legalized homosexuality, making the majority of Southern African states LGBT-affirming by law. South Africa remains the pioneer state in this regard: it is still the only African country to legalize same-sex marriage and was the first in the world to have constitutional protection based on sexual orientation. Even in South Africa, however, homophobia is rife. Although decriminalization is a big step in achieving equality for sexual minorities, it is only the beginning. African activists at the forefront of this work recognize that the courts are not the end of the struggle, but they serve as a significant factor in protecting sexual minorities.

An Unreceptive Sociopolitical Climate
Across the continent, sexual minorities have been forced into displacement by threats of violence, blackmail, unemployment and other forms of social ostracization. While activists across the continent have focused on achieving human rights and legal protections for LGBT citizens, they have yet to make significant inroads against the cultural resistance to advancing LGBT rights. For many Africans, there is a shared sentiment that homosexuality is un-African and against their traditional and cultural values. Many religious leaders and political leaders especially oppose LGBT rights in the name of protecting national values.

While local African activists are paving the way for a more just future for sexual minorities, foreign efforts in support of LGBT rights, though well-intentioned, often undermine progress. This is largely because many Africans see homosexuality as a Western import. When Obama made stern comments in defense of LGBT rights during his 2015 visit to Kenya, his remarks provoked a severe backlash from local religious and political leaders. Seven hundred Kenyan pastors signed a letter asking him not to come to their country to push ‘gay talk’. In similar situations across the continent, Africans have been adamant about foreigners not imposing their beliefs and culture on them, by promoting LGBT equality.

It is in this sociopolitical climate that African activists are working to promote the freedoms of sexual minorities. They argue that it is not homosexuality that is un-African, but in fact homophobia that they inherited from colonial times through their penal codes. Efforts to confront narratives about the ‘Africanness’ or ‘unAfricanness’ of homosexuality can be threatened by the intrusions of foreign actors.  As seen in the aftermath of Obama’s 2015 visit, foreign support of LGBT rights can be appropriated by local politicians and religious leaders to spew homophobic rhetoric, placing LGBT communities in even more vulnerable positions.

An Alternative Foreign Policy Approach
The previous US administration had a robust strategy to support decriminalization efforts globally, however it fell short in some regards. Although appealing to American activists, threats of withholding financial assistance and public chastising of African countries’ LGBT stance, such as Obama’s address, don’t really serve LGBT communities in Africa. The aid conditionality approach to sexual rights has the potential to create conditions that further the precariousness of LGBT lives, and other marginalized groups who rely on foreign funding for education and healthcare. Furthermore, it excludes the voices of local actors and compromises the potential for civil society to lead its own national movements around sexuality rights.

Earlier this year, the Trump administration announced that it would launch efforts to address the global criminalization of homosexuality. While primarily targeted at putting pressure on Iran, Africa was also on the agenda. Given the Trump administration’s track record on LGBT rights, it seems that the administration may be hoping to use the issue as a pretext for applying sanctions. But that approach might do more harm to LGBT communities than good. If local LGBT individuals are blamed for American sanctions or other punitive measures, they may well suffer violence as a result.

Foreign actors meddling into LGBT politics in African countries ought to consider the climate within which African activists are working. Local activists prefer an approach that is more affirming of local bodies (such as the judiciary, and local and regional LGBT organizations), to a punitive aid-conditionality or public condemnation approach. An aid-based foreign policy approach to championing LGBT rights should instead consider allocating funding to the local and regional organizations and include participation and communication with the activists representing civil society in African countries. For example, ahead of Obama’s 2015 visit, one Kenyan LGBT organization suggested that the US should take the posture of directing efforts and support towards regional bodies such as the African Union (AU) that already passed resolution 275, which presents itself as an African stance on condemning violence against sexual and gender minorities.

Momentum for the LGBT movement across the continent has picked up in recent years. Amid repressive legislation and homophobic rhetoric rooted in religious values and anti-Western cultural sentiments, African LGBT activists are the best-placed actors to challenge their local courts and set precedents for future LGBT wins. Foreign actors supporting LGBT rights across the continent will need to listen to the activists on the ground and support their efforts towards decriminalization and greater protection for sexual minorities.

Stephanie Mithika was an intern with the Africa Center. Follow her on Twitter @steph_mithika.

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Africa Center Director of Programs and Studies and Deputy Director Bronwyn Bruton introduced Hruby’s paper and welcomed participants.

Hruby summarized the changing nature of Chinese financing in Africa, contrasting the well-documented government-to-government lending model with China’s growing incursions into private equity, venture capital, and other investment mechanisms. She also highlighted many of the gains Chinese companies have made in telecommunications, security technology, and media sectors, advising US investors and policy makers to look beyond China’s traditional dominance in infrastructure to new priority areas. Hruby asserted that the United States must build out its commercial strategy toward Africa, using new tools such as the US International Development Finance Corporation to maintain the upper hand in areas of comparative advantage.

An interactive debate followed during which participants discussed the most effective ways to break down persistent barriers to trade in sub-Saharan Africa through new programs such as the Prosper Africa initiative, and the potential of the new African Continental Free Trade Agreement to facilitate American investment on the continent, particularly by small- and medium-sized enterprises.

Among those in attendance were H.E. Seydou Kaboré, ambassador to the United States of Burkina Faso; H.E. Mahamadou Nimaga, ambassador to the United States of the Republic of Mali; representatives from key US government agencies including the US Department of Commerce, US Department of State, US Department of the Treasury, Millennium Challenge Corporation, Office of the US Trade Representative, Overseas Private Investment Corporation, and US Agency for International Development; and members of the intelligence community as well as private equity and advisory firms working in African markets.

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The Trump administration has raised the alarm about China’s domination of large infrastructure projects in Africa, diagnosing the growing indebtedness of African nations to China as a threat to US national security, as well as the sovereignty of the countries affected. They also correctly bemoan the unfair advantages conferred on Chinese firms by Beijing’s multi-billion dollar financial commitments. China’s commercial interests in Africa have evolved from infrastructure-centric, government-to-government (G2G) financing to challenge areas of traditional US investment strengths, such as foreign direct investment, private equity, and venture capital. As a result, the administration needs to account for the true nature of the economic challenge to US interests that China’s changing engagement with Africa poses.

A new issue brief by Africa Center Senior Fellow Aubrey Hruby, “Deconstructing the Dragon: China’s Commercial Expansion in Africa,” captures the diversifying forms of Chinese capital flows to African markets. Hruby first describes the opaque G2G nature of Chinese financing and contrasts it with the traditional government-to-business structure of US development finance. She then analyzes US investment in African markets across capital flows and warns of rising competition from Chinese firms in each category. In light of this evolving landscape, Hruby asserts that the United States must build out its commercial strategy towards Africa, using new tools to maintain the upper hand in areas of comparative advantage and double down on key areas of market demand.

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On Tuesday, June 18, the Africa Center hosted a public event on the state of democracy in Africa, occasioned by the launch of the new book Democracy Works: Rewiring Politics to Africa’s Advantage by Brenthurst Foundation Director Dr. Greg Mills, former Zimbabwean Minister of Finance Mr. Tendai Biti, Dr. Jeffrey Herbst, and former Nigerian President Olusegun Obasanjo.

Africa Center Senior Fellow Mr. Cameron Hudson welcomed guests and introduced Mills and Biti, who presented the book.

Mills laid out various challenges to African democracy and argued that the continent’s rapid demographic growth “demands an end to business as usual.” He stressed that democratic governments have historically performed better than their authoritarian counterparts in promoting development, noting that societal openness generally corresponds to lower volatility and higher economic growth. Mills acknowledged that exceptions do exist but maintained that the often-highlighted cases of Ethiopia, Rwanda, and Singapore are not sufficiently prescriptive or replicable in other African states. Commenting on international aid for democracy and governance promotion in Africa, he purported that although international engagement is not a silver bullet, targeted external assistance can make a difference. 

Expounding upon Mills’ remarks, Biti highlighted the threats posed to democracy around the world by burgeoning populist and nationalist movements, as well as the spread of international terrorism. He critiqued the narrative that elections equate to democracy, emphasizing the equal importance of civil and political rights and holding leaders to account. Biti further highlighted strong institutions, constitutionalism, an empowered citizenry, and a free market as critical democratic guideposts. He concluded that democratic progress should not necessarily be measured on election days, but rather during the periods in between.

In the ensuing discussion moderated by Hudson, panelists discussed the best ways for regional and international organizations to approach democracy promotion, the decline in international laws and norms, and the effects of the youth bulge on democratic demands on governments. Members of the audience also engaged the panel on the impact of urbanization, diaspora groups, and migration on the future of democracy in Africa.  

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On Thursday, June 6, the Africa Center hosted a public discussion on the future of warfare, occasioned by the launch of Senior Fellow Dr. Sean McFate’s latest book The New Rules of War: Victory in the Age of Durable Disorder.

Africa Center Director of Programs and Studies and Deputy Director Ms. Bronwyn Bruton welcomed guests and framed the discussion.  

McFate challenged mainstream understanding of war and peace, arguing that the United States is failing to adapt to modern approaches to warfare. While the US has focused on deterring conventional warfare since well before 1945, he argued that some adversaries have taken more creative approaches to military action, moving beyond the battlefield to new forms of conflict, fought not necessarily between nation-states but rather by corporations, mercenaries, rogue states, and other less traditional combatants. McFate pointed to Russia’s use of disinformation, masked troops, and covert operations to seize Crimea, as well as China’s creeping militarization of the South China Sea, to highlight adaptive approaches to hit enemy weak spots. Simply put, warfare is becoming more cunning, and a blind reliance on technology, tactics, and operations will not win today’s wars. Instead, McFate asserted that the US must adapt to a new age of “durable disorder” and provided ten prescriptive solutions to help policymakers be more strategic in the ways they approach modern-day security threats.

A panel discussion moderated by New York Times National Security Reporter Mr. Julian E. Barnes followed these remarks, featuring McFate and Enough Project Field Researcher and Analyst Ms. Nathalia Dukhan.

Dukhan, a Central Africa expert, applied the concepts outlined in McFate’s book to the conflict in the Central African Republic (CAR), highlighting many similarities between the situation on the ground and McFate’s conception of the future of warfare. Dukhan described CAR as a weak state dominated by myriad armed groups each with their own motivations and ideologies. Foreign contractors like the Wagner Group have entered the country’s security sector and regional mercenaries are allying themselves with local warlords, competing for resources and further destabilizing the region. In this context, Dukhan remarked that conventional approaches to security are failing, citing French troops’ inability to reclaim the city of Bambari from an entrenched warlord culture.

In the ensuing discussion, members of the audience engaged the panel on strategic approaches to combat nontraditional forms of warfare without compromising moral and democratic standards.

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On Thursday, May 16, the Africa Center hosted a discussion on women’s entrepreneurship and gendered barriers to raising capital in African markets.

Ms. Bronwyn Bruton, Africa Center director of programs and studies and deputy director, welcomed attendees, and Ms. Aubrey Hruby, Africa Center senior fellow, set the stage for a panel discussion that included Mr. Jake Cusack, managing partner at CrossBoundary, Ms. Berhane Demissie, managing partner at Cepheus Growth Capital, and Ms. Kathryn C. Kaufman, managing director for global women’s issues at the Overseas Private Investment Corporation (OPIC).

During the discussion, Kaufman gave an overview of OPIC’s new 2X Women’s Initiative, which has mobilized over $1 billion for businesses that are women-owned, led, and supported across the developing world. She underscored the extent to which Development Finance Institutions (DFIs) like OPIC are pushing each other to create gender-equitable change. She expressed hope that a coordinated effort will have outsized impacts in African markets, where private equity funds rely heavily on the DFI community to raise capital.

Cusack touched on his experience leading CrossBoundary, an investment firm specializing in fragile and frontier markets across much of the developing world, and elaborated on its success in achieving gender parity. He stressed that instead of implementing an artificial quota policy, the firm worked to improve its access to gender-diverse talent. Data shows that there is a positive correlation between gender balance and performance in emerging market private equity and venture capital investing, with gender-equitable funds receiving an internal rate of return about 20 percent higher than those that are male-centered. However, while talent is evenly distributed, Cusack noted, opportunity still is not.

Berhane discussed her experience building Cepheus Growth Capital, a private equity firm focused on small and medium-sized enterprises in Ethiopia. She stressed the value of ensuring that firms maintain gender diversity in their own leadership teams and in the companies in which they invest. She cited a recent International Finance Corporation report that sets a minimum of 30 percent men and women in leadership teams as a benchmark, but acknowledged that it is challenging in a market like Ethiopia where private equity is still a nascent asset class. She concluded that more forums are needed to facilitate women’s access to capital, especially those working in first-time funds.

An interactive question and answer period followed, during which the audience engaged panelists on the role of other US government agencies in advancing women’s entrepreneurship and ways to improve women’s access to capital in sectors that are particularly male-dominated, including energy and financial services.

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Focusing on Zimbabwe’s short-term stabilization plan, Ncube presented the progress made on key economic reforms since he was appointed to the finance ministry by President Emmerson Mnangagwa in September 2018. In particular, he highlighted efforts to impose fiscal discipline on the government, which he claimed has reversed a budget deficit that reached 11 percent in 2018. He also discussed monetary sector reforms, including the recent managed float of the Zimbabwean bond note, which was previously pegged one-to-one with the US dollar. Ncube asserted that although inflation would rise in the short term, this measure would ultimately reduce it by November and thus provide relief for Zimbabweans affected by high prices for basic goods.

Ncube also outlined President Mnangagwa’s vision for political reforms in Zimbabwe, including the repeal of controversial legislation such as the Access to Information and Protection of Privacy Act, which restricts the freedom of the press. Ncube also discussed efforts to streamline regulations for foreign investment; the ongoing negotiations to compensate farmers for land seized under the 2000 Fast-Track Land Reform Program; and his hope that Mnangagwa’s ambitious reform agenda could lead to the repeal of ZIDERA legislation by the US Congress, which has restricted Zimbabwe’s access to international credit.

A discussion, moderated by Ms. Bronwyn Bruton, director of programs and studies and deputy director of the Atlantic Council’s Africa Center, followed Ncube’s remarks. Participants focused on the negative effects of recent reforms on average Zimbabweans, potential new areas for investment in Zimbabwe, and the government’s efforts to clear its arrears with international finance institutions such as the World Bank and International Monetary Fund.

Those in attendance and participating in the discussion included LTG William Ward, USA (Ret.), former commander of US Africa Command; Amb. John Campbell, former US Ambassador to Nigeria; and a number of US and non-US government officials and business leaders.

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Introducing the distinguished guest, Atlantic Council Vice President and Africa Center Director J. Peter Pham highlighted the magnitude of Mukwege’s work over the years, treating more than 85,000 women and girls since 1999 – 50,000 of whom have been survivors of sexualized violence – and doing so with a unique combination of medical treatment, psycho-social support, community reintegration, legal assistance to pursue justice, and advocacy.

In his remarks, Mukwege discussed the magnitude of gender-based violence in the DRC, touching on the two decades of work by the Panzi Hospital, a 450-bed facility in Bukavu, South Kivu, in the eastern part of the Congo, to combat the problem. He argued that wartime sexual violence should be banned under conventions similar to those regulating weapons of mass destruction and anti-personnel mines, with prescribed punitive measures against violators. He stated that pressure and action from the international community, including the imposition of targeted sanctions when appropriate, working in conjunction with those affected, was the only way to end the culture of impunity that facilitates gender-based violence in conflict areas and continues to destabilize the DRC.

Touching on the recent presidential, legislative, and provincial elections in the DRC, Mukwege expressed the hope that newly-inaugurated President Félix Tshisekedi would reverse the longstanding stance of denial that the previous regime took towards sexual violence and grant international aid workers necessary access to victims and clinics. He also called on the new president to combat corruption and prosecute the elites, corporations, and foreign powers whose predations have impoverished the Congolese people and stirred instability for too long.

A discussion followed his remarks in which participants engaged Mukwege on the recent elections, measures to combat impunity for sexual violence crimes, and the role of religious institutions and the international community as well as local stakeholders in the fight to end gender-based violence in conflict.

Among those in attendance and participating in the discussion were several high-level current and former US government officials as well as representatives of other think tanks as well as advocacy organizations.

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Ms. Bronwyn Bruton, Africa Center director of programs and studies and deputy director, moderated the ensuing discussion in which participants engaged Faratoon on the Puntland–Somaliland dispute, oil and gas exploration, and the effects of Chinese, Russian, and Gulf State interests in Somaliland and the wider region.

Among those in attendance and participating in the discussion were Ambassador Lange Schermerhorn, former US ambassador to the Republic of Djibouti, Ambassador Stephen Schwartz, former US ambassador to the Federal Republic of Somalia, and Ambassador David Shinn, former US ambassador to Burkina Faso and the Federal Democratic Republic of Ethiopia, as well as representatives from US government agencies and nongovernmental organizations.

The post Somaliland’s foreign minister discusses trade and recognition appeared first on Atlantic Council.

In partnership with the Energy Futures Initiative, the Atlantic Council’s Africa and Global Energy Centers hosted a discussion on November 29 on the role of natural gas in Africa’s energy future, occasioned by the release of Africa50’s new report: Investing in Natural Gas for Africans: Doing Good and Doing Well.

The event featured welcoming remarks by Amb. Richard Morningstar, founding chairman of the Global Energy Center, and keynote remarks by Sec. Ernest Moniz, former US Secretary of Energy and president and chief executive officer of the Energy Futures Initiative, Mr. Alain Ebobissé, chief executive officer of Africa50, and Ms. Melanie Kenderdine, senior fellow with the Global Energy Center. A panel discussion, moderated by Mr. Randolph Bell, director of the Global Energy Center, and featuring Ebobissé, Kenderdine, and Mr. Andrew Kamau, principal secretary of the State Department of Petroleum of the Ministry of Energy and Petroleum of the Republic of Kenya, followed.

In his remarks, Sec. Moniz argued that natural gas should be at the center of Africa’s energy development. He stressed the need for an “all-of-the-above” policy, whereby governments use every tool available to diversify their respective energy mixes, increase power generation, and reduce carbon emissions. Sec. Moniz highlighted the US example of this approach, in which widespread adoption of natural gas, coupled with renewables, has drastically reduced the carbon footprint while maintaining sufficient energy supplies. In Africa, which generates approximately 45 percent of its power from coal and oil, vast new discoveries of natural gas in Mozambique, Senegal, and beyond could fuel a similar energy revolution.

Mr. Ebobissé presented Africa50’s report, discussing the ways in which the infrastructure fund is supporting the development of Africa’s natural gas resources to help countries produce clean power, industrialize, and provide affordable energy to households across the continent. He stressed that there is a strong consensus in Africa that natural gas adoption will fuel development and pay dividends well beyond the power sector. However, he acknowledged that limited midstream and downstream transmission infrastructure are still major hurdles to adopting natural gas on the continent. If this infrastructure can be developed, he argued, demand will increase, and Africa’s energy sector will become more competitive at a global level.

Ms. Kenderdine subsequently underscored the value of natural gas to Africa’s development, laying out different scenarios for countries to develop their natural gas infrastructure using imported or indigenous supplies. She also stated that Africa needed to find ways to monetize the more than $1 trillion in natural gas that is flared or stranded, presenting possible solutions such as airborne virtual pipelines and modular plants.

In the ensuing discussion, Mr. Kamau concurred with the other panelists, explaining how Kenya is integrating natural gas into its energy policy. He spoke of natural gas’ ability to support many other sectors, from powering technology in schools to supporting the manufacturing of cement to address the country’s housing shortage. Panelists also discussed efforts to attract infrastructure investments and the role of organizations like Africa50 in accelerating project development and implementation.

The post Energy experts discuss the role of natural gas in Africa’s energy future appeared first on Atlantic Council.

In his remarks, ElDirdiri expressed that US relations with his country were “moving in the right direction,” despite continued sanctions on Sudan stemming from its designation by the United States as a State Sponsor of Terrorism. He highlighted the successful completion of the first phase of rapprochement between Sudan and the United States, which resulted in the lifting of significant economic sanctions and the ending of a trade embargo in October 2017. ElDirdiri was hopeful that the second phase of negotiations would result in a removal of the remaining sanctions on Sudan.

ElDirdiri also explained Sudan’s regional policy, arguing that his country has been a strong partner in US counterterrorism efforts and made proactive efforts to solve regional crises, highlighting his country’s mediation attempts in the Central African Republic and South Sudan. ElDirdiri expressed his full support of the latest peace deal between South Sudanese leaders Salva Kiir and Riek Machar.

A discussion followed the minister’s remarks in which participants engaged ElDirdiri on recent economic reforms in his country, the sustainability of the latest peace deal in South Sudan, and the activities of other powers–such as China, Russia, Turkey, and the European Union–in the region.

Among those in attendance and participating in the discussion were former US Ambassador to Sudan Tim Carney, former US Ambassador to Burkina Faso and Ethiopia David Shinn, and several current and former US government officials as well as representatives from the private sector and nongovernmental organizations.

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Growing anxiety about China’s dominance of emerging markets spurred a rare bipartisan effort to pass the Better Utilization of Investments Leading to Development (BUILD) Act of 2018. The BUILD Act delivers a needed overhaul of US development finance capabilities and commercial diplomacy by subsuming the Overseas Private Investment Corporation (OPIC) and other development finance agencies into a single, streamlined entity: The United States International Development Finance Corporation (USDFC). The USDFC will provide policymakers with new tools for supporting US commercial diplomacy and promoting US corporate success in fast-growing foreign markets, including equity and grant making capabilities.

The BUILD Act has big implications for African markets, in which demographic growth has fueled an employment crisis and funding for entrepreneurial ventures remains painfully limited. A new issue brief by Africa Center Senior Fellow Aubrey Hruby, “The Future of Development Finance,” suggests that the new USDFC can catalyze job creation and conflict-prevention efforts while countering China’s rise – but only if policymakers create an agency prepared for future market realities. The USDFC, she writes, has to be able to tap into opportunities in the informal marketplace, despite the inherent risks and transaction costs; fast-track the development of business ecosystems and trust; and make the fundraising process more efficient for private equity firms. Hruby also recommends that the new USDFC should prioritize investments in areas of US competitiveness, such as finance, management services, and entertainment, rather than in Chinese-dominated sectors such as infrastructure.

With over 80 percent of future growth emanating out of emerging markets, the BUILD Act is poised to offer US companies a competitive boost that they desperately need. Hruby’s brief offers the policy makers tasked with creating the USDFC with a practical outline for creating a development finance institution capable of capturing the accelerating returns of the African marketplace.

Introduction

Rising competition from China in emerging markets has finally shaken the United States out of its complacency towards development finance and commercial diplomacy, creating a welcome new willingness on the part of US policy makers to innovate in enhancing the tools available to support US corporate success in fast-growing foreign markets.

The Better Utilization of Investments Leading to Development (BUILD) Act of 2018, which passed into law in October, is an important first step towards rebalancing US commercial diplomacy. It establishes a new government agency, the United States International Development Finance Corporation (USDFC),¹ that will subsume the Overseas Private Investment Corporation (OPIC) and authorizes the transfer of some facilities from the US Agency for International Development (USAID), namely the Development Credit Authority (DCA), the Office of Private Capital and Microenterprise (OPCM), and enterprise funds.²While both OPIC and enterprise funds have generated healthy returns for the Treasury, an updated approach that streamlines efforts and combines more flexible financing options will help boost commercial returns and support US national security interests.³Smart power⁴programs that generate economic activity can support conflict-prevention efforts while providing economic opportunities in emerging markets.

The USDFC will allow US policy makers to formulate a twenty-first-century free market approach to development finance. It will continue to focus on helping US businesses invest in low-income and lower-middle-income economies, but will do so more effectively than OPIC has done by expanding current capabilities in five ways:⁵

1. Raising the contingent liability cap to $60 billion over the next five years, which represents a doubling of OPIC’s current $29 billion lending cap.⁶
   
2. Permitting minority equity investments of up to 30 percent of total equity in any given project (the USDFC has a total limit of 35 percent equity of the agency’s total investments).
   
3. Providing technical assistance and grants for advisory services, project studies, and project promotion.
   
4. Allowing products to be denominated and repayable in a foreign currency, not just US dollars.
   
5. Replacing the “US nexus” with a “US preference” allowing for more flexibility for the USDFC to invest in innovative structures and market-interested players.

These new capabilities will provide greater support to US companies and investors seeking opportunities in historically risky markets. Nowhere is this more critical than in Africa.

Sub-Saharan Africa is the second-fastest-growing economic region globally (after South Asia), and many countries have made steady progress in addressing some of the key socioeconomic challenges. But growth is continually undermined by a huge unmet demand for infrastructure— particularly for energy and transport, consumer goods, and services in education and healthcare. Fortunately, most development finance institutions (DFIs) and foreign investment agencies, especially those in Europe and Asia, have already woken up to these trends and are helping the private sector to take advantage of the opportunities they present. African markets currently constitute 27 percent of OPIC’s portfolio and that share is slated to rise given the growth trends on the continent and the expanded USDFC budget cap.⁷ The ability to provide loans in local currencies will also enable the USDFC to be more in tune with local economic conditions, provide lower cost capital, and take a more long-term position in the markets.

This issue brief provides a snapshot of the DFI competitive landscape within African markets, discusses the key components of development finance, outlines the future challenges for DFIs, and offers recommendations to US policy makers charged with making the new USDFC a reality.

A snapshot of development finance institutions in Africa

Emergence of DFIs

Modern DFIs evolved from one of the central pillars of the Marshall Plan: addressing a clear market failure with government-provided insurance to private US investors to protect against the risks faced in post-war European markets. This political risk insurance was expanded in the 1950s to cover a larger spectrum of risks, from currency convertibility to expropriation.⁸ By the late 1960s, US policy makers had recognized the need to form an agency specialized in political risk insurance in an ever-expanding set of countries; they created OPIC in 1971.

For almost fifty years, OPIC and its sister institution, the US Export-Import Bank, have been central vehicles for US commercial diplomacy. OPIC was established with an initial portfolio of $8.4 billion in political risk insurance and $169 million in loan guarantees under the Richard Nixon administration, with a mandate to help US firms invest in sound business ideas in emerging markets with weak institutions.⁹ By participating alongside the private sector in accessing high risk–high return opportunities, OPIC, at its core, has been self-sustaining. It has returned almost $4 billion back to the US Treasury in deficit reduction over the last ten years, supported over $80 billion in US exports, and created 280,000 American jobs.¹⁰

OPIC does this by providing firms with risk-mitigating tools, such as political risk insurance and debt investment in private equity (PE) funds. But, while relatively large in capitalization, OPIC was built with limitations that have hamstrung its capacity to innovate and made it unable to effectively compete with its developed country counterparts. These limitations include its dependence on debt investments and dollar-based lending. Still, despite these constraints, OPIC has delivered benefits to the US economy and paid development dividends abroad.

With the exception of Britain, which formed its Colonial Development Corporation (CDC Group) in 1948

¹¹ to help advance agricultural development in the wake of World War II, many European countries also created their DFIs in the late 1960s and early 1970s. A combination of Cold War thinking, post-independence colonial patronage, and a desire to be part of the East Asian growth story of the 1970s motivated the formation of over a dozen DFIs and microfinance organizations in this period. Across the board, these institutions typically provide credit, equity, and a wide range of capacity-building programs to companies, small businesses, and early-stage funds whose financial needs are not sufficiently served by private banks or local capital markets.¹²

DFI finances

Most DFIs are funded through annual contributions from national governments, which ensures their creditworthiness. At their core, most DFIs are lenders with debt dominating their portfolios. The great exception is the United Kingdom’s CDC Group: 70 percent of its commitments have been in equity.¹³ To date, DFIs have generally focused on finance and infrastructure projects. OPIC provides the most financing for utilities (largely the result of the Barack Obama administration’s Power Africa initiative).¹⁴ A breakdown of the portfolios of the best-known DFIs is shown in Table 1.¹⁵

DFIs’ role in Africa’s growth story

African projects and deals claim the largest regional share of DFI portfolios. Between 2012 and 2016, sub-Saharan Africa received the most commitments ($14.2 billion), followed by East and South Asia ($10.5 billion) and Latin America ($10.2 billion).¹⁶ The $14 billion allocated in 2016 was nearly six times the amount allocated in 2005, and the proportion of funds allocated to Africa in overall DFI portfolios has also been growing. In the last fifteen years, it has risen from less than a quarter to roughly a third of the European DFIs’ consolidated portfolio. OPIC is also very active in the region: In 2017, sub-Saharan Africa accounted for 27 percent of its portfolio. The current portfolio is $6.1 billion across 128 projects.¹⁷

Comparing the development finance activities of non-European countries with those of the traditional DFIs is difficult given the vastly different approaches taken by the newer cadre of investors in sub-Saharan African markets (including China, India, Turkey, Morocco, and Israel). What these new players have in common is their aggressive use of financial activities as central to their commercial diplomacy and foreign policy.

No country has invested more in commercial diplomacy over the past decade than China. Fueled in large part by its desire to find natural resources and to sustain corporate profits, China has over the past two decades transformed its formerly negligible economic ties to Africa. It is now the continent’s biggest financier, accounting for 14 percent of Africa’s total debt stock.¹⁸ (This figure understates China’s hold on Africa’s fastest-growing economies: Beijing, for example, holds over 72 percent, or $5.32 billion, of Kenya’s bilateral debt).

¹⁹ Through the China-Africa Development Fund and export-import banks, China has supported the development of over three thousand critical infrastructure projects.²⁰ At the most recent Forum on China-Africa Cooperation, held in September, Beijing announced an additional commitment of $60 billion over three years to African countries.²¹

By offering debt that often does not meet the Organisation for Economic Co-operation and Development’s concessionality terms, China has been able to fill gaps left by multilateral financial institutions and Western DFIs, which often have stringent economic, social, and governance criteria. China’s aggressive approach has produced dramatic increases in the number of Chinese firms doing business in Africa; annual two-way trade is now over $200 billion.²² McKinsey & Company, a global consulting firm, estimates that there are now over ten thousand mainly private Chinese companies of all sizes operating in all sectors of African markets.²³ While China makes a show of announcing new programs and additional funds to support Chinese companies in Africa at a pageant-like triennial summit, US commercial diplomacy has stagnated. It still relies on the African Growth and Opportunity Act (a nonreciprocal trade agreement granting duty-free access to the US market for certain products), a hamstrung Export-Import Bank, and OPIC (which is limited to using only debt tools) as the foundation of its commercial relationship with Africa. The creation of the USDFC throws open a new door to innovation in development finance for the United States and will finally begin to level the playing field.

Key functionalities and best practices

DFIs are pivotal catalysts of growth in underserved economies, but they also promote the interests of their own governments and domestic businesses.

The BUILD Act articulates three main principles that will guide USDFC activities: additionality, meaning that DFI interventions must not crowd out private capital; the need to be catalytic by leveraging the capacities of the private sector and partnering with like-minded institutions; and alignment with US foreign policy strategic objectives.

Tool of commercial diplomacy

The United States has had a history of purporting to align its commercial interests with developmental and national security goals, but mostly falling short of creating robust commercial diplomacy capacities. A few bright spots—the Marshall Plan and US support provided to the fledgling private sectors of the former Soviet Union—demonstrate how measured capitalism can help foster democracy and political stability.

A core pillar of the Donald Trump administration’s National Security Strategy (NSS), and its America-first focus, is focused on regaining economic competitiveness as a basis for US power going forward.²⁴ The NSS makes explicitly clear what has long been intrinsically understood— that economic strength is the foundation of geopolitical strength—and calls for upgrading “diplomatic capabilities to compete in the current environment and embrace a competitive mindset.”²⁵Through its ability to generate economic activity in underserved markets, the newly created USDFC has an important role to play in smart power programs that help prevent conflict, create jobs, and deliver returns for the domestic economy.

Risk mitigation in underserved markets

The USDFC will prioritize activities in less developed countries, as defined by the World Bank.²⁶

There is no doubt that DFIs—by acting as first-movers and providing tools to reduce risk and unlock private capital flows—play a catalytic role in underserved markets.

DFIs are evolving away from the monoline provision of political risk insurance and increasingly seek to provide a comprehensive tool kit that is still aimed at mitigating political and regulatory risk, but also addresses counterparty credit risk and currency risks.

Currencies in emerging markets are often volatile and suffer from double-digit inflation. Resolving foreign exchange risks is vital for unlocking private equity flows into emerging markets by ensuring returns are not erased at exit when profits are translated back into dollars. According to the African Private Equity and Venture Capital Association’s review of private equity in Africa, 63 percent of fund managers found currency fluctuations to be the most important macroeconomic risk when investing in African markets.²⁷ DFIs have an important role to play by developing cost-effective ways to support investors in managing currency risks.

The four main risk mitigation tools relevant to African markets are summarized in Table 2.²⁸

Seeding private equity funds

DFIs have played a central and catalytic role in the creation of the African private equity industry. In the late 1990s, European DFIs, along with the IFC, began helping to seed private equity funds focused on African markets with equity. As one of the first to move in 1995, FMO started actively working with local partners and commercial banks to create small and medium-sized enterprise (SME) funds via the Dutch government’s Seed Capital Fund.²⁹ Technical assistance was also provided to train local investment managers. In that way, the DFI capital started to unlock other pools of money, including from institutional investors and private individuals looking to invest in African funds.

It is hard to overstate the importance of DFIs to the private equity industry. In 1997, there were twelve funds with a total of $1 billion³⁰ and today there are well over two hundred managing upwards of $35 billion in assets.³¹ Over 50 percent of private equity funds in Africa have DFIs as early investors, and DFIs helped to create a pool of professional fund managers deeply steeped in sustainable investing practices.³² The United Kingdom’s CDC Group has invested $4.1 billion in eighty-two private equity funds operating across the African continent, which in turn have invested more than $50 billion in more than 570 privately owned and managed companies in sixty-five countries.33 By comparison, OPIC has made just thirty-six investments in emerging market private equity firms.³³ This is, in part, due to OPIC’s inability to invest equity, and the reluctance of European DFIs to invest equity alongside OPIC debt.

In 2017, $453 billion was raised for private equity globally, adding to a stock of current uninvested capital of over $1 trillion.³⁴ The amount of money raised for African private equity was less than 1 percent of the global raise. The United States is home to seventy-seven of the one hundred top global limited partners and of these, 42 percent are public or private-sector pension funds. There is a huge amount of capital that could be unlocked for emerging and frontier markets by the USDFC through seeding more funds and other Africa-focused intermediaries. Nowhere is this more needed than in African countries.

Though ten million people are coming of age and joining the African labor market every year, the continent is only creating 3.7 million jobs per annum. American counter-extremism and security interests will be advanced if the USDFC can figure out ways to unlock more latent capital in the United States to help advance job creation in African countries.³⁵

Direct investments

In addition to seeding private equity funds, DFIs started making direct investments in African companies in the early 2000s. Direct investments give DFIs the opportunity to support company growth in situations in which PE firms cannot invest, or in which the investment has strategic significance in terms of either return, impact, or both.

Because DFIs have different thresholds for economic returns, they can often absorb more risk and be more patient over time. Also, the thorough due diligence conducted by DFIs sends valuable market signals to other investors. When DFIs invest in an African corporation, family offices, private equity funds, and international and local institutional investors take note and often piggyback on the DFIs’ diligence work. DFI equity investments therefore have the potential to be valuable far beyond their face value through their de-risking catalytic effect and ability to unlock private capital.

But it is important that such investments remain catalytic and do not instead crowd out private interests. Many DFIs have stipulations in their mandates that prevent them from competing on bids where the private sector has also bid.³⁶

DFIs of the future

The creation of the USDFC presents US policy makers with a strategic opportunity to innovate and shape a development finance institution wired to support US companies in rapidly growing, ever-changing low- and lower-middle-income countries. As the 120-day period articulated in the BUILD Act for creating the new agency unfolds, policy makers should focus their efforts on ensuring that the USDFC is equipped to do the following:³⁷

• Operate in informal markets. Informal markets are the loci of economic growth in most low-income countries. The informal sector produces an estimated 40 percent of Latin American and 35 percent of South Asian gross domestic product, and employs 65 percent of the workforce in some sub-Saharan African countries. In Kenya, the informal sector accounted for 90 percent of the jobs created in 2016. Scarce data, immature governance structures, fragmentation, and fluidity make investing in informal businesses extremely difficult for DFIs. The traditional due diligence requirements of major DFIs either make it impossible for informal sector companies to survive—due to a lack of proper documentation and corporate compliance, and the limited bandwidth of the entrepreneurs—or are cost-prohibitive on a return-adjusted basis for DFIs to embark on given the small size of the deals.

DFIs of the future cannot ignore the opportunities in the informal sector and must find a way to reduce the associated transaction cost. Companies operating in African markets that straddle the formal and informal markets such as cars45 in Nigeria and Brookside Dairie in Kenya should be studied to understand how they make informal businesses more efficient and the constraints to growth. These “straddling” businesses could be targets of direct investment as they carry outsized development returns by creating entire ecoystems of SMEs.

Additionally, DFIs could begin investing in companies that provide crosscutting business support services aimed at getting early-stage businesses investment ready. This space has traditionally been left to nonprofit players that lack the return incentive of DFIs, such as USAID’s joint program with leading consultancy firm Open Capital Advisors,³⁸ which makes $600,000 available through an investment readiness program to catalyze $3.5 million in investment into East African businesses; or Mastercard Foundation’s $1 million investment to support the African Entrepreneur Collective, an East African–focused SME incubator working to develop small businesses in Rwanda.³⁹ Such support, while valuable, often comes with a limited timeframe and therefore lacks the ongoing benefit a private investment would deliver. The flexibility to give technical assistance and make direct debt and equity investments into these service companies helps to formalize informal markets, and allows DFIS to be developmentally catalytic.⁴⁰

• Fast-track the development of business ecosystems and trust. DFIs of the future will also be able to use investments to get outsized development returns by reducing the cost of doing business, fostering trust within the market, and serving as a bridge for institutional capital. While DFIs have been helping to shape business ecosystems since the creation of the first enterprise funds in Central and Eastern Europe after the collapse of the Soviet Union, the needs of fast-growing companies in undercapitalized markets will require a blurring of the lines between traditional DFI products. A movement towards more flexible and customized funding structures (blended finance) will ensure that businesses get the capital necessary through various stages of growth. Part of additionality is ensuring that firms are responsive to customers rather than DFI processes. The increase in local debt facilities backed by DFIs is a positive development reducing the risk of debt financing for growing SMEs in emerging markets.

• Make the fundraising process more efficient for private equity firms and intermediaries. Given their unmatched importance to private equity funds operating in African markets, DFIs should dedicate some of their resources to improving the efficiency of the fundraising process. The average African private equity firm takes over three years to raise money, independent of its size. A great deal of this time is spent meeting with the two dozen main DFIs, tweaking presentations, and going through each DFI’s highly individualized application process. DFIs of the future can draw inspiration from the best practices in incubators and accelerators and apply them to the fundraising process, experiment with panel-type interviews and processes, and employ shared tech-based screening and due diligence procedures. By establishing even more standard rules and consistency in how they themselves operate, DFIs have an additive role to play in helping the entire development finance sector ecosystem evolve.

DFIs are more relevant than ever in the face of global growth patterns. With over 80 percent of future growth emanating out of emerging markets, US companies will require a competitive boost. Under the right leadership, mandate, and structure, DFIs can create new channels to crowd-in the private sector. Moreover, they can play a catalytic role by generating new knowledge, convening stakeholders, and providing technical assistance to build capacity in both the private and public sectors.⁴¹

The new USDFC

In addition to expanding the budgetary cap, the BUILD Act has endowed the new USDFC with equity power and a consolidated set of tools.

First, the USDFC will help put US development finance on a par with other countries at a crucial time. A recent estimate is that between 2002 and 2014, annual commitments made by DFIs grew from $10 billion to $70 billion. In addition, the DFIs of the other G-8 nations have been growing and doing development finance in more flexible ways, improving tools, and investing much more aggressively than the United States. For example, in 2017, the United Kingdom committed to quadrupling the limit on support it gives to its development finance portfolio.⁴² The USDFC will also improve US competitiveness against China, which is making ever-larger investments through its development finance institutions.⁴³

Second, the USDFC’s ability to invest equity in addition to debt makes the agency even more catalytic. With equity, it will be able to more effectively seed private equity funds and intermediaries focused on African markets. Under the old system, a private equity firm that was fundraising and had received an OPIC commitment would have to go to the European DFIs to get investments in order to unlock the OPIC debt money. European DFIs were reluctant to make these types of investments, however, because OPIC’s debt would be senior to their equity in the event of a bust scenario. Funds were thus often forced to choose between OPIC and European DFIs, and most chose the Europeans, whose long-standing equity products could truly anchor funds. Now the USDFC will be able to do the same and that power will create more US funds that invest abroad.

Finally, the USDFC will streamline the fundraising process by bringing a consolidated tool kit to aid efforts in US commercial diplomacy. It will consolidate some agency activities and federal development programs into one full-service, self-sustaining institution.⁴⁴ By creating a flexible menu of lending, first-loss capabilities, equity, local currency debt, and grants for technical assistance, the USDFC will be able to better deliver blended capital to a company or fund that is appropriately calibrated to its stage of growth. It will be the first time that policy makers will be able to speak about grants and returns, capacity-building and private equity in a single conversation unmarred by interagency divisions and communication slowdowns. It could become a role model for other DFIs.

Recommendations

The bipartisan nature of the support for the USDFC is inspiring in a time of deep divisions in Washington. The Trump administration has transformed the potential for the United States to buttress African economic development, while helping American companies succeed in new markets. Expanding a government agency, recruiting additional staff, and developing a viable pipeline of opportunities will all take time and create new bureaucratic, technical, and political challenges. During this formative 120-day reorganization period, US policy makers should consider the following recommendations:

1. Double down on areas of US competitiveness. The United States is a service-based economy and excels in sectors such as finance, technology, entertainment, and professional services.⁴⁵ Home to the world’s most well-established hub of venture capital and tech entrepreneurship, the United States has an opportunity to shape the new USDFC in areas of competitive differentiation and to offset recent Chinese advances. Chinese tech companies such as Huawei, Tecno, ZTE, and others have taken a deep interest in African markets over the past ten years and, recently, Tencent and Alibaba have started making investments in countries from Nigeria to Kenya. The USDFC should create special initiatives around financial technologies, venture capital, and crosscutting business services that can reduce transaction costs in lower-income economies. The preference given to American companies under the USDFC should be strongly enforced in areas of US competitive advantage.
   
2. Focus on key performance indicators. To do smaller, more impactful, and catalytic deals, especially in the informal sector, the USDFC should identify and prioritize key performance indicators such as the cost of transactions, standardization of due diligence standards, and time to commitment. Partnering with the European DFIs to standardize and harmonize due diligence and contracting processes can help the USDFC do more deals, more quickly. Additionally, the USDFC should incorporate technology in deal origination, data collection/analysis, and due diligence.
   
3. Cultivate a risk-taking mentality. While having a development mandate to work in low-income economies, many DFIs shy away from riskier deals because of concern about credit rating, the inability to drive down transaction costs, and the difficulty of creating meaningful incentives for employees on deal origination, vetting, closing, and exiting. The USDFC can explore structural innovations like seeding special purpose vehicles to create pools of patient off-balance sheet money from DFIs for higher risk deals.
   
4. Invest in ecosystem players for efficiency. To create a robust pipeline of deals and reduce transaction costs, the USDFC should prioritize investing in companies that function as the critical infrastructure of market assessment, deal origination, and vetting. These include tech companies in the data space and deal platforms such as Fraym and Asoko Insights.
   
5. Mobilize deep private sector expertise. Inspired by the Marshall Plan and early enterprise funds’ successes, the USDFC should create a program for private sector secondees, volunteers, and retirees to serve in advisory council roles on specific funds, deals, and sector deal teams. The Dutch provide a viable model. PUM Netherlands Senior Experts is a nonprofit organization that receives most of its funding from the Dutch government to develop small and medium-sized enterprises in over thirty emerging markets.
   
6. Prioritize equity investment in funds and other financial intermediaries. The vast majority of the USDFC’s equity power should go to funds—general partners of the funds are specialists closer to the ground with greater incentive to close and successfully exit deals. Outside of seeding and growing equity funds and permanent capital vehicles the USDFC should consider making equity investments in platform companies that have outsized and scalable development impact (such as renewable energy companies, financial inclusion technology, and mobile-first education). It is important to have a clearly defined policy around the use of equity to ensure additionality and to prevent the USDFC from competing with the very funds it seeds.
   
7. Create the positions of senior innovation officer and institutional liaison to educate and mobilize the US private sector. Since the mobile revolution has transformed the landscape of frontier markets, and technology will be critical for driving down transaction costs, the USDFC should establish a position of senior innovation officer to engage with tech-first parts of the US economy and forge partnerships with tech innovators in emerging markets. The innovation officer will be important in outreaching to tech companies and Silicon Valley venture funds and incorporating new technology internallly in the USDFC. Additionally, the USDFC should hire an executive tasked with engaging with US family offices and institutional investors, educating US companies and mobilizing domestic interest in priority deals.
   
8. Create a deal corps for MBA graduates. Forging a partnership with the Peace Corps, the Africa Business Fellowship, Bizcorps, US banks, and leading US business schools, the USDFC should create a two-year program for master of business administration (MBA) graduates to work in deal teams based on the continent. These teams, reporting into USDFC, could be involved in deal origination, initial due diligence, and post-deal monitoring. Top MBAs could be incentivized through loan forgiveness, the prestige of working with a US government agency, and a living wage stipend. Through this program, the United States can enhance its competitiveness by creating a whole cadre of future business leaders with first-hand experience in emerging markets.
   
9. Allow for regional enterprise funds. Given that the African continent is divided into fifty-four countries, many small and economically challenged, regional efforts become critical for sustainability. Encouraging regional integration has been a pillar of US foreign policy in African markets and the enterprise funds outlined in the BUILD Act should also operate with a regional mandate to reinforce African economic integration progress. The Millennium Challenge Corporation was given a mandate to make regional compacts earlier this year and the new USDFC should also have this capacity.

Conclusion

The USDFC presents a once-in-a-generation opportunity for the United States to create robust and strategic commercial diplomacy and remain competitive in the global market. The next four months will be critical in laying the groundwork for a DFI suited to the challenges of twenty-first-century emerging markets. By incorporating lessons learned and innovative thinking, the USDFC can create a new standard in development finance, and in doing so, strengthen US global competitiveness.

Aubrey Hruby is a senior fellow at the Atlantic Council and advisor to investors in African markets. She speaks regularly on African business issues and writes regularly for publications including the Financial Times and Axios. Aubrey is a term member of the Council on Foreign Relations, a board member of Invest Africa USA, young leader at the Milken Institute and the co-author of award-winning The Next Africa (Macmillan, 2015). She earned an MBA from the Wharton School at the University of Pennsylvania and an MA from Georgetown University.

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Growing anxiety about China’s dominance of emerging markets spurred a rare bipartisan effort to pass the Better Utilization of Investments Leading to Development (BUILD) Act of 2018. The BUILD Act delivers a needed overhaul of US development finance capabilities and commercial diplomacy by subsuming the Overseas Private Investment Corporation (OPIC) and other development finance agencies into a single, streamlined entity: The United States International Development Finance Corporation (USDFC). The USDFC will provide policymakers with new tools for supporting US commercial diplomacy and promoting US corporate success in fast-growing foreign markets, including equity and grant making capabilities.

The BUILD Act has big implications for African markets, in which demographic growth has fueled an employment crisis and funding for entrepreneurial ventures remains painfully limited. A new issue brief by Africa Center Senior Fellow Aubrey Hruby, “The Future of Development Finance,” suggests that the new USDFC can catalyze job creation and conflict-prevention efforts while countering China’s rise – but only if policymakers create an agency prepared for future market realities. The USDFC, she writes, has to be able to tap into opportunities in the informal marketplace, despite the inherent risks and transaction costs; fast-track the development of business ecosystems and trust; and make the fundraising process more efficient for private equity firms. Hruby also recommends that the new USDFC should prioritize investments in areas of US competitiveness, such as finance, management services, and entertainment, rather than in Chinese-dominated sectors such as infrastructure.

With over 80 percent of future growth emanating out of emerging markets, the BUILD Act is poised to offer US companies a competitive boost that they desperately need. Hruby’s brief offers the policy makers tasked with creating the USDFC with a practical outline for creating a development finance institution capable of capturing the accelerating returns of the African marketplace.

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Africa Center Director of Programs and Studies and Deputy Director Bronwyn Bruton introduced Hruby’s paper and welcomed participants.

In her introductory remarks, Hruby stressed that The Better Utilization of Investments Leading to Development (BUILD) Act is a once in a generation opportunity to reassert US competitiveness in emerging markets. In Africa, the new USDFC will be critical to countering China’s growing economic clout and could help solve a growing employment crisis, while also supporting US businesses investing on the continent. Hruby shared the recommendations from her publication, focusing on the new USDFC’s ability to operate in the informal sector, invest in industries that complement US competitiveness, and foster innovation in development finance.

After her remarks, Hruby opened the discussion to participants from the private sector and multiple US agencies, many of whom played a substantial role in the drafting and passage of the legislation.

The ensuing discussion highlighted several challenges that the new USDFC must overcome. Among others, participants discussed the challenge of gaining access to capital in informal markets, which encompass about two thirds of employment across Africa. To reach a considerable part of the economy and to have a meaningful development impact, the future USDFC must create mechanisms to supply the informal sector with capital despite the risks inherent in informality.

Participants also stressed that the USDFC will need to accelerate the pace at which deals can turn into commercially viable projects, and that innovation will be essential to the USDFC’s ability to keep up with Chinese investments. Hruby asserted that the USDFC must target industries where the United States has a competitive edge, such as finance, venture capital, management services, and entertainment, and seek out industries in which it can build footholds and scale up to reach commercial viability.

Among those in attendance were Atlantic Council Board Director Amb. Reuben E. Brigety II, former US ambassador to the African Union, Mr. Rob Mosbacher, chairman of Mosbacher Energy Company, and a number of representatives from the Overseas Private Investment Corporation, the US Agency for International Development, and private equity and advisory firms working in African markets.

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Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham welcomed guests and stressed the event’s timeliness, just two months before the country’s long-overdue elections. Enough Project Managing Director Brad Brooks-Rubin outlined the scale and scope of the gold trade and the numerous approaches that have been developed to stem the flow of conflict gold. In particular, he underscored how the international community has changed its approach to conflict minerals in recent years, shifting from policies and regulations aimed at banning trade in goods financing conflict entirely to due diligence and risk-based approaches. Brooks-Rubin argued that information and political will are key to the success of these new approaches, and while a lot has been done to clean up the gold trade, far too many armed groups continue to profit from it.

A discussion, moderated by Africa Center Deputy Director Bronwyn Bruton, followed Brooks-Rubin’s remarks and featured Enough Project Deputy Director of Policy Sasha Lezhnev and Responsible Business Alliance Senior Program Manager Hillary W. Amster.

Lezhnev provided an overview of the report, highlighting a specific corporate network and the ways in which it appears to have refined illegally-smuggled conflict gold from eastern DRC at the African Gold Refinery in Uganda. He further outlined the many ways in which this corporate network appears to be noncompliant with international due diligence and anti-money laundering (AML) frameworks, raising several AML red flags outlined by the Financial Action Task Force, and offered recommendations to governments, companies, and consumers. In particular, Lezhnev recommended:

1.       Network sanctions against companies involved in the conflict gold trade, their corporate networks, and their beneficial owners. He noted that both the new trading network and the rival one that immediate proceeded is important, otherwise one may simply replace the other, and the important point is to build up the legitimate, conflict-free trade;

2.       Anti-money laundering measures, including advisories, to identify conflict gold from the Great Lakes region and/or from certain traders as a class of transactions that would be of primary money laundering concern;

3.       Enhanced scrutiny from banks and other gold purchasing companies when dealing with gold refining and trading companies.

Amster spoke about the Responsible Minerals Initiative within the Responsible Business Alliance and its work to provide tools and resources to companies that support due diligence and responsible sourcing of gold and other minerals from conflict areas. She noted that the processing, smelting, and refining process is often the pinch point in the gold supply chain as the materials become largely indistinguishable when purified gold is produced. Amster further acknowledged that the companies involved in the refining process are often the most difficult to audit and do not necessarily feel the same consumer pressure that a jewelry company might as they sit higher up in the supply chain.

In the discussion that followed, panelists discussed ways to incentivize responsible gold sourcing and the role of consumers in applying pressure on actors operating in the upstream and the downstream of the global gold trade.

Among those in attendance were H.E. Mull Sebujja Katende, Ambassador of the Republic of Uganda, Lieutenant General William Ward, former commander of United States Africa Command (AFRICOM), and a number of US and non-US government officials, business leaders, and civil society representatives.

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Dr. J. Peter Pham, Atlantic Council vice president and Africa Center director, welcomed participants and introduced the discussion.

In his remarks, Pham outlined the grim situation in South Sudan, noting that “382,000 South Sudanese have paid with their lives for the ambitions of their supposed leaders…a high[er] mortality rate vis-à-vis the country’s population than even the civil war in Syria has exacted.” Pham further drew attention to the country’s nearly 2.5 million refugees and 1.85 million internally displaced persons—figures which he underscored meant that “more than 36 percent of South Sudanese are dead or homeless because of the protracted conflict”—as well as the 57 percent of the population “living in conditions of food security crisis or worse.” Compounding the tragedy, Pham noted, “2.4 million children, the future of South Sudan—if there is to be one—are not receiving an education” because of the civil war that has raged since late 2013. Addressing Taban Deng on his role in prolonging the conflict as he has shifted sides, Pham observed that “the deaths…peaked in 2016 and 2017, coinciding with your tenure as First Vice President.” Pham summarized by quoting a White House statement that said “[T]he leaders of this country have squandered this partnership, pilfered the wealth of South Sudan, killed their own people, and repeatedly demonstrated their inability and unwillingness…to end the country’s civil war.”

Taban Deng Gai, in his remarks, expressed faith in the latest peace deal signed by President Salva Kiir and former First Vice President Riek Machar (who is slated to supersede Taban Deng Gai as first vice president once more, while the later will remain one of four other vice presidents) in the face of significant skepticism. Taban Deng Gai argued that this peace agreement would address the failings of the previous deal, blaming the 2013 and 2015 outbreak of hostilities on power struggles inside the ruling party and the presence of competing armies in Juba, respectively. According to Taban Deng Gai, the new peace deal has settled “all disputes” among leaders in South Sudan, despite the contention by many experts that the agreement lacks any substantive difference from previous treaties. As, by many reports, the conflict continues amid a dire humanitarian crisis, Taban Deng Gai insisted that South Sudan’s leadership has learned from its mistakes and that the fighting had ceased. He also called for renewed financial support from the United States.

After his remarks, Taban Deng Gai was asked by Atlantic Council Executive Vice President Damon Wilson about Peter Biar Ajak, an alumnus of the Atlantic Council’s Millennium Fellowship and South Sudanese activist, who was detained arbitrarily in Juba in July of this year. Wilson presented the South Sudanese leader with a letter signed by him and Atlantic Council President and CEO Frederick Kempe asking for Ajak’s immediate release—a call that was echoed by other US participants in the roundtable.

An animated discussion about political prisoners then ensued, fueled by Taban Deng Gai’s insistence that the thousands of arbitrary detentions of government opponents was really evidence of the “rule of law” in the country.

The participants, many of whom played substantial roles in the 2011 birth of South Sudan and the years subsequent, unanimously expressed their skepticism over the latest peace deal as well as their frustration and disappointment with a lack of progress towards ending the civil war. Several questioned the stipulations of the most recent agreement, highlighting shortcomings in the implementation of security sector reform, violations of human rights and the need to release political prisoners, enhanced financial transparency, and improved accountability for war crimes. Some participants also drew attention to the irony of the role that the government of the Republic of Sudan—against which the South Sudanese fought for years to become independent—has recently played in trying to broker peace among the various factions in South Sudan. Other participants noted that while all sides have committed atrocities, virtually every independent investigation has attributed the majority of the abuses to government forces.

Participants also highlighted the squandering of much of more $14 billion in aid provided by the United States to South Sudan, while Taban Deng argued that if money had been “better spent,” perhaps there might not have been a conflict. When Taban Deng was questioned on financial transparency and resource governance, one of those accompanying the first vice president, H.E. Awut Deng Acuil, minister of gender, child, and social welfare, first claimed that the government had published the results of two audits as it is required by the constitution to do, before retreating to blame the lack of publication on the auditor general’s lack of authority to conduct audits due to undefined “presidential and parliamentary” concerns.

Taban Deng closed by asking for greater US political and financial support for South Sudan’s leaders and pledged that the elections which were supposed to have been held in 2014 will take place three years from now.

Among those in attendance and participating in the discussion were Ambassador Jendayi Frazer, former assistant secretary of state for African affairs and an Atlantic Council board director; Ambassador Linda Thomas-Greenfield, former assistant secretary of state for African affairs; Ambassador Donald Booth, former US Special Envoy for Sudan and South Sudan; Kate Almquist Knopf, director of the Africa Center for Strategic Studies at the National Defense University and former assistant administrator for Africa at the US Agency for International Development; and Ambassador Makila James, deputy assistant secretary responsible for East Africa and the Sudans in the State Department’s Bureau of African Affairs. Also present were representatives from major human rights and humanitarian organizations as well as a number of current and former US government officials.

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On the margins of the 73rd ordinary session of the United Nations General Assembly, the Atlantic Council’s Africa Center and Global Energy Center hosted a half-day conference focusing on new opportunities for development across Africa’s energy sector. The event featured welcoming and introductory remarks by Dr. J. Peter Pham, Atlantic Council vice president and Africa Center director, followed by brief remarks by Mr. Bernard Looney, BP chief executive for upstream. H.E. Daniel Kablan Duncan, vice president of the Republic of Côte d’Ivoire and Mr. Andrew M. Herscowitz, Power Africa coordinator at the US Agency for International Development, presented keynote remarks during the event, while Mr. Randolph Bell, Global Energy Center director, delivered closing remarks.

Vice President Duncan discussed the numerous opportunities for African economies generated by improved energy access. He highlighted President Alassane Ouattara’s goal of reaching 4GW of installed capacity by 2020 and outlined the steps his government is taking to meet this target. Duncan also spoke to the state of Africa’s energy sector more broadly, lamenting the insufficient access to reliable electricity and the impediments that hinder African countries’ ability to tap the continent’s immense yet under-exploited energy potential. In discussing these challenges, he stressed the need for ambitious energy policies cognizant of environmental concerns and attractive institutional and regulatory frameworks to fuel greater investment, among other recommendations. Above all, Duncan cited the continent’s stubborn infrastructure gap as the primary impediment to growth, underscoring the need to unlock private sector funds, in addition to non-traditional financing models, to meet Africa’s growing energy demand.

Mr. Herscowitz shared several lessons learned since Power Africa first launched in 2013 and expressed satisfaction with the program’s ability to provide market-driven solutions to advance Africa’s energy sector. However, he acknowledged the persistent challenge of bringing energy deals to close in several African markets. He also discussed Power Africa 2.0., an updated strategy that expands previous targets while placing greater emphasis on transmission and distribution infrastructure as well as the creation of enabling environments for the private sector.

Three panel discussions completed the event, each focusing on different energy resources. The first panel, moderated by Dr. Charles Ebinger, Global Energy Center senior fellow, focused on gas and featured Mr. Lance Crist, global head of natural resources at the International Finance Corporation; Ms. Emma Delaney, BP regional president for West Africa; Mr. Alain Ebobissé, CEO of Africa50; and Mr. Jay Ireland, president and CEO of GE Africa.

The second panel, moderated by Ms. Meghan Gordon, senior editor at S&P Global Platts, focused on the future of oil in Africa and included Mr. Brian Herlihy, founder and CEO of Black Rhino Group; Mr. Adewale Tinubu, CEO of Oando PLC; and Mr. Stephen Willis, regional president of BP Angola.

The third panel, moderated by Ms. Aubrey Hruby, Africa Center senior fellow, focused on the spread of renewable energy across the continent and included Mr. Kerry Adler, president and CEO of SkyPower; Mr. William Doffermyre, vice president and general counsel of the Overseas Private Investment Corporation; and Mr. Christopher Ryan, head of North America at Mainstream Renewable Power. Among those in attendance and participating in the discussion were three former Assistant Secretaries of State for African Affairs–Amb. Linda Thomas-Greenfield, Mr. Walter H. Kansteiner III, and Africa Center Senior Fellow Constance Berry Newman–senior business leaders from across the continent, and thought leaders from a variety of industries.

Watch the highlights of the conference here:  

1.       Opening Remarks: Dr. J. Peter Pham, Vice President for Research and Regional Initiatives and Director, Africa Center, Atlantic Council

2.       Opening Remarks: Mr. Bernard Looney, Chief Executive, Upstream, BP

3.       Panel 1: Prospects and Challenges for West African Gas Development

4.       Keynote Address: H.E. Daniel Kablan Duncan, Vice President, Republic of Côte d’Ivoire

5.       Panel 2: African Energy Futures: The Role of Oil

6.       Keynote Address: Mr. Andrew M. Herscowitz, Power Africa Coordinator, US Agency for International Development

7.       Panel 3: Africa’s Renewables Story

This event was made possible by generous support from BP.

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African film, music, and fashion are exploding in popularity on the global stage. From Nigeria’s Nollywood film industry to the visual arts in South Africa, creative and cultural industries (CCI) represent a new realm of economic op­portunity. From artists to distrib­utors, Africa’s creative economy is currently estimated to employ about half a million people, generates $4.2 billion in revenue, and is growing rapidly. In order to expand Africa’s share of the $2.25 trillion global entertainment market, African governments, busi­nesses, and investors should find innovative ways of supporting, promoting, and investing in CCI.

A new issue brief by Africa Center Senior Fellow Aubrey Hruby, Getting Creative About Development, provides a snapshot of the creative and cultural indus­tries in key African markets, discusses the trends under­girding the growth of CCI, outlines the challenges facing the industry, and offers policy recommendations. Africa has long been rich in talent and creativity, and in today’s maturing markets, African CCI has a significant role to play in eco­nomic development and the potential to stake its claim as part of the global mainstream.

 

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]]> https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/getting-creative-about-development-2/ Mon, 24 Sep 2018 13:11:21 +0000 https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/ African film, music, and fashion are exploding in popularity on the global stage. From Nigeria’s Nollywood film industry to the visual arts in South Africa, creative and cultural industries (CCI) represent a new realm of economic op­portunity.

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African film, music, and fashion are exploding in popularity on the global stage. From Nigeria’s Nollywood film industry to the visual arts in South Africa, creative and cultural industries (CCI) represent a new realm of economic op­portunity. From artists to distrib­utors, Africa’s creative economy is currently estimated to employ about half a million people, generates $4.2 billion in revenue, and is growing rapidly. In order to expand Africa’s share of the $2.25 trillion global entertainment market, African governments, busi­nesses, and investors should find innovative ways of supporting, promoting, and investing in CCI.

A new issue brief by Africa Center Senior Fellow Aubrey Hruby, Getting Creative About Development, provides a snapshot of the creative and cultural indus­tries in key African markets, discusses the trends under­girding the growth of CCI, outlines the challenges facing the industry, and offers policy recommendations. Africa has long been rich in talent and creativity, and in today’s maturing markets, African CCI has a significant role to play in eco­nomic development and the potential to stake its claim as part of the global mainstream.

Introduction

By 2035, sub-Saharan Africa will have more working-age people than the rest of the world combined. African governments collectively need to create eighteen million new jobs each year to absorb the large, young, and ambitious population coming to working age.¹ But technological advances, combined with the underdeveloped infrastructure of most African nations, mean that the tried and true model of export-oriented industrialization, which allowed the East and Southeast Asian economies to develop very rapidly, is unlikely to produce adequate job creation in the vast majority of African markets. In fact, manufacturing as a share of total economic activity in Africa has stagnated at about 10 percent,² and—though there are notable exceptions, such as Ethiopia—the continent as a whole is deindustrializing.³ Agriculture still continues to serve as the backbone of most African economies, with over 70 percent of Africans earning a living in that sector.⁴

But as Africa urbanizes, the composition of economic activity is rapidly changing, shifting away from agriculture and towards the services sector. In 2015, services accounted for 58 percent of sub-Saharan GDP (up from 47 percent in 2005).⁵ More significantly, 33 percent of African youth are now employed in services.⁶ The services sector is broad and dynamic, including everything from accounting firms to roadside barbers. And an often-overlooked source of growth in the sector, especially in Africa’s larger and more developed markets such as Nigeria, South Africa, Kenya, and Morocco, are the creative and cultural industries (CCI). African film, music, and fashion are exploding in popularity on the global stage and should be seen as a force for economic good.

From Nigeria’s Nollywood film industry to the visual arts in South Africa, CCI are creating a new realm of opportunity. Africa’s cultural goods sector⁷ is estimated to employ about half a million people and generate $4.2 billion in revenue on the continent, albeit mostly through the informal economy.⁸ However, if CCI could become more formalized and thus capitalized, CCI could become a driving force in economic development. African governments, foreign aid agencies and multilateral institutions should consider elevating CCI within their development strategies. This brief takes a market-oriented view of African music, fashion, film, and visual arts and addresses the commercialization of the arts for employment and profit. In this way, indigenously-created African products will be discussed in the same context as foreign cultural products that touch African markets through the production process. The brief treats cultural goods as products that can be consumed locally and exported internationally and the central argument of this brief is that African countries should strive for a larger share of the global entertainment market.

With these undergirding assumptions, this brief will provide a snapshot of the creative and cultural industries in key African markets; discuss the trends undergirding the growth of CCI; outline the challenges facing the industry; and offer policy recommendations. While the creative and cultural sector will not supplant agriculture, manufacturing, or services in job creation efforts, CCI has a significant role to play in African economic development and has far too long been ignored due to its untraditional nature.

Snapshot of the creative and cultural industries in Africa

Africa’s rich cultural assets have influenced global culture since the horrors of slavery carried African traditions to the Americas and Europe. Though slaves and their descendants enriched their new countries and communities, creating entirely new categories of music and art, they were rarely permitted to receive commercial returns on their cultural contributions. And cultural exports from Africa continued to be undervalued, and appropriated by non-African artists, well into the post-colonial era. The same type of racial discrimination that prevented black American artists from sharing in the profits of their creative pursuits historically disadvantaged Africans in their efforts to monetize their talents. Superstar Nigerian musician Fela Kuti has never gained proper recognition from Western record companies despite selling millions of copies of his sixty records. Fela commented, “American record companies seem to feel I am antiwestern, anticapitalism, anti the kind of society they like.”⁹ As a result of this type of exclusion, the creative and cultural industries in African markets today lack the formality and professionalism of their global counterparts. However, globalization is rapidly changing this reality, and presenting African countries the opportunity to harvest greater returns from the international entertainment market.

Today, CCI plays an integral role in the global economy, generating $2.25 trillion in revenue and employing 29.5 million people. Africa accounts for less than 3 percent of the total revenue, and 8 percent of the total CCI jobs, leaving room for tremendous growth.¹⁰

Demand for African cultural goods has increased both within the continent and internationally. There is a global appetite for representations of African cultures—even fictitious ones. The Hollywood blockbuster Black Panther, which showcased African actors, music, and design influence, is now the highest grossing superhero film of all time, bringing in over $1.2 billion at the box office globally. American celebrities and first ladies wear African fashion and Nigerian music pulses on the airwaves. Nollywood, Nigeria’s film industry, accounts for 2 percent of Nigerian GDP and directly employs 300,000 people.¹¹ Indirectly, Nollywood is estimated to employ over one million people from actors to directors, hair stylists to sound technicians, marketers to advertisers.¹² In South Africa, creative industries contribute about 2.9 percent to GDP and account for 3.6 percent of employment.¹³

While most CCI is consumed locally in African markets, transatlantic musical collaborations are growing and there is deepening integration between US record labels and African (mainly Nigerian) artists. Nigerian singer-songwriter Tiwa Savage’s collaboration with the American R & B singer, Fantasia Barrino, led to a Grammy nomination in 2010, and WizKid’s feature on Drake’s song, “One Dance,” led to a multi-album worldwide deal with RCA Records/Sony Music International. African music is now accessible on international services such as iTunes, Shazam, and YouTube, and Spotify opened offices in South Africa in early 2018. Africa’s creative and cultural industries are unmistakably on the rise —especially in the US and European markets, which will make them more and more attractive to investors. This matters, because additional capital is needed to commercialize and distribute these products to the global market, and to maximize the sector’s profit and employment potential for African economies.

CCI by sub-sector

The United Nations Educational, Scientific, and Cultural Organization (UNESCO) defines CCI as activities “whose principal purpose is production or reproduction, promotion, distribution or commercialization of goods, services and activities of a cultural, artistic or heritage-related nature.” CCI has eleven sub-sectors: television, visual arts, newspapers and magazines, advertising, architecture, books, performing arts, gaming, movies, music, and radio. This brief covers only the film, music, and, fashion industries given their size, relative maturity, measurability, and potential for future growth.

Film industry

Nollywood is the central hub of Africa’s film industry and is the second-largest film industry in the world by volume. Due to working capital constraints and the largely informal nature of Nollywood, film production is rapid, averaging about forty movies per week—a volume that falls short of only India’s Bollywood industry. Over the last three decades, Nollywood has been largely ignored by the rest of the world, but has built a large and dependable audience of Nigerians.¹⁴ Today, that domestic market is expanding outside Nigeria and the Nigerian diaspora, and filling the continent-wide demand for programming that is made by Africans about Africans. Most titles are recorded in English and usually sell over 200,000 copies, allowing them to turn a profit within two to three weeks of release.¹⁵These profits are then recycled into the new round of production.

As the industry matures and production value improves, Nollywood films have garnered greater international recognition and commercial success, with some available to stream on platforms like Netflix. The Wedding Party premiered at the 2016 Toronto International Film Festival and quickly became the first Nigerian film to pass the $1.3 million mark, only to be surpassed by its sequel The Wedding Party 2 in 2017. ¹⁶

With the success of Nollywood and its growing role in the Nigerian economy (it contributes $7.2 billion to GDP), the government has increasingly acknowledged the importance of the industry for economic development.¹⁷ Abuja has committed a budget of about $8 million through Project ACT, which aims to improve and promote three key components of the movie-making value chain: capacity building, film production, and distribution.¹⁸The government has also pledged tax relief aimed at fostering growth in the film industry.

Before the rise of Nollywood, Egypt was an internationally-recognized global powerhouse in film production. Prior to 2011, Egypt produced about forty films a year and has accounted for 75 percent of the films made in Arabic-speaking countries since 1980.¹⁹Political and economic challenges have since adversely affected Egypt’s industry—production numbers plummeted after the events of the Arab Spring. However, the industry is beginning to recover as younger filmmakers and older stars return to remake the industry in a new era.

The film industry is also growing rapidly in South Africa and Morocco, though not through original content production, as in Nollywood. Instead, these countries have become destinations for many of the world’s top filmmakers. Cheaper production costs, tax credits, and safe environments lead many to film in these alluring landscapes: from Safe House and Eye in the Sky in South Africa to American Sniper and Sex and the City 2 in Morocco. Ahead of many of their peers, the infrastructure in Morocco and South Africa provides filmmakers with the necessary tools for high-end movie production. State of the art complexes such as Cape Town Film Studios’ $35 million facility enhance South Africa’s competitiveness to attract production. Employing just four thousand people in 1995,²⁰ the South African industry created more than 21,000 jobs by 2017 and contributed about $430 million to GDP.²¹

American, British, and French companies account for about 90 percent of foreign investment in the Moroccan film industry, which amounted to over $130 million in 2014. Filming is largely clustered in Ouarzazate, and has created about three thousand Moroccan jobs.²²Companies in Morocco are providing cheaper alternatives for many of the roles required in movie production, including editing, which can offer attractively lower costs for international filmmakers. Morocco’s government has also supported the expansion of the film industry through a successful incentive structure, which includes a simplified import and export process for film shooting equipment, rebates from nationally owned transportation services (i.e. Royal Air Maroc), and VAT exemption on all good and services acquired in Morocco.

Music industry

African music has long influenced music genres in the West. However, African-produced music gained little recognition outside of the continent until the era of independence. In the 1960s and seventies, Afrobeat, a combination of West African jazz, and funk styles pioneered by Fela Kuti, influenced a generation of American and British artists. But the appeal remained niche and diaspora-focused from the 1980s until around 2010. As streaming services spread throughout Africa with broadband penetration and mobile telephony, music made on the continent has gained global recognition from everyday listeners to music superstars like Drake and Nas.²³ Nigerian pop sensation Davido credits the internet and social media with sparking the transition of African music from the periphery to the mainstream in western markets.²⁴

Today Nigeria is the hub of music creation in Africa, producing over 550 albums annually. Over the last decade, “Naija” music has skyrocketed in popularity and today Nigerian live performance exceeds $100 million in annual revenue.²⁵ Nigeria has a strong domestic digital music business and international players are taking a bigger interest. US and European record labels continue to sign Nigerian artists as they gain visibility through collaborations with Western artists. Los Angeles-based Universal Music Group recently acquired one of East Africa’s largest labels, AI records, and has opened a new office in Lagos to focus on the region.²⁶Universal has additionally signed established artists from Ghana, South Africa, Côte d’Ivoire, Togo, and Cameroon, as they build a pan-African music operation.

In just a decade, music has become a key Nigerian export. The dominance of Nigerian music on African radio and TV stations led to protests in Kenya, where local artists felt they could not build a Kenyan following. In response, Kenya’s Ministry of Culture passed legislation directing that 60 percent of content on radio and TV stations must be produced domestically.²⁷

The music industry is contributing to the growth of the creative sector not only in Nigeria, but also in South Africa and Kenya. South Africa’s total music revenue is set to reach $178 million by 2020, supported by revenue from digital music streaming.²⁸ A strong mobile music sector will support rapid growth in Kenya as well. Kenya’s total music industry revenue is expected to rise to from just $22 million in 2017 to $32 million in 2021.²⁹ Internet penetration and the spread of mobile technology will continue to support increased consumption of digital music.

Fashion industry

Demand for apparel by African designers is no longer limited to local markets. Western fashion houses have long tapped the African market for inspiration, from Yves Saint Laurent’s 1967 “African” collection to Stella McCartney’s incorporation of Ankara prints in her spring 2018 collection. Given the long-standing demand for the often bold, bright, and lively nature of African designs, African designers themselves are finally gaining prominence abroad. Amaka Osakwe, designer of the fashion line Maki Oh, gained commercial success thanks to pop sensations Beyoncé and Rihanna, and to former first lady Michelle Obama wearing her styles.

The majority of African megacities now hold fashion weeks to showcase African designers, including Johannesburg, Cape Town, Lagos, Accra, Dakar, Cairo, and Nairobi. In addition to growing the local fashion market, African designers increasingly participate in New York, London, and Paris fashion weeks. Today’s African designers are global, often operating in European, American, and African markets simultaneously. The Nigerian designer Deola Sagoe recognized the appeal of African styles when studying in the United States in the 1980s. The core element of Sagoe’s designs rely on Aso Oke fabric, a traditional handwoven cloth from Nigeria, which has attracted the attention of Vogue and A-list celebrities.³⁰

The global fashion industry is projected to generate $5 trillion in the next decade, and African designers are looking to capture a larger piece of that market. African designers operating at the heights of global fashion are positioned to take a greater share of the $420 billion luxury fashion industry³¹ and inspire local designers focused on sub-Saharan Africa’s $31 billion apparel and footwear market.³²

The African Development Bank’s recent launch of the Fashionomics initiative highlights the role fashion can play in economic development. To grow Africa’s fashion industry, the initiative looks to promote investment in the sector, increase access to capital for entrepreneurs, and incubate and accelerate start-ups.³³Fashionomics is actively providing training and knowledge sharing opportunities for today’s burgeoning designers.

Trends undergirding the growth of CCI

Africa’s changing demographics, the growth of the African diaspora and the rise of mobile and internet technology all support CCI growth.

Demographics

Not only is the size of the market for CCI growing in sheer numbers, but the underlying demographic shifts are more favorable to the film, music, and fashion industries. Globally, millennials are responsible for over two-thirds of all streams on Spotify³⁴ and the median Hulu subscriber is just thirty-one years old, showing a strong youth bias in terms of digital media consumption.³⁵ Africa is a young continent. About two-thirds of its population is currently under the age of thirty, compared to just one-third in Europe and North America.³⁶ Over 43 percent of Africa’s population currently lives in urban areas, and 90 percent of urban population growth will take place in Asia and Africa in the coming decades.³⁷ These young urbanites are more likely to have mobile and broadband access and are increasingly middle class. ³⁸

A larger middle class will result in more disposable income to spend on live concerts, movie tickets, and the latest fashions. Between 2011 and 2015, spending in South African households on recreation and culture, and on clothing and footwear, saw a real increase of 57.9 percent and 23.3 percent respectively.³⁹ The shift to a younger, more prosperous middle class will continue to support the growth of CCI.

Communications infrastructure

The growing penetration of internet and mobile devices throughout the continent supports a more robust CCI market. In sub-Saharan Africa, unique mobile subscriber penetration reached 44 percent by the end of 2017, up from just 25 percent at the start of the decade. In the coming years, the mobile subscriber base is expected to grow 4.8 percent per year. In Nigeria alone, there were 91.6 million internet users or about 45 percent of the population in 2017, most located in urban centers. ⁴⁰

On a continent with only one cinema per million people, streaming services will play a pivotal role in the growth of the film and music industries. Mobile payments, well-established in markets such as Kenya, strengthen business models in the music and film industry. Spotify entered the African market with a launch in South Africa in May 2018. Next to the big global players like Spotify, YouTube, and Apple Music, there is a growing number of African streaming services, many focused on delivering African content. The music-streaming service Simfy Africa has grown from the South African market to include Nigeria and Angola. NotJustOkay, a Nigerian music blog, has visitors from 183 countries.⁴¹Similarly, iRoko Partners, a media distribution company, has been extremely successful in both the Nigerian market and globally.

Globalized entertainment market

While the market for CCI grows within Africa, globalization opens access to international entertainment markets. The days when Hollywood just focused on the US market are over. The rise of a worldwide middle class has resulted in faster, broader consumption of the industry’s content. Filmmakers must consider the box office potential of their films in other regions like China, which would have been a distant concept just two decades ago. Streaming services for music and movies allow content to be marketed and accessed around the world instantaneously.

African CCI is positioned to take advantage of the entertainment industry’s global view. A growing number of Africans are native or secondary English speakers, making their products more consumable given the global popularity of the language.

The diaspora

Global celebrity culture and Africa’s growing diaspora work in tandem to accelerate the spread of African music, film, and fashion to international markets. Centuries-long relationships between African, European countries and the United States mean that millions of Africans and people of African descent live in a country outside of their birth. The African Union estimates the size of the African diaspora at 170 million.⁴²Because of the diaspora and the market power of African Americans in regard to entertainment,⁴³ African celebrities are gaining greater recognition in Western countries. South African Trevor Noah, host of the popular American comedy news program, The Daily Show, and Academy Award winner and Kenyanraised Lupita Nyong’o are just two such examples. After her Oscar win, Lupita Nyong’o went on to star, alongside multiple African actresses, in the Broadway musical Eclipse about the 2003 Liberian civil war. The play’s success highlights a growing appetite for African stories and African voices, often brought to the US market through the African diaspora.

African nations’ relationships with countries such as China are spreading African cultural influence eastward. Deputy Director of the Chinese State Administration of Radio and Television, Yan Chengsheng, has expressed interest in bringing Nollywood films to China’s highly regulated film market. Chengsheng has argued the quality of Nollywood films needs to improve, but also acknowledged the opportunity, stating “while telling Chinese stories to the world, we are also willing to tell African stories.”⁴⁴ As international markets are exposed to the people and culture of Africa, their desire to consume the exports of CCI will rise.

Challenges facing CCI in African markets

A number of obstacles inhibit the creative and cultural industries from making a greater contribution to economic growth in African markets. The scarcity of capital remains a top problem for artists and businesses in the industry. Without traditional forms of collateral in a perceived “risky industry,” banks and individuals are reluctant to fund creators. Moreover, a lack of sufficient industry data inhibits entrepreneurs from effectively accessing credit when they cannot readily point to comparables to justify projected returns on an investment.

Lack of funding

Today’s funding for the creative industry often comes in the form of grants for non-commercial activities. A United Nations Conference on Trade and Development (UNCTAD) study in Zambia confirmed that the historic tradition of viewing the creative industries from a cultural rather than commercial lens leaves the industry dependent on public funds.⁴⁵A dearth of African millionaires eager to invest in the creatives leaves many entrepreneurs with few options to turn to for capital. But in more established markets, like Lagos and Cape Town, businesses investing in creative talent are beginning to emerge. Temple Management, a full-service management agency for those in entertainment, art, and media, is working to modernize and professionalize the industry playing the same role that the Creative Artists Agency (CAA) does in the US market“Creative Artists Agency,”. ⁴⁶

As CCI matures, banks are beginning to provide new forms of financing. In Nigeria, the Bank of Industry’s “Nollywood Fund” and Access Bank’s “Access NollyFund” show that the banking industry is beginning to acknowledge the commercial potential of African film industries. However, the amount of capital provided by these funds is small compared to the demand for capital. The Nollywood Fund’s maximum borrowing limit is around $140,000.⁴⁷ While this is well above the average Nollywood film budget of $40,000, it comes nowhere close to Bollywood’s average film budget of $1.5 million or Hollywood’s $47.7 million.⁴⁸ The lack of financing leads to low budget production resulting in poor quality films with little potential for commercial success beyond the Nigerian market. Creative approaches are sorely needed.

Lack of intellectual property rights protection

The prevalence of movie and music piracy in Africa frustrates monetization efforts. Lack of intellectual property (IP) rights and enforcement limits an artist’s ability to earn a return on investment. The World Bank estimates that for every legitimate Nollywood film sold, nine are pirated.⁴⁹Furthermore, the Nigerian Copyright Commission (NCC) estimates the country loses over $1 billion annually to piracy.⁵⁰ South Africa estimates it loses 44 percent of its DVD revenues, 15 percent of which is online. ⁵¹ High piracy also deters international co-production and distribution opportunities in foreign markets. Music is regularly obtained in the Nigerian markets through illegal downloads, rather than legitimate music stores or streaming services that ensure artists receive their portion of a sale.⁵² Without a functioning IP rights system, many African artists leave the continent to pursue their talents elsewhere.

Recommendations

To fully support and commercialize CCI, governments and international organizations need to take deliberate steps to invest in all aspects of the value chain from creation to consumption. Accurate measurement of CCI’s impact on GDP and employment are critical to legitimize the commercial potential of the industry. Two-thirds of African countries have already signed the Convention on the Protection and Promotion of the Diversity of Cultural Expressions,⁵³ but their commitment needs to be realized in development strategies by incorporating innovative new policies and enforcement mechanisms to advance and protect Africa’s CCI.

To African Governments:

Collect and Track Data

African governments need to expand and consistently track CCI statistics to support policy development and promote private sector investment. UNESCO’s 2009 guidelines for measuring the economic effects of the cultural industry prompted many African countries to begin country measurement. Kenya has taken a lead by publishing the Nairobi Plan of Action on Cultural Industries and facilitating the buildout of institutions such as the Music Copyright Society of Kenya and the Kenya Film Commission. However, the availability and quality of statistics varies widely across the continent based on the capacity of a country’s national statistics institute.

Countries already exhibiting strong national statistics need to track specific statistics related to CCI’s impact on GDP and employment. As more data is collected, countries can develop more impactful policy and partnerships to meet the needs of CCI.

Enforce Intellectual Property Rights

The successful distribution of music and film relies on stricter IP rights and stronger enforcement mechanisms. Laws need to be less ambiguous and updated to reflect current technologies. Regulating ownership and ensuring creative control over an artist’s work will expand potential export opportunities. It will also encourage additional investment as banks can be more certain of a return on investment.

In May 2018, South Africa’s highest decision-making body approved the first phase of a new IP policy to improve access to medicine. South Africa’s Department of Trade and Industry worked with the United Nations Conference on Trade and Development (UNCTAD) to identify needed stakeholders and industry experts to draft the new policy. While the first phase is focused on public health, a similar method could be followed to develop new IP policies for music and film in future phases and outside South Africa.⁵⁴

Introduce Targeted Funding Schemes and Incentives The capital made available to CCI by the traditional risk-averse banking model will continue to be insufficient. Without proper financing, artists will struggle to gain access to global supply chains. However, the risk can be mitigated by targeted programs and credit-guarantee schemes established by regional and development banks, and implemented by commercial banks. For example, the ECOWAS Investment and Development Bank (EBID) had started a Cultural and Industries Guarantee Fund (FGIC) to provide financing to West African cultural projects, but the program seems to have not been prioritized after 2015.⁵⁵ These types of programs should be properly funded, staffed and prioritized. Additionally, regional programs targeted as supporting CCI industries, such as the African Development Bank’s Fashionomics, should continue to prioritize connecting artists and designers with traditional and alternative financing channels.

African governments should also facilitate strategic alliances between the public and private sectors to encourage capital investment. This includes setting aside public funds for partnerships supporting CCI and providing incentives to international companies to invest in Africa’s economies. Morocco and South Africa’s growing film production industries should serve as models. Government incentives attract international producers, who partner with African companies and hire Africans to assist in production. Similar programs can be used elsewhere in Africa or leveraged for industries beyond film.

Reduce the Cost of Data

Increased digital media consumption will demand increased broadband access and universal Wi-Fi. Only one in every hundred Africans has access to cable internet, and those that do pay exorbitantly more for data then those outside Africa. Telegeography, a research firm, estimated the cost of internet connectivity in Johannesburg at $9 per month for each megabit per second of capacity, about twenty times the cost in London and ten times the cost in Los Angeles.⁵⁶ In the past few years, there has been a sizable increase in the capacity of undersea cables connecting Africa to the rest of the world. As new cables come ashore, competition has driven prices down. African governments need to support competition by ensuring private sector participation in the broadband economy.

Beyond broadband, Africa’s expensive mobile-internet packages force consumers to limit their access to data, reducing consumption opportunities. While increased cable connections continue to drive mobile data prices down, universal Wi-Fi access has the capacity to disrupt traditional mobile phone and cable internet companies. Wi-Fi signals not only carry more data per second than those used by a 4G phone, but the equipment to produce a Wi-Fi network is cheap. African governments should continue to explore innovative approaches to encouraging additional Wi-Fi services through the use of TV white space to expand the consumer base for CCI. Malawi and South Africa’s partnership with Microsoft in this area can serve as test cases for potential scale up elsewhere on the continent.⁵⁷

To the United States

Given the competitive edge the United States has in the entertainment industry,

⁵⁸American policy-makers should consider establishing a US-African CCI financing roundtable. This public-private platform should be led by the Overseas Private Investment Corporation (OPIC) and would draw upon sector experts to facilitate financing and investments that contribute to CCI growth. Knowledge exchange and collaboration among key actors will deepen understanding of Africa’s CCI market opportunities and risks. The roundtable should work to establish pathways of investment that can be packaged for investors with different appetites for risk.

To International Organizations

The World Bank and IFC can better support CCI by creating job positions with responsibility for financing Africa’s creative and cultural industries. While the IFC works with clients in media, technology, and retail, it has not established an area of expertise in CCI. Taking a holistic view of the industry will better position the IFC to meet the needs of the industry’s interconnected players. Given the potential development impacts of CCI, these institutions need to dedicate the necessary talent to support the growing financial needs of the industry.

International organizations also need to take a role in tracking the impact of CCI. While the last decade has led to a rise in the capture of CCI-related statistics, the lack of annual, continent-wide measurements of CCI remains. The World Bank should work with UNESCO to expand statistics related to the economy, trade, and the private sector to include statistics dedicated to CCI. While UNESCO tracks a variety of statistics related to cultural employment and feature films,

⁵⁹ African countries are not routinely represented in all statistics.

Conclusion

The digitized, global economy provides an opportunity for African CCI to play a more meaningful role in the continent’s development. From artists to distributors, Africa’s creative economy can provide modern jobs across multiple sectors and contribute to economic growth. Additionally, sharing African creativity with global audiences helps to change perceptions, encourage tourism and lays the groundwork for myriad cultural exchanges. African governments, businesses and investors must recognize the value of CCI, as without their support and promotion, the industry will find it increasingly difficult to remain competitive in global markets. Africa has long been rich in talent and creativity, and in today’s maturing markets, these artists and producers have the potential to stake their claim as part of the global mainstream.

Aubrey Hruby is a senior fellow at the Atlantic Council and advisor to investors in African markets. She speaks regularly on African business issues and writes regularly for publications including the Financial Times and Axios. Aubrey is a term member of the Council on Foreign Relations, a board member of Invest Africa USA, young leader at the Milken Institute and the co-author of award-winning The Next Africa (Macmillan, 2015). She earned an MBA from the Wharton School at the University of Pennsylvania and an MA from Georgetown University.

 

1    Céline Allard et al., Regional Economic Outlook: sub-Saharan Africa 2015, International Monetary Fund, April 2015, https://www.imf.org/~/media/Websites/IMF/imported-flagship-issues/external/pubs/ft/reo/2015/afr/eng/pdf/_sreo0415pdf.ashx

2    Brahima Sangafowa Coulibaly, “Africa’s Alternative Path to Development,” The Brookings Institution, May 3, 2018, https://www.brookings.edu/opinions/africas-alternative-path-to-development/

3    “More a Marathon than a Sprint,” The Economist, November 7, 2015, https://www.economist.com/middle-east-and-africa/2015/11/07/more-a-marathon-than-a-sprint

4    Africa has not experienced a green revolution similar to that of East Asia, where
cereal yields nearly quadrupled between 1960 and 1990. Low productivity in African
agriculture and labor continues to inhibit economic growth; Daudi Sumba et al., Africa
Agriculture Status Report 2017: The Business of Smallholder Agriculture in sub-Saharan Africa, Alliance for a Green Revolution in Africa, August 28, 2017, https://agra.
org/wp-content/uploads/2017/09/Final-AASR-2017-Aug-28.pdf; El-hadj M. Bah et al.,
The Africa Competitiveness Report 2017, World Bank Group, May 4, 2017, http://documents.worldbank.org/curated/en/733321493793700840/pdf/114750-2-5-2017-15-48-
23-ACRfinal.pdf

5    Art Chambers et al., The sub-Saharan African Services Economy: Insights and Trends,
US International Trade Commission, July 12, 2017, https://www.usitc.gov/publications/332/sub-saharan_african_id-17-046_final_071217sae.pdf

6    El-hadj M. Bah et al., The Africa Competitiveness Report 2017, World Bank Group, May 4, 2017, http://documents.worldbank.org/curated/
en/733321493793700840/pdf/114750-2-5-2017-15-48-23-ACRfinal.pdf

7    Based on EY’s definition of the underground economy, which involves the exchange of cultural goods hidden from official view. See: Marc
Lhermitte et al., Cultural Times: The First Global Map of Cultural and Creative Industries, EY, December 2015, http://www.ey.com/Publication/
vwLUAssets/ey-cultural-times-2015/$FILE/ey-cultural-times-2015.pdf

8    Marc Lhermitte et al., Cultural Times: The First Global Map of Cultural and Creative Industries, EY, December 2015, http://www.ey.com/Publication/vwLUAssets/ey-cultural-times-2015/$FILE/ey-cultural-times-2015.pdf

9    Richard Harrington, “Fela Kuti &,” Washington Post, November 7, 1986, https://www.washingtonpost.com/archive/lifestyle/1986/11/07/fela-kuti-38/69e5f304-aa23-44ce-a3c2-c9d3e3c119ee/?utm_term=.4d142b945bf1

10    Lhermitte et al., “Cultural Times.”

11    Ibid

12    Eric Oh, Nigeria’s Film Industry: Nollywood Looks to Expand Globally, US International Trade Commission, October 2014, https://www.usitc.
gov/publications/332/erick_oh_nigerias_film_industry.pdf

13    Revised White Paper on Arts, Culture, and Heritage, Department of Arts and Culture of the Republic of South Africa, February 2017, http://
www.dac.gov.za/sites/default/files/Legislations%20Files/Revised%203rd%20Draft%20RWP%20on%20ACH%20FEBRUARY%202017_0.pdf

14    Jake Bright, “Meet ‘Nollywood’: The Second Largest Movie Industry in the World,” Fortune, June 24, 2015, http://fortune.com/2015/06/24/
nollywood-movie-industry/

15    Production costs range on average from $25,000 to $70,000; “Making a Fortune by Distributing Nigerian Films Online,” BBC News, May 7,
2012, https://www.bbc.co.uk/news/world-africa-17896461

16    The Wedding Planner made N453 million at the box-office, far surpassing the previous Nollywood box office record of N178.5 million;
Christopher Vourlias, “Wedding Party Fuels Record Nigerian Box Office Despite Ailing Economy,” Variety, February 3, 2017, https://variety.
com/2017/film/global/wedding-party-fuels-record-nigerian-box-office-despite-ailing-economy-1201977878/

17    Steve Omanufeme, “Runaway Success,” IMF, Finance and Development 53 (2016), accessed August 15, 2018, http://www.imf.org/external/
pubs/ft/fandd/2016/06/omanufeme.htm

18    “About Us,” Project ACT – Nollywood, accessed August 15, 2018, http://www.projectactnollywood.com.ng/about/

19    Lhermitte et al., “Cultural Times.”

20    Andrew England, “Booming Film Industry Boosts South Africa’s Economy,” Financial Times, September 5, 2014, https://www.ft.com/content/6cce315e-3420-11e4-b81c-00144feabdc0

21    Economic Impact of the South African Film Industry, Urban-Econ Development Economists, June 21, 2017, http://nfvf.co.za/home/22/
files/2017%20files/Final%20NFVF%20Economic%20Impact%20Study%20Report_21_06_2017.pdf

22    “Economie créative : panorama et potentiel,” Ministère de l’Economie et des Finances du Royaume du Maroc, April 2016, https://www.finances.gov.ma/Docs/depf/2016/economie_creative.pdf

23    Phoebe Park, “From Afrobeat to Akon: Why African Music Finally Has the World’s Ear,” CNN, November 18, 2016, https://www.cnn.
com/2016/05/05/africa/future-african-music/index.html

24    Arwa Haider, “Davido, Mr Eazi and How Afrofusion Went Mainstream in the West,” Financial Times, December 22, 2017, https://www.ft.com/
content/b3af2160-e033-11e7-a0d4-0944c5f49e46

25    Lhermitte et al., “Cultural Times.”

26    Yinka Adegoke, “The World’s Biggest Music Company is Setting Its Sights on Africa,” Quartz Africa, July 17, 2018, https://qz.com/1328454/
universal-music-group-the-worlds-biggest-music-company-sets-its-sights-on-africa/

27    Bill Odidi, “Our Singers Busy Crying Foul, But Just How Local is Our ‘Local’ Music?” Daily Nation, August 29, 2015, https://www.nation.co.ke/
lifestyle/weekend/Our-singers-busy-crying-foul/1220-2849900-423kf0z/index.html.

28    Vicki Myburgh et al., “Entertainment and Media Outlook: 2016-2020,” PwC, September 2016, https://www.pwc.co.za/en/assets/pdf/enm/entertainment-and-media-outlook-2016-2020.pdf

29    Ibid

30    “Fashionable Business: Deola Sagoe, Others Driving the Continent’s Multi-Billion Dollar Industry,” Ventures Africa, September 10, 2014, http://
venturesafrica.com/fashionable-business-deola-sagoe-leading-africa-towards-15bn/

31    Luxury and Cosmetics Financial Factbook 2017, EY, 2017, https://www.ey.com/gl/en/industries/consumer-products/ey-luxury-and-cosmetics-financial-factbook-2017#item2

32    Euromonitor International, “Apparel and Footwear in 2015: Trends, Developments, and Perspectives,” May 2015, http://www.euromonitor.
com/apparel-and-footwear-in-2015-trends-developments-and-prospects/report

33    “African Creative Industries,” Fashionomics Africa, accessed August 15, 2018, http://www.fashionomicsafrica.org/creative/

34    Hugh McIntyre, “Millennials are Leading the Spotify Revolution,” Forbes, April 20, 2016, https://www.forbes.com/sites/hughmcintyre/2016/04/20/millennials-are-leading-the-spotify-revolution/

35    “Hulu Grows to Over 17 Million Subscribers in 2017, Emerges as Powerful Pay TV Alternative Combining Live Television with the Largest
SVOD TV Library in the US,” Hulu, January 9, 2018, https://www.hulu.com/press/hulu-grows-to-over-17-million-subscribers-in-2017-emergesas-powerful-pay-tv-alternative-combining-live-television-with-the-largest-svod-tv-library-in-the-u-s/

36    Based on data from the United Nations World Population Prospects 2017, https://esa.un.org/unpd/wpp/

37    World Urbanization Prospects: “The 2018 Revision, United Nations Department of Economic and Social Affairs,” May 16, 2018, https://esa.
un.org/unpd/wup/Publications/Files/WUP2018-KeyFacts.pdf

38    The African Development Bank estimates Africa’s middle class to be 350 million people or 34 percent of Africa’s population (2014). Africa’s
middle class continues to grow at a faster rate than total population growth. Additionally, Africa’s middle class has led to increased domestic
consumption, with consumer spending expected to reach US $2.6 trillion by 2030; Mthuli Ncube et al., “Tracking Africa’s Progress in Figures,” African Development Bank Group, May 9, 2014, https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Tracking_Africa%E2%80%99s_Progress_in_Figures.pdf

39    “Media Release: Living Conditions Survey (LCS) 2014/2015,” Statistics South Africa, last updated January 27, 2017, http://www.statssa.gov.
za/?p=9473

40    “Nigeria’s Internet Users Rise to 91.6m,” Communicator, 22 (2017): accessed August 15, 2018, https://www.ncc.gov.ng/thecommunicator/index.php?option=com_content&view=article&id=1572:nigeria-s-internet-users-rise-to-91-6m&catid=32&Itemid=179 The Mobile Economy: sub-Saharan Africa 2018, GSMA, 2018, https://www.gsmaintelligence.com/research/?file=809c442550e5487f3b1d025fdc70e23b&download

41    Funsho Arogundade, “Nigeria’s Super Bloggers,” PM News Nigeria, January 28, 2013, http://www.pmnewsnigeria.com/2013/01/28/nigerias-super-bloggers/

42    The African Union (AU) Commission defines the African diaspora as “peoples of African origin living outside the continent, irrespective
of their citizenship and nationality and who are willing to contribute to the development of the continent and the building of the African
Union.”

43    Janie Boschma, “Black Consumers Have ‘Unprecedented Impact’ in 2015,” Atlantic, February 2, 2016, https://www.theatlantic.com/politics/
archive/2016/02/black-consumers-have-unprecedented-impact-in-2015/433725/

44    Solomon Elusoji, “China Looks Forward to Opening Its Giant Market to Nollywood,” This Day Live, May 22, 2018. https://www.thisdaylive.
com/index.php/2018/05/22/china-looks-forward-to-opening-its-giant-market-to-nollywood/

45    Keith Nurse, “Study on Alternative and Innovative Funding Mechanisms for ACP Cultural Industries, European Commission,” http://acpculturesplus.eu/sites/default/files/2017/02/02/etude_financements_-_executive_summary_en.pdf

46    Creative Artists Industry, accessed August 15, 2018, https://www.caa.com/

47    “Nollyfund,” Bank of Industry, accessed August 15, 2018, https://www.boi.ng/boinollyfund/

48    Eric Oh, Nigeria’s Film Industry: Nollywood Looks to Expand Globally, US International Trade Commission, October 2014, https://www.usitc.
gov/publications/332/erick_oh_nigerias_film_industry.pdf

49    Ibid

50    Ibid

51    South African Film Industry Economic Baseline Study Report, National Film and Video Foundation of South Africa, April 2013, http://nfvf.
co.za/home/22/files/Baseline%20study.pdf

52    Dionne Searcey, “Nigeria’s Afrobeats Music Scene is Booming, but Profits go to Pirates,” New York Times, June 3, 2017, https://www.nytimes.
com/2017/06/03/world/africa/nigeria-lagos-afrobeats-music-piracy-seyi-shay.html

53    Convention on the Protection and Promotion of the Diversity of Cultural Expressions, Paris, 20 October 2005, available from http://www.
unesco.org/eri/la/convention.asp?KO=31038&language=E&order=alpha

54    United Nations Conference on Trade and Development, “South Africa Adopts New IP Policy Improving Access to Medicine,” May 31, 2018,
http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=1762

55    ECOWAS Bank for Investment and Development, “Annual Report 2014,” 2014, http://www.bidc-ebid.com/wpen/blog/wp-content/uploads/
EBID_annual_report_2014_en.pdf

56    “Beefing Up Mobile-phone and Internet Penetration in Africa,” The Economist, November 9, 2017, https://www.economist.com/special-report/2017/11/09/beefing-up-mobile-phone-and-internet-penetration-in-africa

57    David L. Johnson and Chomora Mikeka, “Malawi and South Africa Pioneer Unused TV Frequencies for Rural Broadband,” IEEE Spectrum,
August 29, 2016, https://spectrum.ieee.org/telecom/internet/malawi-and-south-africa-pioneer-unused-tv-frequencies-for-rural-broadband

58    Aubrey Hruby, Escaping China’s Shadow: Finding America’s Competitive Edge in Africa, Atlantic Council, September 7, 2017, http://www.atlanticcouncil.org/images/Escaping_Chinas_Shadow_web_0907.pdf

59    United Nations Educational, Scientific, and Cultural Organization, “Welcome to UIS.STAT,” accessed August 15, 2018. http://data.uis.unesco.
org/

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]]> https://www.atlanticcouncil.org/commentary/event-recap/turkey-s-investment-opportunities-in-africa/ Fri, 07 Sep 2018 03:26:26 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/turkey-s-investment-opportunities-in-africa/ On September 6, 2018 the Atlantic Council IN TURKEY, in cooperation with the Atlantic Council’s Africa Center and the Foreign Economic Relations Board of Turkey (DEIK), hosted a half-day conference in Istanbul titled Turkey’s investment Opportunities in Africa, to explore business opportunities on the African continent. Turkey’s interest and engagement in Africa has grown significantly […]

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]]> On September 6, 2018 the Atlantic Council IN TURKEY, in cooperation with the Atlantic Council’s Africa Center and the Foreign Economic Relations Board of Turkey (DEIK), hosted a half-day conference in Istanbul titled Turkey’s investment Opportunities in Africa, to explore business opportunities on the African continent.

Turkey’s interest and engagement in Africa has grown significantly in recent years. Since 2013, bilateral trade volume between Turkey and Africa has grown to $17.5 billion and total Turkish investment in Africa is estimated at around $7 billion.

In this context, the conference was the second event this year organized by the Atlantic Council IN TURKEY in partnership with the Africa Center, following a roundtable on March 19 titled Africa in 2018 and Beyond: Challenges and Opportunities.

Atlantic Council Turkey Representative Defne Arslan opened the conference by outlining the growing economic relations between Turkey and Africa and stressing the opportunities for cooperation with third parties such as the United States, which can provide the financing necessary to undertake projects necessary for the development of Africa.

DEIK Africa Business Council’s Deputy Coordinating Chairman Fatih Volkan Kazova spoke about growing Turkish-African relations, bolstered by the Turkish government’s extensive diplomatic outreach, which has seen the number of Turkish diplomatic missions in Africa increase from twelve to forty-one since 2009.

Atlantic Council Vice President for Research and Regional Initiatives and Africa Center Director Dr. J. Peter Pham noted that Turkey, with its close proximity and cultural ties to Africa, has an inherent interest in its push to develop diplomatic and economic relations with Africa. The focus of the conference was therefore on how, rather than the why, to engage with Africa.

The first panel, “Financing Infrastructure and Industry in African Markets,” moderated by Dr. Pham, consisted of Mubadala Infrastructure Partners Investment Director Kemi Abdul and Proxima Law Partner Serge Nawej. The panel addressed the enormous African infrastructure deficit, which lacks up to $170 billion per year of new funding. The panel shared their thoughts about how to best approach investing in the African market and the experiences of their companies in Africa.

The second panel, “Bridging the Bankability Gap: Project Development and Execution,” moderated by Africa Center Senior Fellow Aubrey Hruby, featured Africa50 Chief Operating Officer Carole Wamuyu Wainaina, Director of Transportation at the Infrastructure Concession Regulatory Commission of the Federal Republic of Nigeria Emmanuel Onwodi, and Limak Holding Global Head of Airports Haldun Köktürk. Africa50 is an infrastructure investment platform funded by the African Development Bank and African countries; it uses equity investments to catalyze public and private capital into viable projects in the energy, transport, and other sectors. The panel delved into the details of project development from the drawing board to financial close. In challenging and many times uncertain African markets, successful development can be a long and expensive process, creating a barrier as large or larger than the lack of financing. The panelists provided their insights into the development process, the challenges, and best practices to mitigate risk.

Africa’s serious and persistent gap in critical infrastructure is a significant constraint to the continent’s overall economic growth. Turkish companies, with a breadth of international experience in construction and infrastructure, can play an increasingly important role in helping Africa overcome its strategic deficiencies.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/celebrating-the-60th-anniversary-of-mashav-2/ Wed, 18 Jul 2018 13:08:19 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/celebrating-the-60th-anniversary-of-mashav-2/ In celebration of the 60th anniversary of MASHAV–Israel’s Agency for International Development Cooperation–the Atlantic Council’s Africa Center, in partnership with the Embassy of Israel to the United States, hosted an event on US-Israeli development cooperation on Wednesday, July 18. The conversation focused especially on the “trilateral” efforts by the two countries in Africa as well […]

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In celebration of the 60^th anniversary of MASHAV–Israel’s Agency for International Development Cooperation–the Atlantic Council’s Africa Center, in partnership with the Embassy of Israel to the United States, hosted an event on US-Israeli development cooperation on Wednesday, July 18. The conversation focused especially on the “trilateral” efforts by the two countries in Africa as well as the lessons learned by the Israeli agency over the years. The event featured a welcome and introduction by Dr. J. Peter Pham, Atlantic Council vice president and Africa Center director, followed by remarks by H.E. Ron Dermer, Israel’s ambassador to the United States. Amb. Gil Haskel, deputy director general of the Ministry of Foreign Affairs and head of MASHAV, and Mr. Ramsey Day, deputy assistant administrator of the US Agency for International Development (USAID)’s Bureau for Africa, then presented keynote remarks. 

Two panel discussions followed opening remarks, focusing on US-Israeli development cooperation and the future of MASHAV. The first panel featured Mr. Wale Gataneh Beze, deputy project coordinator and senior horticulturalist for the Smallholder Horticulture Project, a joint initiative between USAID, MASHAV, and Ethiopia’s Ministry of Agriculture and Natural Resources, and Amb. Haskel. The second panel included Ms. Shuli Kuzon van Gelder, MASHAV’s director of planning, evaluation, and partnerships, and Mr. Daniel S. Mariaschin, CEO and executive vice president of B’nai B’rith International. Dr. Pham moderated the first panel, while Amb. Haskel moderated the second. 

In the first panel, Amb. Haskel highlighted the success of triangular cooperation between Israel, the United States, and Ethiopia in improving access to agricultural technology and sustainable farming methods for smallholder farms in Ethiopia. Mr. Beze then provided an in-depth view of the Smallholder Horticulture Project, noting how its focus on capacity building has opened new doors for Ethiopia’s agricultural sector.

In the second panel, Van Gelder and Mariaschin discussed MASHAV’s unique approach to development through its emphasis on building relationships between people and “training the trainers.” They also discussed the importance of development and MASHAV’s many diverse programs in representing both Israel abroad. The ensuing conversation focused on a variety of topics, including the extent to which Israel’s history influences MASHAV’s work today and future focal points of development assistance around the globe.

Among those in attendance and participating in the discussion were H.E. Ammon Mutembwa, ambassador of Zimbabwe to the United States; Amb. Werner Romero, former ambassador of El Salvador to Israel; Amb. Herman J. Cohen, former US assistant secretary of state for African affairs; Ms. Kaye Lee, acting deputy assistant secretary for security affairs and Central Africa in the US State Department’s Africa Bureau; and a number of US and non-US government officials, business leaders, and development professionals. 

The event concluded with a light reception hosted by the Embassy of Israel.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/briefing-on-sectarian-violence-and-political-turmoil-in-the-central-african-republic/ Thu, 12 Jul 2018 16:05:17 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/briefing-on-sectarian-violence-and-political-turmoil-in-the-central-african-republic/ On Thursday, July 12, the Atlantic Council’s Africa Center, in partnership with the Enough Project, hosted Nathalia Dukhan, field researcher and analyst for the Enough Project and The Sentry, for a private roundtable discussion on increasing sectarian violence and political turmoil in the Central African Republic (CAR). CAR has suffered from waves of sectarian violence […]

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]]> On Thursday, July 12, the Atlantic Council’s Africa Center, in partnership with the Enough Project, hosted Nathalia Dukhan, field researcher and analyst for the Enough Project and The Sentry, for a private roundtable discussion on increasing sectarian violence and political turmoil in the Central African Republic (CAR).

CAR has suffered from waves of sectarian violence since 2013, after a collection of armed groups known as the Séléka seized control of the capital Bangui and overthrew the ruling government led by Francois Bozizé. Since that time, multiple peacekeeping missions and political dialogue efforts have attempted to restore stability to the country, but to little avail. Dukhan presented her research on the worsening of the crisis, the numerous armed factions and criminal enterprises operating in the country, their motivations, and the risks they pose to justice and peace efforts. She also discussed the emergence of new international actors in CAR, particularly Russia, and their attempts to garner influence in CAR and elsewhere in Central Africa through economic and defense cooperation.

The discussion, moderated by Ms. Bronwyn Bruton, Africa Center director of programs and studies and deputy director, followed Ms. Dukhan’s remarks and focused on coordination among armed groups, as well as policy instruments that could be used to restore institutions and the rule of law in the country.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/icrc-africa-director-briefs-policy-makers-on-internal-displacement-issues/ Wed, 11 Jul 2018 20:16:35 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/icrc-africa-director-briefs-policy-makers-on-internal-displacement-issues/ In collaboration with the International Committee of the Red Cross (ICRC), the Atlantic Council’s Africa Center hosted a discussion on internal displacement on Wednesday, July 11. The event featured Ms. Patricia Danzi, the ICRC’s regional director for Africa, along with members of the ICRC’s regional delegation in Washington.  In her remarks, Danzi acknowledged that there is often […]

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]]> In collaboration with the International Committee of the Red Cross (ICRC), the Atlantic Council’s Africa Center hosted a discussion on internal displacement on Wednesday, July 11. The event featured Ms. Patricia Danzi, the ICRC’s regional director for Africa, along with members of the ICRC’s regional delegation in Washington. 

In her remarks, Danzi acknowledged that there is often confusion surrounding the terms internally displaced person (IDP), migrant, and refugee. She argued that IDPs are the most vulnerable and difficult to account for, often dispersed in “IDP Belts” around urban areas in a wide range of living situations, unable to flee the country from threats such as conflict, human rights violations, and sudden-onset natural hazards. She further discussed the causes of displacement across Africa.

Danzi stressed that the African Union Convention for the Protection and Assistance of Internally Displaced Persons in Africa (Kampala Convention), and the existing guiding principles on internal displacement, are excellent instruments to ensure that states respect humanitarian law, human rights, and other responsibilities related to protecting and assisting the internally displaced. Moreover, the leadership the African Union has shown on IDP issues, pushing through the first legally binding regional treaty to address IDP protections and declaring 2019 the “Year of Refugees, Returnees, and Internally Displaced Persons in Africa,” cannot go unsung. However, ICRC representatives stressed that many states in Africa must go one step further and adopt legislation that can codify rights in the Kampala Convention into domestic law, and strengthen local mechanisms for responding to the needs of families forced from their homes by conflict and violence. Donors should also encourage parties to the Kampala Convention to pass such domestic legislation.

Further, while these existing frameworks and humanitarian response plans are generally successful at providing basic services needed to keep IDPs alive in camps, Danzi argued that they do not go far enough, failing to provide the “next step” of access to employment, living services, and a more prosperous life. Danzi called on actors beyond the humanitarian community to work more closely with non-governmental organizations to integrate aid for displaced persons into national strategies and elevate IDP issues to the highest levels. 

A discussion, moderated by Ms. Bronwyn Bruton, Africa Center director of programs and studies and deputy director, followed Danzi’s remarks, focusing on the best way forward for donors and governments to effectively address IDP issues, as well as the most effective government structures to coordinate humanitarian response plans to internal displacement across the continent. 

Also in attendance and participating in the discussion were Ambassador Linda Thomas-Greenfield, former assistant secretary of state for African affairs; Ambassador William M. Bellamy, former principal deputy assistant secretary for state for African affairs; and LTG William E. Ward, USA (Ret.), former commander of US Africa Command; as well as a number of US and non-US government officials, civil society actors, and NGO representatives.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/discussion-with-the-congolese-opposition/ Wed, 23 May 2018 12:26:13 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/discussion-with-the-congolese-opposition/ On Wednesday, May 23, the Atlantic Council’s Africa Center hosted a discussion with Mr. Moïse Katumbi Chapwe, former governor of Katanga Province and leader of Ensemble pour le changement, a new political movement in the Democratic Republic of the Congo (DRC), and Mr. Félix Tshisekedi, president of the Union pour la démocratie et le progrès social (UDPS), […]

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]]> On Wednesday, May 23, the Atlantic Council’s Africa Center hosted a discussion with Mr. Moïse Katumbi Chapwe, former governor of Katanga Province and leader of Ensemble pour le changement, a new political movement in the Democratic Republic of the Congo (DRC), and Mr. Félix Tshisekedi, president of the Union pour la démocratie et le progrès social (UDPS), the DRC’s oldest continuously operating political party.

In their remarks, Katumbi and Tshisekedi announced that the Congolese opposition would field a unified candidate in the presidential election scheduled for December 23, 2018. Incumbent Joseph Kabila, whose constitutionally-mandated two-term limit expired over eighteen months ago, has twice delayed elections. Katumbi stressed that the Congolese opposition is united and working together for a brighter future, citing his joint visit to the United States with Tshisekedi as an example of their cooperation. Both candidates warned participants that Kabila was resurgent and reintroducing his stranglehold on the country, noting that it is “a very dark time for the electoral process [in DRC].” “We’re here to sound the alarm,” said Tshisekedi, “Tomorrow when the catastrophe arrives, you cannot say you didn’t know.”

The two also recounted how electoral experts from their respective political formations were working together, including a recent joint meet with the technical team from the Organisation internationale de la Francophonie.

A discussion, moderated by Dr. J. Peter Pham, Atlantic Council vice president and Africa Center director, followed Katumbi and Tshisekedi’s remarks, focusing on the role that the international community could play in ensuring that credible elections take place this December as well as how to ensure the country gets the humanitarian aid it urgently needs for the more than five million displaced persons and the estimated thirteen million facing starvation – crises both speakers blamed on the poor governance of the incumbent regime.

Also in attendance and participating in the discussion was Ambassador Larry Wohlers, senior coordinator for the Great Lakes region of Africa at the US Department of State; Ambassador William Garvelink, former US Ambassador to the DRC; and three former US assistant secretaries of state for African affairs: Ambassador Herman Cohen, Ambassador Jendayi Frazer, and the Honorable Constance Berry Newman (the latter two are also, respectively, an Atlantic Council board director and a senior fellow in the Africa Center). Also at the event were a large number of US and non-US government officials, business leaders, and civil society representatives.

Before the event, Africa Center director J. Peter Pham interviewed Katumbi and Tshisekedi on Facebook Live (in French):

 

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]]> https://www.atlanticcouncil.org/commentary/event-recap/investors-and-entrepreneurs-debate-the-impact-of-disruptive-technology-on-africa/ Fri, 20 Apr 2018 19:24:02 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/investors-and-entrepreneurs-debate-the-impact-of-disruptive-technology-on-africa/ On Friday, April 20, the Atlantic Council’s Africa Center launched two new policy briefs that tackle the complexities of disruptive technology and innovation in Africa. Authored by Aleksandra Gadzala, Atlantic Council senior fellow, “Fintech: Powering Inclusive Growth in Africa” seeks to help investors and policymakers better understand the waves of financial technology (fintech) innovation unfolding […]

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On Friday, April 20, the Atlantic Council’s Africa Center launched two new policy briefs that tackle the complexities of disruptive technology and innovation in Africa. Authored by Aleksandra Gadzala, Atlantic Council senior fellow, “Fintech: Powering Inclusive Growth in Africa” seeks to help investors and policymakers better understand the waves of financial technology (fintech) innovation unfolding in sub-Saharan Africa, while “3D Printing: Shaping Africa’s Future” catalogues the experiences of countries around the world facing the challenges of widespread 3D printing adoption.

Dr. J. Peter Pham, Atlantic Council vice president and Africa Center director, welcomed attendees, and Ms. Aubrey Hruby, Africa Center senior fellow, set the stage for a panel discussion that included Olawale Ayeni, regional head, Africa venture capital investments at the International Finance Corporation; Tahira Dosani, managing director of Accion Venture Lab; Chijioke Dozie, co-founder and CEO of OneFi; and Njideka Harry, president and CEO of the Youth for Technology Foundation.

During the discussion, Dosani and Ayeni outlined the crucial role of the startup community in Africa’s fintech sector, offering an investor perspective of the effects of disruptive technologies on African markets. Dosani argued that while banks and formal financial institutions will forever play a role in driving financial inclusion forward, they are not well positioned to leverage newer technologies and innovation to advance the sector. She further stressed that innovation efforts on the continent are fundamentally changing digital finance, bringing costs down and allowing companies to earn attractive returns on investment in low-income communities that would otherwise be left out of formal systems.

Dozie discussed some of the risks inherent in fintech innovation in Africa, and highlighted OneFi’s work in Nigeria to provide credit to individuals who lack access to financial services. Harry spoke at length about the 3D printing on the continent, especially in the manufacturing sector, and the ways in which it is impacting the future of learning. She stressed the need to incorporate exponential technologies in curriculums to prepare the next generation for what will be a tremendously different labor market and bridge Africa’s stubborn skills gap.

Those in attendance and participating in the discussion included H.E. Mninwa Johannes Mahlangu, ambassador to the Republic of South Africa; Ambassador Herman Cohen, former US Assistant Secretary of State for African Affairs; and a number of US and non-US government officials and business leaders.

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]]> https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/fintech-powering-inclusive-growth-in-africa/ Fri, 20 Apr 2018 13:00:00 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/fintech-powering-inclusive-growth-in-africa/ From cryptocurrencies to blockchain to mobile money, financial technology (“fintech”) is revolutionizing the basic structures of the global economy. Financial services delivered through fintech are becoming more accessible, efficient, and personal. In sub-Saharan Africa, where only 34 percent of adults have bank accounts, fintech companies are already providing financial products and services to millions of […]

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]]> Download pdf

From cryptocurrencies to blockchain to mobile money, financial technology (“fintech”) is revolutionizing the basic structures of the global economy. Financial services delivered through fintech are becoming more accessible, efficient, and personal. In sub-Saharan Africa, where only 34 percent of adults have bank accounts, fintech companies are already providing financial products and services to millions of unbanked and underserved Africans in ways that traditional financial institutions cannot.

 

A new issue brief by Africa Center Senior Fellow Dr. Aleksandra Gadzala, Fintech: Powering Inclusive Growth in Africa, helps investors and policy makers better understand the impact of the waves of fintech innovation unfolding in sub-Saharan Africa, and reflects on the enabling environments needed to ensure its success and contribution to inclusive growth. Fintech has the potential to serve as an equalizer in Africa by driving financial inclusion, but the technology faces hurdles. Gadzala’s brief tracks the emergence and expansion of fintech on the continent and the ways in which it adds value to other sectors, including insurance, energy, and agriculture. She concludes that, while not without its challenges, the long-term prospects for fintech to drive economic growth in Africa are immense.

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]]> https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/3d-printing-shaping-africas-future-2/ Fri, 20 Apr 2018 13:00:00 +0000 https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/ A new issue brief by Africa Center Senior Fellow Dr. Aleksandra Gadzala, 3D Printing: Shaping Africa’s Future catalogues the experiences of other countries facing the challenges of widespread 3D printing adoption.

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Disruptive technologies—such as the Internet of Things, robotics, and three-dimensional (3D) printing—have been heralded as the future of the global manufacturing sector. However, in Africa, they could hinder industrialization and result in fewer entry points into global supply chains. While it may be possible for African nations to “leapfrog” directly to newer technologies, it is more likely that developing the relevant worker know-how, infrastructure, and corporate capabilities necessary to leverage the potential value of these technologies will be a very gradual process. African policy makers must therefore pursue multipronged strategies to ensure relevance as 3D printing and other disruptive technologies move into the mainstream.

 

A new issue brief by Africa Center Senior Fellow Dr. Aleksandra Gadzala, 3D Printing: Shaping Africa’s Future catalogues the experiences of other countries facing the challenges of widespread 3D printing adoption.

Gadzala argues that, at its core, 3D printing is just another manufacturing process. Yet, over time it could significantly reshape how and where things are made, with far-reaching consequences for economies that rely on low-wage, labor-intensive manufacturing. African countries are not alone; observing how other countries anticipate and prepare for the coming changes may provide valuable lessons. Smart governments are supporting skills training and innovation and diversifying their industries and markets. They are now making the decisions that will later determine their role in a world of 3D printing and automation. In the near term, Africa does not have much to gain from 3D printing, but if its governments do not start to make such decisions now, the continent will have much to lose.

Introduction

According to the global consulting firm McKinsey & Company, one out of four workers worldwide may be African by 2030.¹

The global center of gravity of labor-intensive manufacturing is expected to shift to poorer economies with lower labor costs—including those in sub-Saharan Africa—and the African region could emerge as “the next factory of the world.”² Yet, this is not certain. The adoption of technologies associated with “Industry 4.0”—the Internet of Things (IoT), robotics, and three-dimensional (3D) printing— in China and high-income economies in Europe and the United States is reducing the importance of low labor costs in determining overall production location and may, in the long term, lead to a reshoring of global supply chains.

For African economies, this may mean fewer entry points into global supply chains and may make industrialization more difficult to achieve. Because most African countries generally lack essential technology and industry skills, there is no near-term scenario under which they would be able to leverage technologies like 3D printing and automation to compete globally in manufacturing. While there are opportunities to “leapfrog” to new technologies, developing the relevant worker knowhow, infrastructure, and corporate capabilities are likely to be a gradual process. African policy makers must therefore pursue disparate strategies to ensure relevance as 3D printing and automation move into the mainstream. The experiences of other countries facing similar challenges may provide valuable lessons. This brief explores how the approaches pursued by India, Cambodia, and South Africa might inform African development strategies.

The muddled promise of 3D printing in Africa

3D printing—also known as additive manufacturing—is attracting more attention as it steadily matures and moves into the mainstream. In 2016, total global revenues from 3D printing systems totaled more than $6 billion, representing a 17.4 percent expansion of the industry.³ In emerging markets, 3D printing is expected to become a $4.5 billion industry by 2020, as the range of printable materials expands beyond its currently limited array.^{4 5} Commonly referred to as a “disruptive technology,” additive manufacturing often conjures up images of a future that is utopian or dystopian, depending on one’s outlook. At its core, however, 3D printing is just another manufacturing process. According to the National Institute of Standards and Technology, 3D printing is “the process of joining materials to make objects from three-dimensional (3D) models layer by layer as opposed to subtractive methods that remove materials.”⁶While traditional manufacturing creates forms by removing layers of material, 3D printing processes create objects by adding material; much like how a pastry chef might assemble a layer cake, the materials are shaped into designs to fulfill specific functions.

3D printing offers several advantages over traditional manufacturing processes. Among them is the ability to create objects with complex geometries and internal cavities. Using sunglasses as an example, wherein a manufacturer would normally produce the sunglass pieces separately and then assemble them, 3D printing allows for sunglasses to be produced as a whole with the material varying in different areas of the frame; the earpieces are soft and flexible, while the rims supporting the lenses are hard. This has applications ranging from jet engine components to hearing aids. GE Aviation produces fuel nozzles for its next-generation turbofan engines using 3D printing. Ninety-eight percent of hearing aids worldwide are manufactured through 3D printing processes, each being custom-made to fit the user’s unique ear shape.⁷Because each printed object is produced independently, it can be easily modified to meet particular needs or to accommodate updates.

The ability to create highly customized or differentiated products in small batches further sets 3D printing apart from traditional manufacturing. While 3D printing does not have the advantage of economies of scale, making it unsuitable for high-volume manufacturing, it does allow for rapid prototyping, shortening the time it takes to move a product from design to production. This may, for instance, allow entrepreneurs to more swiftly manufacture products that address locally entrenched challenges from the ground up. For example, a consortium of Canadian organizations in partnership with the Comprehensive Rehabilitation Services (hospital) in Kisubi, Uganda, is trialing 3D printing of prosthetic limbs for amputees. Rather than being casted with plaster, the damaged limbs are digitally scanned and the prostheses are digitally modeled before being sent for production. This method has produced better-fitting limbs at a quarter of the usual production time.⁸In Togo, a 3D printer built from electronic waste has been used to print prototypes of designs by local entrepreneurs—items like anti-theft products for motorcycles, for example, which are often stolen.⁹

Another challenge for Africa’s industrialization

To the extent that there is enthusiasm for 3D printing and Industry 4.0 in Africa, it is rooted in the hope that it will enable economies to leapfrog industrialization to development. Many African countries have been able to overcome decrepit telecommunications infrastructure to develop advanced mobile technology capabilities and, as the thinking goes, they should be able to do the same in manufacturing. However, it is not that easy to replicate and build sophisticated 3D printers or to develop the specialized skills needed to know how to produce durable and reliable products. Many 3D-printed products often require a number of postproduction steps and tests, which require their own specialized knowledge, machinery, and infrastructure.¹⁰Small-scale personal printers may address distinct local challenges but are unlikely to contribute to Africa’s industrialization en masse. The potential gains from 3D printing in Africa are likely to be limited.

Currently, the United States, Germany, Korea, and Japan lead in 3D printing.¹¹ Among emerging economies, the biggest growth is expected to come from China and India. In China, the government is aggressively pushing technologies associated with Industry 4.0. In 2015, China unveiled its “Made in China 2025” initiative to foster advanced technologies, emphasizing 3D printing as a key enabler. The Ministry of Industry and Information Technology then released the “National 3D Printing Industry Promotion Plan (2015–2016),” which has since been complemented by a new “Additive Manufacturing Action Plan (2017–2020).” In 2017, Chinese institutions spent $1.1 billion on 3D printing.¹²

Beijing expects its 3D printing industry to reach annual sales revenues of more than $3 billion by 2020, with an average annual growth rate of 30 percent or higher.¹³ This is part of China’s overarching shift toward automation, as it aims to move its companies up the manufacturing value chain to remain competitive.

As China and other developed economies retool their factories with the latest technologies, Africa’s core competitive advantage—its large and inexpensive labor force—risks being eroded. Not that long ago, African countries were encouraged to integrate into global value chains (GVCs) as corporations turned to offshoring to boost efficiency. Integration into GVCs—first as a source of primary inputs and later as potential production hubs—was seen as a means of improving African countries’ industrial capabilities, employment, and social structures.¹⁴ In Ethiopia, Chinese footwear, pharmaceutical, and other light manufacturing factories employ thousands of Ethiopian workers engaged primarily in product assembly. But labor-saving technologies like 3D printing are making these low-wage, labor-intensive manufacturing roles increasingly redundant, leaving African countries with fewer entry points into GVCs. 3D printing is also likely to repatriate some production activities that were earlier offshored.¹⁵ 3D printing has few production stages, and the flexibility to build products at the point of consumption reduces global transportation costs and vulnerability to risk factors like political unrest and natural disasters common to some African countries. It can also improve time-to-market responsiveness and hasten responses to changes in demand. According to the Oxford Martin School at the University of Oxford, 85 percent of Ethiopian jobs are at risk of being replaced by 3D printing and automation, 67 percent in South Africa, and 65 percent in Nigeria.¹⁶ Such massive job loss may undermine industrialization and may increase the likelihood of social unrest as Africa’s young population—an estimated 830 million individuals by 2050

¹⁷—enters the job market with limited opportunity.

3D printing in comparative perspective

African economies are not the only ones facing this challenge. In Vietnam, globalization has allowed for the creation of some 250,000 hardware manufacturing jobs.¹⁸ By inserting itself into downstream activities in GVCs, Bangladesh was similarly able to generate millions of jobs in the textile and garment sectors. However, 86 percent of jobs in Vietnam¹⁹ and more than 70 percent of jobs in Bangladesh²⁰ are at risk of being replaced by 3D printing and other disruptive technologies.

Governments and private-sector entities in potentially affected economies are working to soften the effects. Upgrading skills and retraining staff are obvious initiatives. The United Arab Emirates has established a “Fourth Industrial Revolution Council,” creating a knowledge-sharing system of think tanks for new technologies. In 2016, the Singaporean government launched two statutory boards—SkillsFuture Singapore and Workforce Singapore—which, together with its educational institutions, are working to strengthen adult training in technology. It is essential for countries to have an educated and skilled workforce to be able to actively participate in an increasingly digitized global economy and to meet what will likely be changed quality and productivity benchmarks. On its own, however, a skilled workforce is not enough. Many governments are aware that 3D printing will affect industries unevenly and are pursuing Industry 4.0 strategies that build on their competitive advantages, with some possible lessons for African leaders and industries.

India

India risks losing nearly 69 percent of jobs because of 3D printing and automation.²¹ At particular risk are the food and beverage, pharmaceutical, and automotive industries; today, robot makers in India mostly supply the country’s automotive sector, with more than 2,100 industrial robots being sold in 2014.²² Additionally, most of the 3D printers are sold to the automotive and aerospace industries. The trend threatens to undermine the government’s “Make in India” initiative, which was intended to attract investment and boost employment in labor-intensive manufacturing sectors. India suffers from an overhang of more than 17 million unemployed workers.²³

The government is taking steps to prepare its industries, and it has identified IoT as one of the most important disruptive technologies for the country. IoT—a network in which smart devices communicate with each other to send and receive data—relies on information technology (IT) capabilities and allows India to capitalize on its 3.9-million strong and skilled IT workforce to innovate around the edges of 3D printing. 3D printers can be integrated with IoT technologies to optimize manufacturing supply chains and reduce costs. In “smart factories,” for example, the integration of 3D printing and IoT capabilities allows production and logistics systems to organize themselves without human intervention. India’s first smart factory is being developed in Bangalore. Set up at the Indian Institute of Science’s Center for Product Design and Manufacturing, with seed funding from the Boeing Company, it allows data to be continuously collected and monitored to provide real-time insights into every movement and process taking place on the factory floor. The data generated are fed back into a responsive, network-enabled framework that allows the factory to function truly autonomously.²⁴ Indian companies Mahindra & Mahindra, Tata, Godrej, and Welspun are adopting smart-factory principles. The Indian state of Andhra Pradesh aims to be an IoT hub by 2020.²⁵

IoT is expected to eliminate nearly 94,000 low-skilled IT jobs in India.²⁶ In the long term, however, it is also expected to create more than 100,000 medium-skilled jobs that complement other disruptive technologies, such as data security, data science, communications, technology support, and technology services.²⁷ Global demand for traded goods and services has diverged in recent years. As technology reshapes manufacturing processes, demand for GVC trade in services is likely to remain high and is likely to benefit populous, lowskilled, English-speaking economies like India.²⁸ Indian companies DhruvSoft, OnGraph, and Altiux have already entered the IoT services space. Others, like 75F, are developing IoT platforms for building automation and other applications that also rely on 3D printing.

Cambodia

One of the fallacies surrounding 3D printing is that monumental change is imminent. In reality, 3D printing is still underdeveloped. It currently does not scale well; even as the range of printable materials is expanding, it remains limited. Generally, 3D printers do a poor job of handling soft, flexible materials, for instance, which is why the automotive and aerospace industries that use hard materials are among its earliest adopters. For a country like Cambodia, where garment and footwear manufacturing contributes 16 percent to the total gross domestic product and accounts for more than 80 percent of all exports,²⁹ this may be good news—for now.

Third after Ethiopia and Nepal, Cambodia is among the countries most susceptible to the effects of automation.³⁰ Nearly 90 percent of garment workers are at risk of being replaced by what the International Labour Association calls “sewbots.”³¹ These sewbots are unlikely to appear in Cambodian factories, but they are being installed in Europe and the United States, where Cambodian exports are heavily concentrated.³² The footwear manufacturer Adidas already uses 3D printing at its “Speedfactory” in Ansbach, Germany, and at its US location in Atlanta, Georgia. The factory pairs a small human workforce of around 160 people with 3D printing, robotic arms, and computerized knitting to produce 500,000 pairs of shoes per year for the European market.³³ This is a modest figure compared with the nearly 300 million pairs of shoes that it sources annually,³⁴ suggesting that mass production of 3D-printed footwear may be on the way, but it is not fast approaching.

Similarly, 3D-printed garments are not yet within reach. Because 3D printers build objects by depositing layers of material one on top of the other, the layers fuse together in a way that is wholly unlike how fibers become fabric. 3D-printed clothing so far is rigid and unwearable.³⁵ Even when this problem is solved, it is likely that 3D-printed garments will have to undergo finishing processes to improve their aesthetics. Detailed or even whole pieces for higher-end fashion labels will likely still have to be sewn by hand.³⁶

Cambodia has begun to diversify away from garment and footwear manufacturing and from US and European markets. While garment manufacturing continues to dominate, Cambodian exports have expanded to include primary commodities like rice and rubber, as well as light manufactured goods, including automobiles and electronic components.³⁷Cambodia’s proximity to Thailand is one of the factors driving this diversification, as the country is a major producer of trucks, cars, and electronic components; Cambodian exports to Thailand surged 46 percent in 2016.³⁸ In Thailand and in neighboring Association of Southeastern Asian Nations (ASEAN) markets, low-quality, low-priced goods are still in demand, even as technological advancement facilitates more sophisticated production. This mirrors the experiences of China and India, where highly traded manufacturing sectors segmented the markets. This holds notable promise in Africa; many local manufacturing industries have seen increases in their intra-African trade shares over the last decade.³⁹

3D printing in Africa: South Africa leads the way

Manufacturing is not monolithic in terms of the extent of 3D printing. The adoption varies across subsectors, with some industries more affected than others. Those less affected are likely to continue to facilitate potential entry points into GVCs for less industrialized economies. Along with the services sector, this includes a range of commodity-based manufacturers, such as wood and paper products and food processing, which are traded less and are therefore less susceptible to international competition. Additionally, countries that feed GVCs with raw materials may assume more powerful roles as 3D printing is more widely adopted; more players will need to be supplied with small batches of input materials for printing.⁴⁰ With an abundance of mineral reserves—including titanium, which is of special interest for the aerospace and defense industries because of advantages it has in weight and chemical resistance—South Africa is positioning itself as a global supplier of metal inputs and metal 3D-printed parts for the medical and aerospace markets. It currently leads the continent in 3D printing. In the long term, the government aims to export more than fifty tons of 3D-printed titanium parts per year.⁴¹ In 2017, the Aeroswift project, a South African-built titanium powder 3D printer, successfully produced aircraft parts, including a throttle lever, a condition lever grip, and a fuel tank pylon bracket, with the first commercial applications expected in 2019. The project is a collaboration between Aerosud, South Africa’s largest private aerospace manufacturing company, and the South African Council for Scientific and Industrial Research. Among its likely clients are Airbus and Boeing.⁴²

South Africa benefits from established educational institutes that have advanced research and design capabilities, as well as vibrant innovation hubs. Examples of the former include Vaal University of Technology’s (VUT) Southern Gauteng Science and Technology Park and the Centre for Rapid Prototyping and Manufacturing at the Central University of Technology, which provides services in 3D printing for medical, prototyping, and rapid tooling purposes. “Makerspaces” additionally help entrepreneurs realize their product ideations for which 3D printing is a key tool. The global “maker movement,” a technology-based extension of the “do-it-yourself” culture, has given rise to a number of makerspaces, or “fab labs,” around the world. There are more than one hundred such makerspaces in Africa today.⁴³ In 2011, VUT launched the “Idea 2 Product” lab series with twenty personal 3D printers. Since then, the labs have expanded to multiple South African universities, science centers, and schools, including township schools,⁴⁴ and globally to New Zealand, Sweden, and the United States. Labs are typically furnished with 3D printers, laser cutters, and even sewing machines. They allow entrepreneurs to experiment, collaborate, and learn the skills necessary to remain relevant in the coming era of manufacturing.

Preparing Africa for the 3D printing revolution

The trend toward 3D printing narrows the path for less-developed economies to industrialize. In Africa, the expected inward migration of labor-intensive manufacturing activities—especially from China—may not happen. Countries outside of Africa also face the prospect of “premature deindustrialization,”⁴⁵ with governments and private-sector players scrambling to mitigate the risk. The experiences of India, Cambodia, and South Africa offer possible lessons learned and ways forward for African economies.

Focus on GVCs in the services sector

India’s strategy to leverage its IT capabilities and innovate around the edges of 3D printing—particularly in services—reflects broader patterns in global trade. Mostly, countries trade in manufactured products. However, when manufacturing GVCs are broken down, services play a significant role and now account for nearly onehalf of world trade.⁴⁶ This trend reflects the importance of software in smart finished products (such as connected cars using 3D printing and IoT), as well as the growing role of services in managing supply chains.

Many African economies have opened up to trade and investment in manufacturing, but they have not done so in services. This is a futile approach. Poorer African economies with lower labor costs risk losing entry points into GVCs for manufactured goods, and they are unlikely to develop sufficiently advanced 3D printing and robotics capabilities to compete with their more developed counterparts. Specializing in upstream activities, such as research and development and design, and in downstream activities like marketing, finance, communications, and distribution of finished goods, can facilitate new entry points. Many African economies are already competitive in these areas and can become even more competitive over time. Kenya, Rwanda, Senegal, and South Africa have vibrant information and communications technology (ICT)-based services sectors. Nigeria has sophisticated capabilities in banking services; Ghana has capabilities in transportation, storage, and public administration. As GVCs become more digitized, financial technology (fintech) services are also likely to elevate countries like Kenya with advanced fintech capabilities.

All of these services require careful regulation, and if properly managed, they could be effective means for integrating African economies into GVCs as 3D printing and automation advance.

Capture 3D material segments

The availability of materials and material science knowhow will be one of the key enablers for the widespread adoption of 3D printing. The players at the front of the value chain who supply materials for 3D printing will hold significant influence, as they will likely define the properties and production costs of the components. South Africa is taking advantage of its significant titanium reserves to position itself as a supplier of metal inputs and metal 3D-printed parts across industries. While plastics have garnered the most attention as a 3D printing material, it is metals that have been the fastest growing 3D printing category since 2012.⁴⁷ The range of printable materials is further expanding to include ceramics, cement, and glass.⁴⁸

For African countries rich in natural resources, a significant opportunity may lie in supplying and producing metals for metal 3D printing systems. Common metals used include stainless steels, aluminum, nickel, cobalt-chrome, and titanium, which are usually applied in powder form.⁴⁹

Mineral-rich countries, such as Tanzania, Mozambique, and the Democratic Republic of the Congo, can differentiate themselves by dominating particular material segments. This may position them to exert influence over the market and the value chain. If not part of a wider economic strategy, however, this approach risks further entrenching African dependence on commodity exports. Resource-rich countries should leverage their competitive advantage in 3D printing materials in tandem with a policy of market and industry diversification and a focus on skills training.

Strengthen intra-African trade

Over time, 3D printing is likely to curb trade in manufactured goods to developed economies. Some manufacturing segments will be reshored, and goods will be produced domestically and for domestic markets. Like Adidas, for example, the footwear manufacturer Nike is embracing 3D printing to move production closer to its key consumer markets.⁵⁰ According to the Dutch banking company, ING, 3D printing could eliminate one-quarter of world trade by 2060, leaving export-oriented countries with severe trade deficits.⁵¹

In anticipation of such shifts, Cambodia has started to reorient its trade to neighboring ASEAN countries, as well as to its domestic market. For less industrialized countries, low-quality, low-priced goods produced and consumed domestically or regionally are likely to remain in demand. As China’s economy developed, for example, it consisted of a small upper segment served by foreign companies and a large, low-end segment served by local firms offering low-quality, low-priced products at the bottom.⁵² The Indian textile manufacturer Arvind Mills was able to take an ostensibly global product—blue jeans—and fashion it to suit local needs. In Africa, regional markets for such goods hold considerable promise. Intraregional trade has the potential to expand production, generate jobs, and reduce dependence on developed markets for exports.

In March 2018, leaders of forty-four African nations signed the Continental Free Trade Agreement (CFTA), establishing the largest single market for goods and services since the World Trade Organization.⁵³ The CFTA will go into effect once twenty-two countries have ratified it in their national parliaments; as more states ratify the agreement, its implementation will proceed automatically in those countries. The hope is that the agreement will trigger a cycle of more intra-African trade, which will in turn drive the structural transformation of their economies. Currently, only 16 percent of Africa’s trade is intraregional, owing to high trade costs in the region.⁵⁴ The CFTA has the potential to increase this by an estimated 52 percent by 2022, providing all countries complete negotiations and ratify in a timely fashion.⁵⁵

African countries already trade more value-added products among themselves, unlike their exports to the rest of the world, which are mainly commodities. For example, many African manufacturing industries have seen significant increases in their intra-African trade shares between 2000 and 2014.⁵⁶ In 2014, manufactured goods accounted for 41.9 percent of intra-African exports compared with a 14.8 percent share of exports outside of the continent.⁵⁷ For members of the East African Community (EAC), a regional organization of six countries, bilateral trade is highest among neighboring states. In 2011, EAC-member bilateral trade was 213 percent higher than before the common market was established in 2010.⁵⁸ Commodities are among the most commonly traded goods, followed by manufactured goods such as cement, textiles, sugar, beer, and salt.

Intraregional trade provides a unique opportunity for African countries to build on their competitive advantages and develop more robust trade platforms. Combined with appropriate domestic industrial policies, as well as improvements in logistics and infrastructure, intraregional trade may significantly offset some of the losses likely to be caused by 3D printing.

Continue to foster technology innovation hubs

Intra-African trade may hold promise for 3D printing across the continent. In the absence of an adequately trained workforce, African countries are unlikely to be globally competitive in 3D-printed products and parts, with few exceptions. However, less sophisticated production may meet local demand. In Nigeria, the start-up ElePhab produces 3D-printed replacement parts for the Nigerian market. In Rwanda, the solar energy provider Great Lakes Energy uses 3D printing to develop packaging and storage solutions for its solar products.⁵⁹

Technology ecosystems like fab labs and makerspaces are vital to such ventures, as they allow entrepreneurs to develop skills, collaborate, and innovate around local challenges and solutions. Today, there are more than one hundred such hubs in Africa spurred by government, academic, or private-sector support, or some combination of the three. For example kLab (knowledge Lab), a Kigali-based co-working space for IT entrepreneurs housed within the government-sponsored “ICT Park,” attracts young software developers, offering them a place to gain practical experience and training in digital design and production. The Rwandan government heavily supported kLab’s ecosystem as part of its National ICT Plan.

⁶⁰ kLab also maintains ties with the Kigali Institute of Technology and the National University of Rwanda, through which it gains access to potential clientele.

Other models also exist. The Nigerian incubator program, 400.NG, for example, has partnered with the venture capital firm L5Lab in Lagos, as well as local tech hubs in an effort to bridge the gap between talent-picking and skills development.⁶¹ Nairobi’s wellknown technology hub, iHub, prides itself on having emerged in spite of, rather than because of, government support. Johannesburg’s Braamfontein neighborhood houses technology firms, including Impact Hub, Black Girls Code, TechinBraam, and the Branson Centre for Entrepreneurship. Like kLab, its success points to the important role that multiple stakeholders have played in supporting Africa’s technology ecosystems and to the likely and varied local applications of 3D printing.

Leverage global partnerships

Fab labs and similar technology innovation hubs are good examples of how partnerships with international stakeholders can help African countries hone their competitive advantages in the coming era of manufacturing. Virtual connections to labs worldwide can facilitate knowledge exchange. Partnerships with global venture capital funds and other sources of start-up funding are also important. A significant portion of the $560 million in venture capital funding to Africa’s tech hubs comes from US and European investors.⁶²

Leveraging the know-how of international partners is pivotal for the development of 3D printing in Africa and in regions currently lacking such knowledge. For example, a 2017 pilot project between Siemens, the Emirati aerospace manufacturer Strata, and Etihad Airways successfully designed, certified, and manufactured the first aircraft interior part to be created with 3D printing technology in the Middle East.⁶³ As a leader in the industry, Siemens consulted on the selection of materials, testing, and the development of the manufacturing processes; Etihad was responsible for the design and certification of the part for use in aviation; and Strata 3D-printed the part with support from local collaborators. The project is an example of 3D printing’s potential when the right global and local expertise is leveraged. Similar collaborations could benefit African airline companies, including the continent’s biggest airline, Ethiopian Airlines, to diversify their operations. In 2016 Ethiopian Airlines signed a memorandum of understanding with South Africa’s Aerosud to explore the potential of 3D manufactured aircraft parts in Ethiopia.⁶⁴

At its core, 3D printing is just another manufacturing process. Yet, over time it will significantly reshape how and where things are made, with far-reaching consequences for economies that rely on low-wage, labor-intensive manufacturing. In this, African countries are not alone; observing how other countries anticipate and prepare for the coming changes may provide valuable lessons. Smart governments are supporting skills training and innovation, developing complementary competencies, and diversifying their industries and markets. They are now making the decisions that will later determine their role in a world of 3D printing and automation. In the near term, Africa does not have much to gain from 3D printing, but if its governments do not start to make such decisions now, the continent will have even more to lose.

Aleksandra Gadzala is a senior fellow in the Africa Center and a geopolitical risk consultant focused on emerging and frontier markets. She is the editor of Africa and China: How Africans and Their Governments are Shaping Relations with China, and her writings have appeared in numerous publications, including The National Interest and China Review, and have been cited in US congressional testimony. She holds a PhD in Politics from the University of Oxford.

1    J. Peter Pham, “Assessing China’s Role and Influence in Africa,” Prepared statement
presented at a Hearing before the House Subcommittee on Africa, Global Health, and
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2    Irene Sun, The Next Factory of the World: How Chinese Investment is Reshaping Africa
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3    Ian Campbell et al., Wohlers Report 2017: 3D Printing and
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alliedmarketresearch.com/3D-printing-emerging-economieschina-india-UAE-brazil-south-africa-marketSome estimates suggest that if the current growth of investment in 3D printing continues, 50 percent of all globally manufactured goods will be printed by 2060.

5    Raoul Leering, 3D Printing: A Threat to Global Trade, ING,
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6    Douglas S. Thomas and Stanley W. Gilbert, National Institute of
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8    Rob Goodier, “Nia’s 3D-Printed Prosthetic Limbs Cut Costs and
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14    “Global Value Chains and Africa’s Industrialisation,” African Economic
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15    Luciano Fratocchi, “Is 3D Printing an Enabling Technology for
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16    Carl Benedikt Frey et al., Technology at Work v2.0: The Future
Is Not What It Used to Be, Citi GPS, January 2016, https://www.
oxfordmartin.ox.ac.uk/downloads/reports/Citi_GPS_Technology_
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17    Siddharth Chatterjee, “Promise or Peril? Africa’s 830 Million Young
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20    Frey et al., Technology at Work v2.0

21    Ibid

22    James Crabtree, “Spectre of Automation Hangs over Indian
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25    Information Technology, Electronics & Communications
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26    Ananya Bhattacharya, “The Internet of Things Could Be the Light
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27    Phil Fersht and Jamie Snowdon, Impact of Automation and
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28    Frey et al., Technology at Work v2.0

29    Cambodia: Diversifying Beyond Garments and Tourism, Asian
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30    Frey et al., Technology at Work v2.0

31    Jae-Hee Chang, Gary Rynhart, and Phu Huynh, ASEAN in
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32    More than 80 percent of Cambodia’s exports go to Canada, the
European Union, and the United States

33    Anna Wiener, “Inside Adidas’ Robot-Powered, On-Demand
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34    Tansy Hoskins, “Robot Factories Could Threaten the Jobs of
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35    Roni Jacobson, “The Shattering Truth of 3D-Printed Clothing,”
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36    Y.L. Yap and W.Y. Yeong, “Additive Manufacture of Fashion
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37    Cambodia: Diversifying Beyond Garments and Tourism

38    Cheng Sokhorng, “Exports Driving Shift in Thai Trade,” The
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39    Mary Hallward-Driemeier and Gaurav Nayyar, Trouble in the
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40    André Laplume, Bent Petersen, and Joshua M. Pearce, “Global
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41    Deon de Beer et al., A South African Additive Manufacturing
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opportunities for engagement with the United States, see
Anthony Carroll, “Forging a New Era in US-South African
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42    Wendell Roelf, “South Africa in Talks with Airbus, Boeing to Print
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43    Ndubuisi Ekekwe, “Africa’s Maker Movement Offers Opportunity
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44    Selina Rapulane, “Idea to Product Labs Spring Up in Township
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45    Dani Rodrik, Premature Deindustrialization, National Bureau
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46    Global Value Chain Development Report 2017: Measuring and
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47    Avetik Chalabyan et al., “How 3-D Printing Will Transform the
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48    Richard D’Aveni, “The 3-D Printing Revolution,” Harvard Business
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49    “Metal Powders – The Raw Materials,” Metal AM, http://www.
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50    Jennifer Bissell-Linsk, “Nike’s Focus on Robotics Threatens Asia’s
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51    Leering, 3D Printing

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54    Arabile Gumede, “Africa Set to Agree $3 Trillion Trade Bloc,
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55    David Luke and Babajide Sodipo, “Launch of the Continental
Free Trade Area: New Prospects for African Trade?” International
Centre for Trade and Sustainable Development, June 23, 2015,
https://www.ictsd.org/bridges-news/bridges-africa/news/
launch-of-the-continental-free-trade-area-new-prospects-forafrican

56    Hallward-Driemeier and Nayyar, Trouble in the Making?

57    Lily Sommer et al., Smart Industrialisation Through Trade in
the Context of Africa’s Transformation, Overseas Development
Institute, August 2017, https://www.odi.org/sites/odi.org.uk/files/
resource-documents/11678.pdf

58    “Trade in East Africa: Worth Celebrating,” The Economist, June
9, 2016, https://www.economist.com/news/middle-east-andafrica/21700398-regional-co-operation-has-been-good-leastpart-continent-worth

59    Elizabeth Dearborn Hughes, “Why Africa Should Embrace
3D Printing,” Medium, April 5, 2016, https://medium.com/@
elizabethdearbornhughes/why-africa-should-embrace-3dprinting-d2e2384f183d

60    Jonathan Kalan, “kLab: A Space for Innovation in Rwanda,” How We
Made It In Africa, August 1, 2012, https://www.howwemadeitinafrica.
com/klab-a-space-for-innovation-in-rwanda/18942/

61    Tim Kelly and Rachel Firestone, How Tech Hubs are Helping to
Drive Economic Growth in Africa, World Bank Group, 2016, http://
documents.worldbank.org/curated/en/626981468195850883/
How-tech-hubs-are-helping-to-drive-economic-growth-in-Africa

62    Yomi Kazeem, “Startup Venture Funding Jumped More Than 50%
in Africa Last Year to a Record High,” Quartz, February 21, 2018,
https://qz.com/1211233/how-much-did-african-startups-raise-in2017-partech-disrupt-africa/

63    “Strata, Etihad Airways Engineering and Siemens Reveal the
MENA’s First 3D-Printed Aircraft Interior Part,” Siemens, 2017,
http://www.middleeast.siemens.com/me/en/news_events/news/
news_2017/strata-etihad-airways-engineering-and-siemensreveal-the-menas-first-3d-printed-aircraft-interior-part.htm

64    Samuel Getachew, “From Service to Manufacturing: Ethiopian
Airlines Verging Towards 3D Printing,” Reporter, August 13, 2016,
https://www.thereporterethiopia.com/content/service-manufacturing-ethiopian-airlines-verging-towards-3d-printing

The post 3D Printing: Shaping Africa’s Future appeared first on Atlantic Council.

]]> https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/3d-printing-shaping-africas-future/ Fri, 20 Apr 2018 13:00:00 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/3d-printing-shaping-africas-future/ Disruptive technologies—such as the Internet of Things, robotics, and three-dimensional (3D) printing—have been heralded as the future of the global manufacturing sector. However, in Africa, they could hinder industrialization and result in fewer entry points into global supply chains. While it may be possible for African nations to “leapfrog” directly to newer technologies, it is […]

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Disruptive technologies—such as the Internet of Things, robotics, and three-dimensional (3D) printing—have been heralded as the future of the global manufacturing sector. However, in Africa, they could hinder industrialization and result in fewer entry points into global supply chains. While it may be possible for African nations to “leapfrog” directly to newer technologies, it is more likely that developing the relevant worker know-how, infrastructure, and corporate capabilities necessary to leverage the potential value of these technologies will be a very gradual process. African policy makers must therefore pursue multipronged strategies to ensure relevance as 3D printing and other disruptive technologies move into the mainstream.

 

A new issue brief by Africa Center Senior Fellow Dr. Aleksandra Gadzala, 3D Printing: Shaping Africa’s Future catalogues the experiences of other countries facing the challenges of widespread 3D printing adoption.

Gadzala argues that, at its core, 3D printing is just another manufacturing process. Yet, over time it could significantly reshape how and where things are made, with far-reaching consequences for economies that rely on low-wage, labor-intensive manufacturing. African countries are not alone; observing how other countries anticipate and prepare for the coming changes may provide valuable lessons. Smart governments are supporting skills training and innovation and diversifying their industries and markets. They are now making the decisions that will later determine their role in a world of 3D printing and automation. In the near term, Africa does not have much to gain from 3D printing, but if its governments do not start to make such decisions now, the continent will have much to lose.

The post 3D Printing: Shaping Africa’s Future appeared first on Atlantic Council.

]]> https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/fintech-powering-inclusive-growth-in-africa-2/ Fri, 20 Apr 2018 13:00:00 +0000 https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/ Fintech: Powering Inclusive Growth in Africa, helps investors and policy makers better understand the impact of the waves of fintech innovation unfolding in sub-Saharan Africa, and reflects on the enabling environments needed to ensure its success and contribution to inclusive growth.

The post Fintech: Powering inclusive growth in Africa appeared first on Atlantic Council.

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From cryptocurrencies to blockchain to mobile money, financial technology (“fintech”) is revolutionizing the basic structures of the global economy. Financial services delivered through fintech are becoming more accessible, efficient, and personal. In sub-Saharan Africa, where only 34 percent of adults have bank accounts, fintech companies are already providing financial products and services to millions of unbanked and underserved Africans in ways that traditional financial institutions cannot.

A new issue brief by Africa Center Senior Fellow Dr. Aleksandra Gadzala, Fintech: Powering Inclusive Growth in Africa, helps investors and policy makers better understand the impact of the waves of fintech innovation unfolding in sub-Saharan Africa, and reflects on the enabling environments needed to ensure its success and contribution to inclusive growth. Fintech has the potential to serve as an equalizer in Africa by driving financial inclusion, but the technology faces hurdles. Gadzala’s brief tracks the emergence and expansion of fintech on the continent and the ways in which it adds value to other sectors, including insurance, energy, and agriculture. She concludes that, while not without its challenges, the long-term prospects for fintech to drive economic growth in Africa are immense.

Introduction

From cryptocurrencies to blockchain to mobile money, financial technology or “fintech” is revolutionizing the basic structures of the global economy. Financial services delivered through fintech are becoming more accessible, efficient, and personal. In sub-Saharan Africa, where only 34 percent of adults have bank accounts, 16 percent have access to formal savings, 6 percent to formal borrowing,¹ and where 94 percent of transactions are made in cash,² fintech companies are already providing financial products and services to millions of unbanked and underserved Africans in ways that traditional financial institutions cannot. In many African markets, traditional banks are not retail-focused and require expensive account fees and cumbersome paperwork, or they have branches that are far away from where unbanked communities work and live. They are often disconnected from and little trusted by low-income populations.

While not without its challenges, the long-term prospects for fintech to overcome these barriers and drive financial inclusion in Africa are intact and profound. Advances in fintech also have positive spillovers for other sectors including insurance, energy, and agriculture. This brief helps potential investors and policy makers better understand the waves of fintech innovation unfolding in sub-Saharan Africa. It explores trends, opportunities, and challenges in mobile money, cryptocurrencies, and blockchain solutions. Finally, it reflects on the factors necessary for fintech’s long-term success.

Mobile money in Africa

Propelled by the rapid adoption of mobile phones across the continent, fintech companies are introducing new financial distribution models and payment channels that are aligning financial products to the needs of Africa’s low-income consumers. In the first wave of financial innovation, fintech companies began mainly as mobile money platforms on the back of the distribution capabilities of mobile network operators (MNOs). “Mobile money,” broadly, is a technology that enables customers to receive, store, and spend money securely using their mobile phones. At its most basic, it is a cash transfer system: users deposit cash with mobile money agents that electronically transfer it to other users, who withdraw the cash from other agents. Although it is technology based, cash is still at its core. Sub-Saharan Africa today accounts for more than half of all mobile money deployments worldwide, with one-hundred-and-forty active mobile money schemes across thirty-nine of Africa’s fifty-four countries.³ In seven countries—Kenya, Namibia, Ghana, Gabon, Tanzania, Uganda, and Zimbabwe—more than 40 percent of the adult population actively uses mobile money.⁴

The most distinct and celebrated mobile money success story is M-Pesa, which was created by the Kenyan MNO Safaricom in 2007. Initially launched as a simple peer-to-peer (P2P) money transfer system to enable consumers and small businesses to send and receive money, M-Pesa’s estimated 30 million users now pay bills, transfer money, save, make purchases, and perform traditional banking services with just their mobile phone. Mobile money has evolved beyond M-Pesa’s initial offering to include a range of additional functions: mobile wallets, mobile payments, core banking services, and wealth management services. More and more mobile money providers are focusing on solutions beyond financial services like taxation, education, insurance, and business administration.

Mobile money in sub-Saharan Africa has also evolved beyond M-Pesa. Several other mobile money providers have been successful, including MTN Mobile Money, with forty-one million registered customers across fifteen countries; Orange Money, with sixteen million registered customers across fourteen countries; and Tigo Money, with eight million registered customers across five African countries.⁵ These and other mobile money providers fall into three overarching categories: MNO-led, bank-led, and a hybrid of the two that involves partnerships between MNOs and banks. In MNO-led models, the MNO is responsible for most of the value chain, including the virtual telecommunications network, the physical agent network, and the issuing and processing of payments; a commercial bank is the deposit holder. For example, a customer wanting to make a basic payment transaction through her M-Pesa account will deposit cash with a Safaricom agent, usually at a corner store in return for an e-float—a virtual deposit in her mobile wallet stored on her mobile phone. Soon after making the deposit, she receives a text message confirming that the e-float has been deposited. She can then either transfer the e-float to another phone whose user can pay out the e-float with a Safaricom agent or keep the e-float and pay it out at a future date. At the core of this model is a mechanism for safeguarding customers’ funds: the e-float is backed by deposits held at commercial banks. The earned interest does not benefit Safaricom and the funds held in trust are not fungible with those of Safaricom, making them safe from claim in the event the MNO becomes insolvent.

In bank-led mobile money models, banks provide access to their agent networks and payments issuing and processing capabilities. The role of MNOs is restricted to providing the telecommunications infrastructure through which services are offered. For example, the Central Bank of Nigeria (CBN) defines mobile money as a banking service and allows only licensed bank and non-bank (but not MNO) organizations to operate mobile money systems; any organization wishing to operate such a system must be licensed by the CBN. Leading the Nigerian mobile money sector so far has been Paga, a non-bank mobile money provider, which has expanded its customer base 81 percent annually, from one million customers in 2013 to over six million in 2017.⁶ Paga evolved from a mobile money operator to a fully-fledged and licensed mobile payments company.

In 2016, it processed US$500 million in payments.⁷ Paga customers can transfer money via their mobile phones, and businesses can integrate Paga’s checkout payment processes into their operations and allow customers to pay with Paga’s mobile services and then receive their payments through Paga’s agent network.

Between the bank-led and MNO-led mobile money models is a hybrid model like that pursued in Ghana. Although mobile money is regarded as a banking service, the Bank of Ghana has liberalized the banking sector to include non-banks (including MNOs) in providing mobile money services. MNOs can be licensed as agents of banks or as financial service providers to offer what the central bank calls “branchless banking.” Under this approach, MNOs provide the technology for the receipt and transfer of cash, the agent networks, and have ownership of the mobile money brand that incentivizes them to drive customer acquisition. In Ghana, the MNO MTN operates mobile wallets for multiple partner banks including Ecobank Ghana, Fidelity Bank, Merchant Bank, Ghana Commercial Bank, and Barclays Africa.⁸ Nearly 40 percent of Ghanaians have mobile money accounts—nearly the same as in Kenya and significantly more than the six percent in Nigeria.⁹

Interoperability challenges and cryptocurrencies

One of the challenges encountered by mobile money platforms is interoperability within and between countries, as well as the continued reliance on cash for deposits. Interoperability refers to interconnection across mobile money providers, including transfers between mobile money accounts or mobile money and traditional bank accounts, both domestically and internationally. Recent interoperability agreements signed in and by Uganda, Kenya, Rwanda, and Tanzania now facilitate cross-border mobile money transfers. Fintech companies like Flutterwave, a US company operating in Ghana, Nigeria, and several other African Countries, are also building digital payment infrastructures for processing payments across card, bank account, and mobile money platforms and across African countries. A little over a year after it launched in 2016, Flutterwave had processed US$1.2 billion in payments across ten million transactions.¹⁰ As cryptocurrencies continue to gain attention, they are also being proposed as a means of facilitating interoperability and deepening financial inclusion in Africa.

A cryptocurrency is a decentralized digital asset that is designed to work as a medium of exchange using encryption and a decentralized computer network to process transactions and generate new units. It is not backed by any sovereign, and unlike a stock or bond, it has no intrinsic value other than the cryptocurrency itself. Because of the decentralized nature of cryptocurrencies, those who hold the currency—which is, or can be, anybody—also own the financial infrastructure on which it is based, thereby eliminating the need for thirdparty authorities in financial transactions. At their most basic, cryptocurrencies like Bitcoin or Ethereum are essentially P2P payment solutions.

In sub-Saharan Africa and other developing economies, cryptocurrencies are becoming attractive as a means of exchange and a store of value. This is especially true in economies where there are restrictions on taking cash abroad, where inflation is high, and political turmoil likely. In Zimbabwe, where inflation in 2015 was more than 500,000,000,000 percent,¹¹ the value of the most well-known cryptocurrency, Bitcoin, surged to over ten thousand dollars in November 2017. Possibly propelled by the coup d’état that ousted President Robert Mugabe, the price was a 75 percent premium on global Bitcoin prices.¹² For Zimbabweans, Bitcoin and other cryptocurrencies are a financial safe haven and a way of purchasing needed imports from foreign markets. The leading Zimbabwean cryptocurrency exchange, Golix, trades six cryptocurrencies with approximately one million dollars in transactions per month.¹³ Nearly 37 percent of all Golix customers use it as a savings mechanism.¹⁴ Similarly in Nigeria, a weakening naira caused a nearly 1,500 percent increase in Bitcoin trading in 2017,¹⁵ surpassed only by China.

Like a growing number of Africans, Nigerians are also turning to Bitcoin and other cryptocurrencies as a solution for sending and receiving remittances. Remittances comprise the sub–Saharan region’s largest source of foreign income yet remain cumbersome and costly to send.¹⁶ In the absence of third party financial intermediaries, however, transaction costs for cryptocurrencies are low or negligible, and cryptocurrency remittance services are emerging as alternatives to Western Union and MoneyGram services. Through BTCGhana, a Bitcoin-based remittance platform, users outside of Ghana can buy Bitcoins and quickly send them to Ghana-based recipients with Tigo Money, MTN Mobile Money, and Airtel Money accounts. Recipients receive the payments in Ghanaian cedi, which they can pay out with MNO agents.¹⁷

Despite the seeming promise of cryptocurrencies, however, they are not without their risks. The cryptocurrency market is so far unregulated, illiquid, and prone to significant price swings that severely limit the transactional use of the assets. In 2017, the price of Bitcoin rose by more than 600 percent and tumbled by double-digit percentages—what would be considered a financial crisis if it happened to the value of a sovereign fiat currency. Because cryptocurrencies are so far concentrated in a few hands and their owners not clearly defined, opportunities for market manipulation, hacking attacks, and ransom are also ripe. How governments will address these risks is as yet unclear. In 2015, the Kenyan government cautioned Kenyan financial institutions against dealing in cryptocurrencies or transacting with entities engaged in cryptocurrencies at risk of “appropriate remedial action from the Central Bank.”¹⁸ In South Africa, the central bank has partnered with the Bitcoin-based platform, Bankymoon, to experiment with cryptocurrency regulation. If African government authorities determine that cryptocurrencies pose too great a systemic or security risk, it is not impossible that they could regulate them out of existence.

Beyond mobile money: Expanding financial access in Africa

The first wave of financial innovation in Africa has been broadly characterized by the emergence and expansion of mobile money and by early-stage experimentation with cryptocurrencies for P2P transactions. Encouraged by the success of this first wave, other companies have begun to leverage some of its innovative technologies to expand financial service offerings for low-income consumers in the region. The P2P model has already expanded to include peer-to-business, business-tobusiness (B2B), and peer-to-government transactions. What may be seen as a second wave of financial innovation is so far characterized by further financial service innovations—significantly, insurance technology (insurtech)—and the integration of mobile money and cryptocurrency solutions into parallel sectors like energy and agriculture.

Financial innovation in African insurance

Like banking penetration, insurance penetration in Africa is low—below 2 percent in most markets. In the most advanced insurance market, Kenya, the banking penetration rate is 3 percent.¹⁹ In South Africa where the rate is a misleading 13 percent, insurance coverage is mostly limited to the costs of funerals and burials (which are important cultural events in sub-Saharan Africa), while the casualty and property market is still undeveloped.²⁰ Like many financial products, insurance products are overall unaffordable and poorly tailored to the needs of low-income customers.

Because banking penetration in Africa is low, many traditional insurance companies are unable to rely on traditional payment channels provided by banks for premium collection and claim payouts. Mobile insurance providers, on the other hand, can leverage MNO mobile distribution channels: thirty-seven African countries have ten times more registered MNO agents than bank branches. In Kenya, for example, Safaricom has more than 130,000 agents with whom customers can cash in and cash out. By contrast, leading banks in Kenya have approximately 15,000 agents.²¹

This scale, coupled with innovations in mobile money technology, has given rise to new insurance models that aim to be more customer-centric and better suited to the needs of Africa’s low-income populations. Through P2P insurance platforms, for example, groups of individuals can pool their insurance premiums together to share risks rather than pay a traditional insurance provider to insure their risks individually. Group members are connected to each other through a digital platform on their mobile phones independent of location. Through South African insurtech startups Pineapple and Casava Insurance, for example, policyholders can connect with friends and family to assist each other during or after claims. Casava calls its model “the Facebook of insurance.”²²

Another emergent insurtech model, on-demand insurance, provides insurance protection when it is required and for a set period. This model is especially attractive for Africa’s emergent sharing economy in which users do not own assets but use them for a limited period. Through index-based insurance products, too, customers can receive benefits on the basis of a predetermined index—for instance, insufficient rainfall levels that will result in loss of harvest. Digital technology enables the system to collect indicator data in a systemic and detailed way and transmit it to the insurer. Payouts are automated and streamlined via mobile money platforms, bypassing the need for cumbersome and costly claims assessment processes.²³

ACRE Africa, a Kenyan-based insurtech company with operations in Tanzania and Rwanda, is an example of an index-based insurer. It matches weather data obtained via satellites with weather conditions required by crops, and automatically pays out claims when the recorded weather data deviates from a predetermined range. Claims are paid into farmers’ mobile wallets or as discounts on subsequent fertilizer and seed purchases; this ensures that farmers can replant their crops and avoid total loss.²⁴ MobiLife, a fully mobile South African-based life insurance company, similarly pursues an unorthodox approach to claim payments.

Rather than paying a lump sum in the event of death, MobiLife provides policy beneficiaries with weekly grocery vouchers; the vouchers are for a set period up to five years. Customers receive weekly text messages with a code that they can use to buy goods at various South African supermarket chains.²⁵ In the event that customers miss payments because of volatile incomes, MobiLife does not cancel the policy but reduces the payout amount until regular payment resumes. Its products are affordable, accessible, and simple, and in this way tailored to the needs and circumstances of South Africa’s low-income consumers.

Mobile money’s positive externalities

Another important characteristic of this second wave of financial innovation in Africa is the integration of mobile money and cryptocurrency solutions into other industry sectors and the emergence of new business models, notably in energy and agriculture. The ability of divergent industries to meaningfully incorporate fintech innovations into their business operations is one of the key factors behind fintech’s staying power.

One new business innovation is based on so-called micro-payments that allow people to transact in small amounts. Examples already in existence include pay-asyou-go solar power for households, irrigation systems purchased on layaway plans, and school tuition fees distributed into small, frequent payments.

In East Africa, M-Kopa Solar uses a pay-as-you-go model with payment made over the M-Pesa mobile money platform; through this, five hundred thousand homes now have solar electricity. ²⁶ Customers put down a US$35 deposit and make daily payments of forty-five cents for a year, after which the solar energy system is theirs. Beyond M-Pesa, other pay-as-you-go energy providers have also been successful, including Fenix International, which has partnered with MTN Mobile Money to provide off-grid solar energy to nearly one hundred thousand households in Uganda and Zambia²⁷ and PEG Africa in Ghana and Côte d’Ivoire, whose business model additionally rewards customers who pay promptly with free hospital insurance through BIMA— an insurtech company that provides customers life and hospital insurance for as little as thirty cents per month.

The increased transparency and information about users generated by mobile money can give rise to more customized product offerings. New credit-scoring models that analyze user data can help lenders assess the credit risks of a broad set of customers. Fenix International collects customer repayment histories to create customer credit scores on the basis of which it offers additional products. Mobile money ecosystems and information services have also emerged. In Côte d’Ivoire, the French MNO Orange has partnered with N’Kalô, a social enterprise focused on providing West African cashew nut farmers with critical market information. Together, Orange and N’Kalô have introduced a text messaging service that provides West African farmers with regular market and price updates for nineteen cents per month. A producer might receive a text message that reads: “Buyers are leaving the country, the end of the sale period is approaching. You are advised to sell the rest of your cashew. Price: 500- 550 CFA/kg, trend downward.”²⁸ In Ghana, farmers can similarly access weather forecasts, market prices, and farming best practices through Farmline’s text messaging-based service. Farmers can dial *399# on any mobile network and receive information tailored to their location and stage of production.²⁹

Orange and other MNOs including Safaricom and Millicom (which operates on the continent under the “Tigo” brand) have piloted mobile money payments in Africa’s agriculture value chains. Agricultural supply chain financing is a challenge in Africa: many buyers do not pay their suppliers immediately after delivery, and payments are often made only once during the main harvest.³⁰ This makes wealth management as well as medium- and long-term savings a challenge for Africa’s smallholder farmers, who comprise nearly 70 percent of the region’s population.³¹ In Côte d’Ivoire, Orange has partnered with Biopartenaire, a subsidiary of the cocoa producer Barry Callebaut, to implement a scheme to pay cocoa farmers directly into their mobile wallets after the delivery of cocoa beans. The mobile money can be used for payments at stores, public institutions, or can be paid-out with Orange agents.³² SmartMoney International’s “E-Villages” similarly link farmers, small businesses, merchants, and public institutions in rural communities in Tanzania and Uganda. SmartMoney customers receive harvest payments directly into their SmartMoney mobile wallets and can use the mobile money to buy goods at nearly 2,600 E-Village rural merchants.³³ Over the long term, such mobile money networks are likely to create expanded and aggregated mobile money platforms and client bases—the third wave of financial innovation.

The blockchain opportunity

The blockchain is most frequently debated in the context of cryptocurrencies—especially Bitcoin, which is based on blockchain technology—as it is used to facilitate various transactions of digitized data, including property registrations, birth certificates, insurance records, and bills of lading. It straddles the first and second waves of Africa’s financial innovation and is likely to be hugely significant for financial inclusion in Africa, and for Africa’s long-term economic development.

A blockchain, often called a distributed ledger, is, essentially, a way of moving information between parties over the internet and storing that information and its transaction history on a disparate network of computers. Think of an enormous global spreadsheet that runs on billions of computers. It is open source, so anyone can change its underlying code and can see all data activity. It uses state-of-the-art cryptography. And it is fully P2P, allowing individuals and businesses to interact directly without the need for third party intermediaries to verify or authenticate transactions. This may potentially allow for faster and cheaper transactions, even though the transacting parties may not know with whom they are dealing. Because it is decentralized and immutable, transactions on the blockchain are theoretically protected from hacking.

Bitcoin provided the first widespread use of blockchain. Since then, a number of experiments have been initiated that attempt to broaden the use of blockchain beyond its use as a digital currency. These range from relatively straightforward solutions like money transfers, to more complex instruments enabled by the introduction of smart contracts—self-executing digital contracts—like trade clearance and settlement. Significant for financial inclusion is the potential use of blockchain for payments, including remittances; supply chain finance; and personal identification. Many low-income individuals lack official documentation, which often precludes them from accessing formal financial services and government resources. A blockchain-based system like OneName or BitNation can provide an innovative and cost-effective way of establishing a digital identity that can develop over time as a user builds a credit history, for example, or accrues property and other assets. In such a system, a username is generated and added to the blockchain directory where the user data is stored. The end-user owns and controls her personal identity, data, and digital assets; she can digitally sign claims, transactions, and documents; own and transfer value; and interact with other distributed applications.

Like the holders of cryptocurrency coins who become owners of the digital financial infrastructure, individuals on a blockchain similarly become owners of the stored data. In a supply chain, blockchain eliminates the need for multiple copies of the same document stored on numerous databases; each participant in the supply chain updates the blockchain to reflect the latest transaction. This allows all parties to conduct due diligence, trace the location and ownership of goods, and make swift payments to suppliers. On AgriLedger, a blockchain-based mobile application (app) designed to streamline the operations of smallholder farmers, farmers can record each transaction and receive immediate order and delivery confirmation. Members of farming cooperatives can keep precise, matching records of data such as purchases, communal labor hours, equipment sharing, and crop sales.34 BitPesa, a pan-African fintech company that provides foreign exchange and B2B Bitcoin-based payments, also enables parties in a supply chain to store data about the origin, quality, and certifications associated with the traded goods. This ensures transparency and helps to mitigate against food fraud.

BitPesa, which is most commonly used by companies for cross-border money transfers, is also a remittance platform. BitPesa customers transact in Bitcoins, which can be sent to the mobile wallets of recipients in Nigeria, Kenya, Tanzania, and Uganda with Paga, Tigo Money, Airtel Money, MTN Mobile Money, and M-Pesa accounts. Recipients can then exchange the mobile money for local fiat currency or store the money in their mobile wallets. Other blockchain remittance platforms like Nigerian-based SureRemit do not allow its crypto product to be redeemed for cash. Instead, SureRemit has connected its crypto product to a network of merchants in Nigeria, Kenya, and Rwanda. Customers can use their SureRemit mobile app to pay for goods like utility bills, school tuition, and online goods—including through African e-commerce giant, Jumia.35

Blockchain technology is still evolving and will face numerous hurdles, some technical, some regulatory, some organizational, and some even societal rooted in notions of trust. Concepts are still being market-tested, but they will not be able to reach their full potential without industry collaboration, common standards, and significant institutional buy-in. At the most basic level, for blockchain to work, all relevant parties must simultaneously adopt the technology

Success factors

Addressing the challenges faced by blockchain and other fintech innovations will require patience. While the transformative potential of fintech is likely to be immense, the process of adoption will be gradual as the innovation gains momentum. Success will depend on supportive ecosystems, sound regulations, and network security.

Supportive ecosystems

Collaboration—between regulators, MNOs, financial institutions, fintech companies, and other businesses including retailers—is key to nurturing continued fintech innovation and adoption in Africa. For fintech companies, collaboration with MNOs is particularly central. Such partnerships allow fintech providers to piggyback on MNO’s brand recognition and customer networks, building a customer base and trust in the market. For example, the MNO MTN, the largest MNO in Africa, has 171 million customers, whereas leading pan-African banks like Ecobank, Standard Bank, and Barclays Africa typically have between eleven and fifteen million customers.³⁴ Ghana offers an interesting example of a potentially supportive fintech ecosystem. Mobile money is enabled by a financial regulatory framework that necessitates cooperation between key stakeholders, and which, by allowing both banks and non-banks (including MNOs) to provide mobile money services, also encourages market competition. After South Africa, Nigeria, and Kenya, Ghana has the most fintech startups on the continent. And the steady rate of mobile money adoption suggests that this framework has the potential to drive fast mobile money penetration and financial inclusion

Over the long term, partnerships between fintech companies and MNOs can additionally provide fintech companies with access to new data that can be used to better understand customer needs, develop more tailored products, and create new market opportunities. Today, many fintech companies still lack detailed localized information about the regions where they deploy solutions. Solutions are often one-size-fits-all schemes in subjectively selected areas—usually based on connections or location. Off-grid energy providers, for example, often make planning and scaling decisions with limited hard data and rely instead on anecdotal evidence.³⁵ Mobile phone data has already been shown to provide accurate proxies of detailed geographical distributions of energy needs. The types of datasets include: the number of mobile phone subscribers in a given area; hourly voice and text messaging traffic between mobile phone subscribers including total call duration, number of calls, and number of text messages; and user mobility patterns.³⁶ As more user data is generated and integrated with artificial intelligence and big data capabilities, it can be leveraged by fintech companies in other sectors to spawn new business models and scale existing solutions.

One requirement for supportive fintech ecosystems in Africa is financing. Africa’s fintech companies are proving interesting for investors. Between 2015 and 2017, the continent’s fintech startups jointly raised US$100 million.³⁷ Some of this activity stems from the large number of fintech startups across Africa, as well as investor awareness of the long-term demand for, and social impact of, fintech services—and the likely associated favorable returns. This combination of returns and impact has allowed African fintech firms to tap into several funding pools, including traditional early-stage venture capital and social impact funds. Yet this combination has, in some cases, also led to mismanaged expectations: investors use Silicon Valley-style term sheets with Silicon Valley return expectations, even though those companies have more long-term views. This requires new and creative ways to de-risk investments in early-stage African companies. Companies like GroFin and Kiva have offered debt structures, revenue-sharing agreements, and royaltybased financing for early-stage companies. Rather than equity purchases, royalty-based capital allows investors to extend capital in return for a percentage of future ongoing gross revenues. Repayment is based on a set percentage of revenue; if there is no revenue in a month, payment is generally not required. For fintech companies that require early-stage funding and do not want to dilute their ownership, this may be a more desirable option than venture capital for instance. Investors who innovate on different structures of capital—not just the products and services of their investments—will be most successful.

Regulation

One of the most significant players in fintech ecosystems is the regulator. Fintech regulation needs to strike a careful balance between protecting consumers, investors, and governments; avoiding disruptive financial crises; and giving fintech companies space to innovate and compete. In markets where mobile money has so far been successful, the regulatory framework has allowed MNOs to compete with banks in a fragmented financial services market. In markets where mobile money has stagnated, the mobile money activities of MNOs are restricted. In South Africa, for instance, only registered banks are allowed to issue mobile money; the only way for non-bank actors to enter the market is through bank-led sponsorship agreements. This ties fintech companies to strict and cumbersome banking sector regulations that may hinder innovation. In the absence of such regulations, however, the risk of illicit transactions, money laundering, and financial terrorism may present increased risks.

Prudential regulation should ensure that fintech providers remain healthy and hold enough capital to avoid losses from such events. Protection of consumers is also needed, especially for low-income consumers who are often at risk of being exploited. Regulations are also required to govern data localization; cross-border data traffic and system interoperability; anti-fraud and personal data protections; and cybersecurity.

Yet the rapid pace of financial innovation has left regulators unable to keep up. Fintech platforms are loosely regulated by multiple statutes and rules, usually in a reactionary and ad hoc manner. Many African countries lack adequate frameworks to support fintech innovations and are unclear on where to assign regulatory responsibility. While this may in some instances prove advantageous—as it did in M-Pesa’s case—it may also lead to confusion in the long term. What is needed is an open and consultative process between the regulator and other players in the fintech ecosystem of each country. Regulators need to understand the distinctive characteristics of the various fintech solutions, including client behavior and needs; the characteristics of products and services; the implementation challenges that fintech companies face; and the potential solutions they can employ.

One way of achieving this is through “regulatory sandboxing”—the creation of controlled environments within which innovation can occur and which allow regulators to observe and learn about the implications of fintech initiatives in their country. The partnership between Bankymoon and South Africa’s central bank is one example. In Zambia, the central bank has similarly established a regulatory sandbox with Zazu, a startup that is building a pan-African mobile-only bank. This gives Zazu the ability to test its products and services with real customers while signaling to regulators what legal limits should be set, how to potentially tax the products, and where and what kind of consumer protections might be necessary. Central banks and other stakeholders in fintech ecosystems can learn a great deal from such sandboxes, as well as those in other jurisdictions. The United Arab Emirates, Singapore, Bahrain, India, and fourteen other countries have regulatory sandboxes. While fintech companies often prefer to fly under the radar to avoid regulation, such constructive engagement may facilitate more transparent and accommodating regulatory measures.

 Network security

Fundamentally, the successful adoption of fintech solutions requires widespread mobile phone ownership and access to affordable data plans. Low-income consumers are generally familiar with mobile technologies, and their use can increase trust and open new avenues of customer engagement. Fintech has so far been successful in Africa precisely because of deepening mobile phone penetration. At the end of 2016, there were 420 million mobile phone subscribers in sub-Saharan Africa, equivalent to a penetration rate of 43 percent; the region’s mobile phone market continues to grow faster than any other region globally.³⁸ However, governments and the private sector may have to intervene in remote areas where markets are not delivering. Mobile ownership must be additionally supported by a vast network of cash-in and cash-out points to enable customers to access cash when they need it, and by a broad set of businesses that accept digital payments.

Critical to fintech’s success, however, is a secure mobile infrastructure. Transacting parties should be able to interact safely without risk of hacking, cyberattack, or privacy breaches. This is a special challenge for blockchain. On blockchain platforms the details of all smart contracts are public—including senders and recipients, transaction data, the code executed, and the data stored inside the contract. This is a problem when transactions involve financial and personal data, as they

often do. Developers globally are working toward various privacy solutions, but many solutions are still early in their development, while others have proven difficult to implement. Personal data protections in Africa are also so far ill-equipped to address the unique protections required by decentralized and distributed technologies. Until robust network security is established, full-scale adoption of fintech solutions will continue gradually.

Yet even at a gradual pace and with many challenges, fintech is proving an important innovation for advancing financial inclusion in Africa. The industry has made significant advances since M-Pesa first launched in 2007, with other stakeholders and governments moving in to facilitate solutions to the continent’s varied needs over the past decade. The demand is great, and the investment opportunities are ripe. Fintech’s potential to deepen financial inclusion in sub-Saharan Africa, to spur economic growth, and to introduce new business models is immense. Ultimately, it is just a matter of time.

Aleksandra Gadzala is a senior fellow in the Africa Center and a geopolitical risk consultant focused on emerging and frontier markets. She is the editor of Africa and China: How Africans and Their Governments are Shaping Relations with China, and her writings have appeared in numerous publications including The National Interest and China Review and have been cited in US congressional testimony. She holds a PhD in Politics from the University of Oxford.

 

1    “Global Findex Data: Sub-Saharan Africa,” World Bank, last updated 2014, http://datatopics.worldbank.org/financialinclusion/region/sub-saharan-africa

2    Bisi Lamikanra and Joleen Young, “Payment Developments in Africa: Volume 1” KPMG,
2015, https://assets.kpmg.com/content/dam/kpmg/za/pdf/2016/09/Payment-Developments-in-Africa-2015.pdf

3    “The State of Mobile Money in Sub-Saharan Africa,” GSMA, 2016,
accessed January 17, 2018, https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2017/07/2016-The-State-of-Mobile-Money-in-Sub-Saharan-Africa.pdf

4    Ibid

5    Mutsa Chironga, Hilary De Grandis, and Yasser Zouaoui, “Mobile
Financial Services in Africa: Winning the Battle for the Customer,”
McKinsey & Company, July 2017, https://www.mckinsey.com/
industries/financial-services/our-insights/mobile-financialservices-in-africa-winning-the-battle-for-the-customer

6    Ibid

7    Ibid

8    “About Mobile Money,” MTN, accessed January 18, 2018, https://
www.mtn.com.gh/personal/mobile-money/about-mobile-money

9    International Monetary Fund, “Use of Financial Services, Mobile
Banking: Registered Number of Mobile Money Accounts for
Nigeria,” 2016, https://alfred.stlouisfed.org/series?seid=NGAFCMARNUM&utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=alfred

10    Sara Ashley O’Brien, “26-Year-Old Founder Wants to Change
Payments in Africa,” CNNTech, July 31, 2017, http://money.cnn.
com/2017/07/31/technology/business/flutterwave-africa/index.
html

11    “Zimbabwe: Backs to the Wall,” Economist, October 3,
2015, https://www.economist.com/news/middle-east-andafrica/21669966-drought-and-weak-rand-may-do-more-decadesanctions-spur

12    Rob Urban, “Bitcoin is the New Crisis Currency,” Bloomberg
Technology, November 17, 2017, https://www.bloomberg.com/
news/articles/2017-11-17/bitcoin-emerges-as-crisis-currency-inhotspotssuch-as-zimbabwe

13    William Chui, “Zimbabwe Bitcoin Exchange Golix Processes $1m
Monthly. Now Profitable,” Techzim, November 1, 2017, https://
www.techzim.co.zw/2017/11/zimbabwean-bitcoin-exchange-golixprocesses-1m-monthly-now-profitable/

14    Lorenzo Fioramonti, “Bitcoin is Already Playing a Key Role in the
Unsteady Financial Systems of Some Developing Markets,” Quartz
Africa, July 4, 2017, https://qz.com/1021155/bitcoin-is-being-takenup-in-zimbabwe-nigeria-south-africa-and-venezuela-amongdeveloping-countries/

15    Aline Oyamada and Camila Russo, “Bitcoin Trading Thrives
Wherever Regulators Crack Down Most,” Bloomberg Technology,
December 13, 2017, https://www.bloomberg.com/news/
articles/2017-12-14/bitcoin-trading-thrives-wherever-regulatorscrack-down-most

16    Sub-Saharan Africa is the most expensive global region to which
to send money. Remittance transactions cost 9.72 percent of the
total amount sent. See: “Remittance Prices Worldwide,” World
Bank, December 2017, https://remittanceprices.worldbank.org

17    “BTCGhana,” BTCGhana, accessed January 18, 2018. https://
btcghana.com/#about

18    Gerald Nyaoma, “Banking Circular No 14 of 2015 Virtual Currencies
– Bitcoin,” Central Bank of Kenya, December 18, 2015, https://
www.centralbank.go.ke/uploads/banking_circulars/2075994161_
Banking%20Circular%20No%2014%20of%202015%20-%20
Virtual%20Currencies%20-%20Bitcoin.pdf

19    John Aglionby, “Africa’s Insurance Market a ‘Giant Waking Up,”
Financial Times, June 28, 2016, https://www.ft.com/content/
bc87016a-2430-11e6-9d4d-c11776a5124d

20    Klaus Kessler et. al., “Improving Financial Inclusion in South Africa,” Boston Consulting Group, April 11, 2017, https://www.bcg.com/
en-us/publications/2017/globalization-improving-financial-inclusion-south-africa.aspx

21    Chironga et. al., “Mobile financial services in Africa: Winning the
battle for the customer.”

22    “Awesome Insurance for Africa,” Cassava, accessed January 16,
2018, https://cassavafintech.com/

23    See for example: Herman Smit, Cat Denoon-Stevens, and Antonia
Esser, “InsurTech for Development: A Review of Insurance Technologies and Applications in Africa, Asia, and Latin America,” The
Centre for Financial Regulation and Inclusion, March 2017, http://
www.microinsurancenetwork.org/sites/default/files/Cenfri%20
InsurTech%20for%20Development%20Research%20Study.pdf

24    “ACRE Africa,” ACRE Africa, accessed January 16, 2018, https://
acreafrica.com

25    “MobiLife: About Us,” MobiLife, accessed January 18, 2018, https://
mobi.co.za/about-us/

26    “M-Kopa Connects Half a Million Homes,” M-Kopa Solar, April 27,
2017, http://www.m-kopa.com/m-kopa-connects-half-a-millionhomes-1/

27    “Vision,” Fenix International, accessed January 16, 2018, https://
www.fenixintl.com/vision/

28    Elizabeth Willmott-Harrop et. al., “Going to Scale with ICTs for Agriculture, Technical Centre for Agricultural and Rural Cooperation
CTA,” 2017, 16

29    “Products,” Farmline, accessed January 18, 2018, http://farmerline.
co/products/

30    Susie Lonie et. al., “Opportunities for Digital Financial Services in the Cocoa Value Chain in Côte d’Ivoire: Insights from
New Data,” World Bank Group, 2017, https://www.ifc.org/wps/
wcm/connect/2d3ae2fc-ae9a-45e1-bb9a-f039927a2f89/IFC+Cote+d%27Ivoire+Digitizing+Cocoa+Value+Chain+report+ENGLISH.pdf?MOD=AJPERES

31    Daudi Sumba et. al., “Africa Agriculture Status Report: The Business of Smallholder Agriculture in Sub-Saharan Africa,” Alliance
for a Green Revolution in Africa (2017)

32    Ibid.

33    “What We Do,” Smart Money International, accessed January 18,
2018, http://www.smartmoneyinternational.com

34    Chironga et. al., “Mobile financial services in Africa: Winning the
battle for the customer.”

35    Brian Spatocco and Donald Sadoway, “GridForm: Rural Mapping and Feature Extraction to Improve Rural Development and Assist
in the Planning of Infrastructural Expansion,” MIT Tata Center,
2017, https://tatacenter.mit.edu/portfolio/rural-mapping-and-feature-extraction-to-improve-rural-development-and-assist-in-the-planning-of-infrastructural-expansion/

36    E.A. Martinez-Cesana et. al., “Using Mobile Phone Data for Electricity Infrastructure Planning,” Cornell University Library, April 15,
2015, https://arxiv.org/ftp/arxiv/papers/1504/1504.03899.pdf

37    Yomi Kazeem, “Why African Fintech Startups Are Becoming
Even More Attractive for Investors,” Quartz Africa, August 6, 2017,
https://qz.com/1043573/african-fintech-startups-like-flutterwaveand-paystack-are-raising-funds-to-drive-financial-inclusion/

38    “The Mobile Economy: Sub-Saharan Africa 2017,” GSMA,
2017, https://www.gsmaintelligence.com/research/?file=7bf3592e6d750144e58d9dcfac6adfab&download

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]]> https://www.atlanticcouncil.org/commentary/event-recap/zimbabwe-s-reserve-bank-governor-discusses-new-economic-order/ Wed, 18 Apr 2018 13:20:34 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/zimbabwe-s-reserve-bank-governor-discusses-new-economic-order/ On Wednesday, April 18, the Atlantic Council’s Africa Center hosted a roundtable with Dr. John Panonetsa Mangudya, governor of the Reserve Bank of Zimbabwe (RBZ). Dr. Mangudya presented a summary of Zimbabwe’s macroeconomic environment, highlighting a declining inflation rate, more diversified exports, and excellent human capital within the context of recent political and economic change. […]

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]]> On Wednesday, April 18, the Atlantic Council’s Africa Center hosted a roundtable with Dr. John Panonetsa Mangudya, governor of the Reserve Bank of Zimbabwe (RBZ).

Dr. Mangudya presented a summary of Zimbabwe’s macroeconomic environment, highlighting a declining inflation rate, more diversified exports, and excellent human capital within the context of recent political and economic change. He elaborated numerous opportunities for investment and growth in Zimbabwe, including unexploited mineral deposits—particularly gold and platinum—and significant tourism potential.

Dr. Mangudya also outlined the Reserve Bank’s strategy to re-engage the international community and settle debts. He proposed an agreement whereby Zimbabwe would be able to employ the debt-snowball method, first paying off its smaller obligations to the African Development Bank and subsequently addressing the larger arrears owed to the Paris Club and World Bank with credit facilities that would be unlocked by the earlier settlements. He called for increased cooperation from the international community to assist with this effort, adding that sanctions and other financial penalties have significantly damaged Zimbabwe’s financial sector. He also spoke on the highly dollarized economy, which he claimed subjugated the RBZ’s macroeconomic tools to those of the United States.

A discussion, moderated by Dr. J. Peter Pham, Atlantic Council vice president and Africa Center director, followed Dr. Mangudya’s remarks, which focused on the various tools Zimbabwe could use to obtain debt relief and ways to improve investment from Western and other African investors.

Those in attendance and participating in the roundtable included Amb. Jendayi Frazer, Atlantic Council board director and former US Assistant Secretary of State for African Affairs; Ms. Constance Berry Newman, former US Assistant Secretary of State for African Affairs; and a number of US and non-US government officials and business leaders.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/gecamines-chairman-discusses-the-drc-s-new-mining-code/ Fri, 13 Apr 2018 18:09:32 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/gecamines-chairman-discusses-the-drc-s-new-mining-code/ On Friday, April 13, the Atlantic Council’s Africa Center hosted a roundtable with Mr. Albert Yuma Mulimbi, chairman of Gécamines and president of the Congolese Business Federation (Fédération des Entreprises du Congo). In his prepared remarks (official document attached), Mr. Yuma emphasized the importance of the mining industry in the Democratic Republic of the Congo […]

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]]> On Friday, April 13, the Atlantic Council’s Africa Center hosted a roundtable with Mr. Albert Yuma Mulimbi, chairman of Gécamines and president of the Congolese Business Federation (Fédération des Entreprises du Congo).

In his prepared remarks (official document attached), Mr. Yuma emphasized the importance of the mining industry in the Democratic Republic of the Congo (DRC) to the overall wellbeing of the country, calling it the “lungs” of the Congolese economy. He highlighted the 2017 production figures of DRC’s most profitable minerals, including copper, cobalt, and coltan, but stressed that the industry was not benefitting the Congolese people as much as it should. According to the speaker, the new Congolese mining code seeks to change this, increasing taxes on profits from 30 to 35 percent and royalties from 2 to 3.5 percent for copper and cobalt, and expanding the government’s stake in new mining projects from 5 to 10 percent. Mr. Yuma acknowledged the concerns expressed by some of the world’s largest mining companies in response to the new mining code, but emphasized that profits should increase once the new code is introduced and the DRC reputation as an attractive mining destination should not be tarnished.

A discussion, moderated by Dr. J. Peter Pham, Atlantic Council vice president and Africa Center director, followed Yuma’s remarks, with participants focusing on the transparency of the mining industry’s supply chains and networks in the DRC and the various ways in which civil society concerns would or would not be incorporated in the country’s policies.

The delegation accompanying Mr. Yuma also included H.E. François Nkuna Balumuene, Ambassador of the DRC to the United States; Mr. Patrick Thierry André Kakwata, Member of the Congolese National Assembly and Chairman of the Natural Resources and Environmental Commission; Mr. Henri-Thomas Lokondo, Member of the Congolese National Assembly; and Amb. Barnabé Kikaya bin Karubi, Senior Diplomatic Advisor to DRC President Joseph Kabila. Also in attendance and participating in the roundtable were Atlantic Council Board Director Amb. Jendayi Frazer, Former US Assistant Secretary of State for African Affairs; Ms. Florizelle Liser, President and Chief Executive Officer, Corporate Council on Africa; and a number of US and non-US government officials and mining industry experts.

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]]> https://www.atlanticcouncil.org/blogs/africasource/who-are-the-winners-and-losers-of-africa-s-new-free-trade-agreement/ Tue, 03 Apr 2018 20:31:25 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/who-are-the-winners-and-losers-of-africa-s-new-free-trade-agreement/ Last month, the leaders of forty-four African nations signed a framework agreement to form a continental free-trade zone that will encompass a billion people and up to $3 trillion of cumulative GDP. The African Continental Free Trade Area (AfCFTA) would be the largest free trade agreement since the founding of the World Trade Organization over […]

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]]> Last month, the leaders of forty-four African nations signed a framework agreement to form a continental free-trade zone that will encompass a billion people and up to $3 trillion of cumulative GDP. The African Continental Free Trade Area (AfCFTA) would be the largest free trade agreement since the founding of the World Trade Organization over twenty years ago, and seeks to create “a single continental market for goods and services, with free movement of business persons and investments.” The agreement is an important stepping stone towards a continental customs union, pan-continental socioeconomic integration, and a more economically self-sufficient Africa.

Unquestionably, the AfCFTA has immense potential to facilitate a virtuous economic growth cycle for the continent. The United Nations Economic Commission for Africa (UNECA) argues that it could double trade figures if tariff rates and non-tariff barriers are reduced, generate much needed employment for Africa’s bulging youth population, and attract new investors to a single African market. However, policymakers must think hard about the long-term distributional consequences of the AfCFTA while navigating the long road to implementation so as not to fall into inequality traps, leaving some economies worse-off and blocked out of global value chains. 

The Long Road to the AfCFTA

The AfCFTA is not the continent’s first call for greater economic integration. In 1980, the Lagos Plan of Action for the Economic Development of Africa was spearheaded by the Organisation of African Unity to push Africa’s resource-intensive economies towards industrialization and greater regional integration. Coupled with the 1991 Abuja Treaty, the Lagos Plan of Action proposed the creation of Regional Economic Communities (RECs), with the hope of improving regional economic integration and advancing certain peace and security initiatives. Unfortunately, with the possible exceptions of the East African Community and the South African Development Community, most of the eight RECs recognized as the “building blocks” of the African Union (AU) have struggled to yield the results necessary to spur substantial economic growth and harmonize the continent’s disparate markets. This is due in part to the difficulty several RECs have had in creating economies of scale – especially in the context of Africa’s balkanized markets – that can be competitive in a regional (and global) marketplace. Moreover, the fact that several countries belong to more than one trade block undermines regional economic integration efforts and puts burdensome strains on member states’ capacities to cope with often contradictory requirements. Many claim Africa’s twisted, tangled, and entwined RECs evince Jagdish Bhagwati’s “spaghetti bowl effect,” with a country such as Tanzania belonging to two RECs and five different regional organizations.

At just 18 percent, Africa has the lowest levels of intra-continental trade of any continent. While the continent’s trading blocs have helped to improve these figures, Africa’s trade with itself is a far cry from the levels witnessed in Latin America (35 percent) and Asia (45 percent), and intra-continental trade has been substantially outpaced by trade with the rest of the world – often by as much as 90 percent. Trade among African countries accounts for just 7 percent of the continent’s GDP, and its overreliance on commodities for extra-regional trade makes it dangerously exposed to commodity price shocks and the major ebbs and flows of global capital markets.

As Africa’s non-commodity exports and manufacturing industry grow, the AfCFTA could catalyze further prosperity. While more than 75 percent of Africa’s global trade spurs from the extractive sectors, intra-African exports are generally more diversified, with manufactured goods accounting for more than 41 percent in 2014. Given the labor-intensive nature of manufacturing, and the AfCFTA’s proposed measures to lower intercontinental trade costs and facilitate investment and the formation of regional value chains, African governments have high hopes that the agreement will help the sector contribute to trade and economic growth, bringing with it much needed employment for the continent’s growing working age population – expected to be the largest in the world at 26 percent by 2050.

What’s the Potential Impact of the AfCFTA?

The implementation of the AfCFTA is still far from completion, pending a long process of consultations, reviews, and formal ratification by twenty-two countries. Its potential, however, is tremendous.

The AfCFTA should make doing business on the continent easier. For Africa’s small and medium-sized enterprises (SMEs), which account for approximately 80 percent of the continent’s businesses, the agreement will put measures in place that allow companies to tap regional markets that they might not otherwise access through preferential trade regimes, transit and customs cooperation, and tariff reductions on intermediate and final goods. These measures should improve the risk-return profiles of participating countries and bring new investors to the table. Moreover, preexisting assistance programs, including the Action Plan for Boosting Intra-Africa Trade, coupled with domestic initiatives like Rwanda’s National Internship Program that aim to upskill and reskill the labor force, should help African enterprise to become bigger, better, and more competitive in the global marketplace. The UNECA has predicted that the AfCFTA’s various measures to spur trade could increase intra-continental commerce by as much as 52 percent by 2022.

In addition, this agreement underscores the continent’s determination to work together and “progress toward the ideal of African unity.” A single African market gives the continent greater opportunities to exert leverage over its non-African trading partners such as the European Union to eliminate trade barriers and attain a better seat at the table in the international system. As Nigerien president Issoufou Mahamadou, who has shown tremendous leadership in fighting for the AfCFTA, put it, “Africa is stronger when we work together.”

Will the AfCFTA be win-win for all involved?

As we have seen time and time again, trade liberalization and free trade agreements create winners and losers. One of the major challenges to harmonizing Africa’s heterogeneous economies under one agreement is the wide variation that exists in their levels of development. For example, Egypt, Nigeria, and South Africa together account for well over 50 percent of Africa’s cumulative GDP, while Africa’s six sovereign island nations collectively account for just 1 percent. The AfCFTA has the greatest levels of income disparity of any continental free trade agreement, more than doubling the levels witnessed in ASEAN and CARICOM. As African countries start to become increasingly integrated in global value chains, and the AfCFTA pushes both intra- and extra-regional trade, it is essential that participating countries build an efficient and inclusive institutional architecture so as not to leave any economies behind. Without sound policymaking and preferential treatment to Africa’s most at-risk economies, the AfCFTA could prove to be a force for economic divergence rather than a force for good.

Africa’s most diversified economies, such as Ethiopia, Rwanda, and Côte d’Ivoire, are likely to benefit most from the free-trade zone in the near term. Countries like South Africa and Kenya, with larger manufacturing bases and more developped transport infrastructure, are likely to benefit from greater economic integration. Ethiopia, with its quickly growing manufacturing sector, could use the AfCFTA to build new and improved export destinations for its products and services across the continent and beyond. The free movement of people could also help to draw new expertise to its booming agriculture and construction sectors, respond quickly and innovatively to market trends, and push key industries to new heights.

Africa’s resource-dependent economies, such as Chad, the Republic of Congo, and Zambia, could see limited income gains and risk losing their competitive advantages as more diverse economies increase productivity and human capital capabilities and gobble up the industries on which smaller, less developed economies rely. Policymakers must take into consideration the specific requirements of these markets, develop strong safety nets, and monitor the effectiveness of accompanying measures to the agreement very closely through the proposed Trade Observatory.

Through the AfCFTA, a majority of African countries have shown a commitment to facilitating increased intra- and extra-regional trade, much needed job and GDP growth, and a more prosperous and self-sufficient economic future for the continent. However, much is yet to be done, and two of Africa’s largest players – Nigeria and South Africa – have yet to sign. For the AfCFTA to be as successful as many hope, leaders must take the time during the next round of negotiations, scheduled to begin later this year, to further develop an efficient and inclusive institutional architecture that, once implemented, unlocks Africa’s full economic potential.

Abdoul Salam Bello is a visiting fellow in the Atlantic Council’s Africa Center and author of La régionalisation en Afrique : Essai sur un processus d’intégration et de développement (L’Harmattan/2017). You can follow him on Twitter @as_bello.

Jonny Gass is an assistant director in the Atlantic Council’s Africa Center. You can follow him on Twitter @JonnyGass.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/israeli-regional-security-and-ct-director-briefs-african-ambassadors/ Wed, 07 Mar 2018 17:43:59 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/israeli-regional-security-and-ct-director-briefs-african-ambassadors/ On Wednesday, March 7, the Atlantic Council’s Africa Center hosted a roundtable for African ambassadors with Ms. Dana Benvenisti-Gabay, Director for Regional Security and Counter Terrorism at the Ministry of Foreign Affairs of the State of Israel. Dr. J. Peter Pham, Atlantic Council vice president and Africa Center director, introduced Benvenisti-Gabay and welcomed participants. In […]

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]]> On Wednesday, March 7, the Atlantic Council’s Africa Center hosted a roundtable for African ambassadors with Ms. Dana Benvenisti-Gabay, Director for Regional Security and Counter Terrorism at the Ministry of Foreign Affairs of the State of Israel.

Dr. J. Peter Pham, Atlantic Council vice president and Africa Center director, introduced Benvenisti-Gabay and welcomed participants.

In her remarks, Benvenisti-Gabay stressed the increasing strategic importance of Africa to the State of Israel, both commercially and diplomatically. She spoke at length about Israel’s new Counter-Terrorism Law, which was adopted by parliament in June 2016 and seeks to provide law enforcement agencies with more effective tools to combat modern terrorist threats, paying close attention to the rights and needs of security forces and civilians in equilibrium. Benvenisti-Gabay went on to highlight three priority areas of the of the Counter Terrorism Department in dealing with issues of terror in Africa and beyond, including efforts to neutralize potential terrorist threats, cut cash flows to terrorist groups, and increase the capacity of security forces to prevent and enhance coordination efforts to combat terrorism.

A discussion followed Benvenisti-Gabay’s remarks, focusing on efforts to counter terrorist narratives and fill gaps in the intelligence apparatus of African governments to stem the threat of terrorism across the continent and improve efforts to combat its rise.

Participants in the roundtable included the Ambassadors of Angola, Cabo Verde, South Africa, and Togo; the Chargés d’affaires, ad interim of Ethiopia, Rwanda, and Uganda; and senior diplomatic officials from several other African embassies.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/foreign-minister-discusses-situation-in-ethiopia/ Thu, 15 Feb 2018 22:19:30 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/foreign-minister-discusses-situation-in-ethiopia/ On Thursday, February 15, the Atlantic Council’s Africa Center hosted Minister of Foreign Affairs of the Federal Democratic Republic of Ethiopia H.E. Dr. Workneh Gebeyehu. Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham welcomed participants and introduced Dr. Workneh, noting that the meeting was happening one day after the Ethiopian government […]

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]]> On Thursday, February 15, the Atlantic Council’s Africa Center hosted Minister of Foreign Affairs of the Federal Democratic Republic of Ethiopia H.E. Dr. Workneh Gebeyehu.

Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham welcomed participants and introduced Dr. Workneh, noting that the meeting was happening one day after the Ethiopian government freed thousands of prisoners and just hours after Ethiopian Prime Minister Hailemariam Desalegn announced his resignation.

In his remarks, Dr. Workneh gave an overview of Ethiopia’s foreign policy in a regional context, including the country’s role in the South Sudan peace process via the Intergovernmental Authority on Development. He then gave an update on the political situation in Ethiopia, remarking on the government’s agreement—amid massive popular pressure—to make substantial political reforms and allow for more inclusive, democratic governance.

A discussion followed the Minister’s remarks, in which participants pressed Dr. Workneh on Ethiopia’s governance and political challenges. He reiterated the historical uniqueness of a voluntary leadership transition, and suggested that the process to select a new prime minister would be a timely one. He also promised that Ethiopian authorities would review some of the legislation that has drawn criticism from the international community for its negative impact on civil society activities.

From his role as a leading mediator of the High-Level Revitalization Forum for the Resolution of the Conflict in South Sudan, he observed that the international community is frustrated and “angry” about the impasse in South Sudan, and noted that the recent US arms embargo on South Sudan sent a very strong signal.

Dr. Workneh noted that Ethiopia intended to work closely with Sudan and Egypt to settle the timeline for filling the Grand Ethiopian Renaissance Dam, which will provide much-needed hydropower to Ethiopia and the broader region. Lastly, he remarked on the spillover effects from the Gulf crisis in the Horn of Africa, declaring that Ethiopia remained neutral amid the diplomatic dispute.

Accompanying the foreign minister to the Atlantic Council were Ambassador of Ethiopia to the United States H.E. Kassa Tekleberhan, Director General for American Affairs at the Foreign Ministry Amb. Birtukan Ayano, as well as other officials. Also in attendance and participating in the discussion were a number of current and former US government officials, business leaders, and numerous representatives of human rights and advocacy organizations.

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]]> https://www.atlanticcouncil.org/blogs/africasource/aubrey-hruby-s-usitc-public-hearing-testimony/ Tue, 23 Jan 2018 18:47:42 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/aubrey-hruby-s-usitc-public-hearing-testimony/ On Tuesday, January 23rd, Africa Center Senior Fellow Aubrey Hruby testified on US-Africa trade and investment before the US International Trade Commission hearing on US Trade and Investment with Sub-Saharan Africa: Recent Developments, #332-564. Distinguished members of the committee, Ambassadors, and fellow witnesses: I would like to begin by thanking you, not only for the […]

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]]> On Tuesday, January 23rd, Africa Center Senior Fellow Aubrey Hruby testified on US-Africa trade and investment before the US International Trade Commission hearing on US Trade and Investment with Sub-Saharan Africa: Recent Developments, #332-564.

Distinguished members of the committee, Ambassadors, and fellow witnesses:

I would like to begin by thanking you, not only for the opportunity to testify before you today, but also the attention that the United States International Trade Commission (USITC) has given to the topic of trade and investment with our partners across Sub-Saharan Africa (SSA).

My name is Aubrey Hruby. I’m a Senior Fellow with the Africa Center at the Atlantic Council and I’ve spent the better part of my career advising Fortune 500 companies to design and implement successful investment and market entry strategies for over twenty African markets. I will devote my testimony to the following themes: 1) an assessment of US trade with SSA; 2) Africa’s increasing diversity of trading partners; 3) the role of the WTO’s TFA in stimulating economic growth and development on the continent; and 4) recommendations for the future.

1.       Diversifying Partners

The US has long been a major partner in SSA trade, but it is no secret that the US commercial relationship with the continent remains underdeveloped. The 49 countries that make up SSA just barely make it into the top ten list of America’s largest trade relationships, and US trade with AGOA participants has lagged since its 2008 peak while African trade relationships with other countries – including China, India, Turkey, and more – have expanded.

While the European Union (EU) and the United States remain major partners in SSA trade, Chinese trade with the continent has surged, increasing by 83 percent from 2009 to 2011 and surpassing $200 billion for the first time in 2013. US trade with the continent, for comparison, peaked in 2008 at just under $105 billion and has fallen to the mid-30s ever since.

Moreover, other emerging economies, including India and Turkey, are also increasing their trade with Africa. India has overtaken China as the world’s fastest-growing economy and many predict India-Africa trade to surpass $100 billion by 2020. Trade between Africa and Turkey, for its part, increased threefold between 2003 and 2015, to $17.5 billion. Turkish businesses, particularly small and medium-sized enterprises (SMEs), are carving out a niche in construction and in information and communications technology, and Turkish Airlines is becoming a prominent carrier to the region, performing beyond expectations in 2017.

Intra-African trade is also increasing. According to the International Monetary Fund, intra-African exports grew from $41 billion in 2010 to $61 billion in 2013. This growth is clearly visible on a national scale—currently, two of Kenya’s top-five export partners are regional neighbors (Uganda and Zambia), with Tanzania, South Africa, and other SSA nations also constituting substantial export destinations. However, despite recent progress, Africa continues to lag behind the rest of the world in the amount of trade that occurs within the continent. From 2002 to 2010, intraregional trade in Africa fluctuated between 8 and 11 percent, staying consistently low. By 2014, intraregional trade in Africa rose to a mere 12 percent. For comparison, intraregional trade in the developing economies of Asia was 17 percent as of 2012, and in Latin America, it has remained stagnant at around 20 percent.

As economic growth trajectories in several SSA economies continue to look up in 2018, after suffering a sharp slowdown in 2016, countries now have greater diversity of potential partnerships than ever before. While the US and the EU will continue remain major partners in SSA trade, the continent has made great strides in diversifying its partners and capitalizing on trade investment opportunities with new countries. US investors are working in a more globally complex Africa.

2.       Flexible and phased agreements are the way forward in Africa

The African Growth and Opportunity Act (AGOA) has formed the bedrock of US-Africa trade policy since the early 2000s and has broad brand value in Africa, representing a business and partnership approach to the historic relationship. AGOA was never meant to be a panacea or replace homegrown growth/reform policies in African countries.  It was enacted to allow African countries time-limited access to the US market, with the hope that they would one day “graduate” from the program and move on to more advanced trade agreements. It might have been 15 years early in terms of having widespread impact, but it put down a marker for the US that remains strong today. It has produced a couple hundred thousand jobs in the apparel sector and stands poised for greater success given current macroeconomic trends, including higher wage rates in China and SSA’s potential to develop many new low-cost manufacturing jobs. In many ways, AGOA is more poised for success today than ever before. 

While the Morocco FTA is a possible example of a way forward beyond AGOA, the failure of the US-SADC FTA negotiations ten years ago shows that there is still much ground to cover in adapting the US approach to FTA negotiations to developing country realities that are limited by institutional capacity, high levels of poverty, and a narrow export base. Flexible and phased agreements are the way of the future and the Trade Facilitation Agreement’s ratification process may prove educational.

3.       Continue to support the WTO’s Trade Facilitation Agreement

The WTO’s Trade Facilitation Agreement (TFA), which entered into force on February 22, 2017, following its ratification by two-thirds of the WTO membership, has the potential to transform African markets. While it is largely too soon to tell how impactful the TFA will be for US-SSA trade as the implementation of the ratified agreement has not yet hit the one-year mark, 25 of the 44 WTO member states in Africa have already ratified, and the three tiered country-led commitment process, coupled with investment incentives, has the potential to boost the exports of less economically developed countries by 35 percent, increase overall economic growth by 3.5 percent per annum, and ease access to foreign markets. The US should continue to support the ratification and implementation of the TFA, and work with African member states to assist with the implementation of their commitments.

4.       New initiatives should reflect America’s competitive edge in African markets

Lastly, I would like to underscore that Africa’s growing number of international trading partners should not and will not preclude American business success on the continent. American companies simply need to be more artful in leveraging the United States’ competitive advantages. Policy makers crafting the commercial aspects of US-Africa policy should focus on sectors in which US companies have a distinct competitive edge, and not force competition in areas that have long been ceded to other global players. Policy makers should also prioritize programs, partnerships, and projects that effectively support US small and medium-sized enterprises (SMEs) to grow through success in African markets.

American sectors positioned for success in African markets include:

·         Professional and business services: Arthur D. Little was the world’s first management consulting firm, and the US has been a dominant player in the service economy ever since. Strengths include: legal, accounting, strategy consulting, higher education, and engineering and design services. As African companies continue to grow in terms of revenue and reach, the business environment in which they operate becomes more sophisticated, particularly if they begin to attract international private equity investment or if they expand across borders. US companies providing professional and business services support that growth, and should capitalize on the opportunity.

·         Finance: The United States is a financial powerhouse, accounting for five of the world’s top ten global financial centers. Lack of capital is a pervasive challenge in African markets and American firms have an opportunity to provide essential services.

·         Media, Entertainment, and Information: The US entertainment industry dominates the global market, and American music has made its way to even the most remote African villages. With the creative and cultural industries booming on the continent, the US film and music industries, with their long-standing partnerships with banks and funds across the world, could play a critical role in taking the African creative industries to the next level in terms of profitability and sustainability.

·         Agribusiness: American agribusiness is industrial in nature, giving it significant research and development capacity, large economies of scale, and global reach. Over 70 percent of all Africans depend on agriculture for their livelihoods. Yet, African agriculture is among the most unproductive in the world—most Africans working in farming are smallholders, producing much smaller yields than their counterparts in other emerging markets. Given the region is projected to need more than double the amount of food, feed, and biofuel in 2050 than it did in 2012, US agribusiness firms specializing in seeds, irrigation, machinery, and crop science have enormous potential to bring their expertise to bear on the continent for mutually beneficial outcomes.

·         Renewable Energy: Although the United States lags behind other countries in some parts of the renewable energy sector (i.e., solar panel production), it has several competitive strengths such as engineering and high-quality product design. Renewable energy has a central role to play in advancing African development, and matching unparalleled American design and engineering with the African market can provide new solutions that could free millions from energy poverty.

The US-SSA trade relationship is underdeveloped, and US commercial participation in African markets is still very much evolving. Given competition from a diversity of potential partners is likely to intensify, US strategy vis-à-vis trade with Africa should focus on areas of competitive advantage to create jobs domestically and promote stability and security in African markets through economic development. Winning the global market of the future will require ceding some battlegrounds to better-suited players while focusing efforts in the arenas in which success is most likely. Strategic prioritization and buy-in from public and private-sector entities is key to unlocking the American competitive business edge, broaden and deepen US-Africa commercial relations, and maximize the benefits to US business and the American people.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/eeas-managing-director-for-africa-discusses-eu-africa-policy/ Thu, 18 Jan 2018 18:14:29 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/eeas-managing-director-for-africa-discusses-eu-africa-policy/ On Thursday, January 18, the Atlantic Council’s Africa Center hosted Amb. Koen Vervaeke, managing director for Africa at the European External Action Service, for a roundtable to discuss relations between the European Union (EU) and Africa in the wake of the fifth Africa-EU Summit, which took place last November in Abidjan, Côte d’Ivoire. Dr. J. […]

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]]> On Thursday, January 18, the Atlantic Council’s Africa Center hosted Amb. Koen Vervaeke, managing director for Africa at the European External Action Service, for a roundtable to discuss relations between the European Union (EU) and Africa in the wake of the fifth Africa-EU Summit, which took place last November in Abidjan, Côte d’Ivoire.

Dr. J. Peter Pham, Atlantic Council vice president and Africa Center director, welcomed participants and provided context for the discussion.  

In his remarks, Vervaeke provided deep insight into the status of the relationship between Africa and Europe, underscoring the success of the recent Summit and the increased political will from both sides to work together in strategic priority areas. Vervaeke also acknowledged that the EU needs to be more flexible vis-à-vis its Africa policy, especially in light of the changing nature of conflict and security challenges on the continent and the spread of non-state armed groups. New challenges, Vervaeke emphasized, bring into question the suitability and sustainability of the current Africa-EU partnership. He exhorted that both sides need to be more strategic at joining forces in complementary ways to address mutual problems.

A discussion, moderated by Pham, followed Vervaeke’s prepared remarks and focused on a number of mutual concerns, including youth unemployment and the jobs gap, migration and mobility, and security and governance issues across the African continent.

Also in attendance and participating in the discussion were a number of current and former US and non-US government officials, business leaders, and civil society representatives.

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]]> https://www.atlanticcouncil.org/in-depth-research-reports/report/equipping-africa-s-primary-school-learners-for-the-future/ Tue, 21 Nov 2017 13:00:00 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/equipping-africa-s-primary-school-learners-for-the-future/ Education remains a crucial component of economic development and poverty reduction. Primary education is especially important, as it provides students with the foundational skills necessary to continue with advanced education and participate in local and global economies. Collectively, educational benefits extend beyond individuals to benefit broader communities.   Despite its importance, primary education in Africa […]

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Education remains a crucial component of economic development and poverty reduction. Primary education is especially important, as it provides students with the foundational skills necessary to continue with advanced education and participate in local and global economies. Collectively, educational benefits extend beyond individuals to benefit broader communities.

 

Despite its importance, primary education in Africa remains in a persistent crisis. Of the sixty-one million children out of school globally in 2016, over half were in sub-Saharan Africa. In addition to low enrollment, the quality of primary education in Africa is among the poorest in the world, and far too many African learners drop out of primary school or graduate without obtaining the skills necessary for success at higher educational levels. At the root of the issue is that African primary schools, especially those in rural areas, are chronically lacking in funding, materials, qualified teachers, and pedagogies that make learning accessible to the students.

A new report by Africa Center Senior Fellow Constance Berry Newman, Equipping Africa’s Primary School Learners for the Future, details the state of primary education on the continent and its post-independence evolution before discussing the obstacles impeding better learning among African primary students. The report identifies key strategies for improving primary education in Africa, including returning to educational “basics,” teaching students in their mother tongues, and incorporating technology where appropriate.

This report concludes with several case studies, including the Medersat.com model in Morocco, that illustrate the effective implementation of these key strategies.

About the Africa Center at the Atlantic Council’s Education Initiative

With generous support from BMCE Bank of Africa, the Africa Center at the Atlantic Council set out to assess the current state of primary education in Africa. While for many years this issue has rested with the international development community, the Center sought to use its convening power—an ability to reach into academia, the non-profit and private sector worlds, and the policy sphere—to raise the profile of the issue, given the centrality of education policy to solving the economic and security challenges presented by Africa’s youth bulge. In particular, the Center focused on innovative examples of countries and organizations working to set up quality primary education institutions, often in the private sector, and asked whether these successful models could be replicated and scaled. This report is the initiative’s final product.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/the-jobs-gap-making-inclusive-growth-work-in-africa-2/ Mon, 06 Nov 2017 20:51:14 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/the-jobs-gap-making-inclusive-growth-work-in-africa-2/ On Monday, November 6, the Africa Center at the Atlantic Council, in partnership with the Tony Blair Institute for Global Change, hosted a panel discussion on how governments and the private sector can tackle Africa’s jobs gap. The event coincided with the US launch of the Institute’s new report: The Jobs Gap: Making Inclusive Growth Work […]

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On Monday, November 6, the Africa Center at the Atlantic Council, in partnership with the Tony Blair Institute for Global Change, hosted a panel discussion on how governments and the private sector can tackle Africa’s jobs gap. The event coincided with the US launch of the Institute’s new report: The Jobs Gap: Making Inclusive Growth Work in Africa.

Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham welcomed guests and described the scale of the jobs challenge in Africa: by 2040, Africa’s labor market is expected to grow to 1.1 billion people, but stubbornly high unemployment rates and a lack of jobs threaten to undermine this massive economic potential.

The report’s author, Mr. Jonathan Said, is head of the Inclusive Growth and Private Sector Development Practice at the Tony Blair Institute for Global Change. He began by identifying key challenges to accurately understanding—and responding to—the jobs gap in Africa, including resource shortages, competing priorities, and a lack of governmental capacity to implement. He also outlined the report’s recommendations, which center around private sector development and investment in trade-oriented sectors that are competitive in the global marketplace. He also stressed the importance of strengthening “islands of effectiveness,” or agencies that can implement, coordinate, and guide sector strategies. Lastly, he stressed the need for African governments to create and execute long-term economic strategies, and set appropriate timelines and expectations to accompany them. Investors and international donors, he noted, can assist in strengthening government capacity to achieve those strategies.

A discussion, moderated by Africa Center Senior Fellow Aubrey Hruby, followed Said’s remarks and included Ms. Anabel González, senior director of the Trade and Competitiveness Practice at the World Bank, and Ms. Helen Hai, CEO of the Made in Africa Initiative. Panelists emphasized that context- and sector-specific country economic strategies are needed to create jobs, stressing the importance of using a sector’s “value proposition” to court private investors. Panelists also highlighted the potential of manufacturing, but suggested that job growth does not have to occur solely in the manufacturing sector—agribusiness, tourism, and even the creative industries have the potential to create substantial job and GDP growth across the continent

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]]> https://www.atlanticcouncil.org/commentary/event-recap/disrupting-illicit-financial-flows-in-congo-2/ Thu, 19 Oct 2017 19:47:42 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/disrupting-illicit-financial-flows-in-congo-2/ On Thursday, October 19, the Atlantic Council’s Africa Center, in collaboration with The Sentry at the Enough Project, hosted a discussion on illicit financial flows in the Democratic Republic of the Congo (DRC), occasioned by the release of the group’s new report: The Terrorist’s Treasury. Atlantic Council Vice President and Africa Center Director Dr. J. […]

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On Thursday, October 19, the Atlantic Council’s Africa Center, in collaboration with The Sentry at the Enough Project, hosted a discussion on illicit financial flows in the Democratic Republic of the Congo (DRC), occasioned by the release of the group’s new report: The Terrorist’s Treasury.

Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham welcomed guests, highlighting the event’s timeliness following the announcement by the DRC’s Independent National Electoral Commission last week further delaying elections to 2019. Enough Project Founding Director Mr. John Prendergast outlined the organization’s new venture – The Sentry – that tracks the financial networks that fuel violent conflicts across Africa. An example of The Sentry’s work is the new report, which details the complicity of Congolese financial institutions in helping terror groups to dodge sanctions. 

A discussion, moderated by Pham, followed Prendergast’s remarks and featured Ms. Holly Dranginis, senior policy analyst for The Sentry at the Enough Project, Mr. J. R. Mailey, director of investigations for The Sentry at the Enough Project, and Mr. Yaya J. Fanusie, director of analysis at the Foundation for Defense of Democracies’ Center on Sanctions and Illicit Finance.

Mailey detailed the central case study of the report, which focuses on a bank in the DRC that has reportedly processed financial transactions for businesses and individuals with ties to Hezbollah. He further underscored the danger of ungoverned spaces, in which lax regulations and weak enforcement not only breeds corruption, but also recruitment and financing potential for terrorist organizations.

Dranginis discussed the report’s recommendations, which include imposing “network sanctions” that target both individuals and their financial affiliates, increasing local and international anti-money laundering measures, and enhanced banking due diligence by financial institutions in the DRC. She acknowledged that conditions that allow illicit networks to flourish do not occur in a political vacuum and, as such, domestic considerations in the DRC—as well as other African countries where illicit networks are thriving—must be part of the solution.

Fanusie commented on terrorism financing around the world, noting that in nearly all cases there is corruption and complicity at some level, which creates a cover for terror groups to launder their money through otherwise licit channels. He suggested that the most comprehensive solution might be to demand financial integrity at all levels.

In the discussion that followed, panelists examined US sanctions policy in Sub-Saharan Africa, including a move away from comprehensive sanctions to more targeted “smart sanctions.” They also discussed the link between political stability and financial integrity amid the DRC’s ongoing political and electoral crisis.

Among those in attendance were H.E. François Balumuene, Ambassador of the DRC to the United States, and Mr. Deogratias Mutombo, Governor of the Congo Central Bank, who during the question-and-answer period of the program took issue with the report, although he did not offer any specific evidence refuting the findings but promised that an investigation was underway. Also in attendance were a number of US and non-US government officials, business leaders, and civil society representatives.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/negotiating-democracy-and-security-in-kenya/ Mon, 16 Oct 2017 16:14:18 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/negotiating-democracy-and-security-in-kenya/ On Monday, October 16, the Atlantic Council’s Africa Center, in collaboration with the International Republican Institute (IRI), hosted Ambassador Martin Kimani, director of Kenya’s National Counter Terrorism Centre and special envoy for countering violent extremism, and Dr. Korir Sing’Oei, legal adviser in the executive office of the deputy president of Kenya, for a private roundtable […]

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]]> On Monday, October 16, the Atlantic Council’s Africa Center, in collaboration with the International Republican Institute (IRI), hosted Ambassador Martin Kimani, director of Kenya’s National Counter Terrorism Centre and special envoy for countering violent extremism, and Dr. Korir Sing’Oei, legal adviser in the executive office of the deputy president of Kenya, for a private roundtable discussion on the security situation in Kenya amid its unprecedented and ongoing electoral crisis.

Atlantic Council Africa Center Director of Programs and Studies and Deputy Director Ms. Bronwyn Bruton welcomed guests and IRI Regional Director for Africa Mr. John Tomaszewski introduced the speakers.

In his remarks, Kimani stressed the importance of using Kenya’s legal system to mediate political disputes and asserted that violent actions and threats would undermine Kenyan democratic institutions. To resolve this current period of political and electoral instability, Kimani said that Kenya needs constitutional and political legitimacy, including an effort by the next president to help Kenyans heal. Kimani also expressed concern that the October 14 bombing in Mogadishu, Somalia had heightened security tensions in Kenya at a time when police and military resources are already strained.

Sing’Oei detailed the electoral challenges facing Kenya before the October 26 rerun, stressing the importance of holding the election before constitutional limits on the election rerun expire and Kenya enters an extra-constitutional “twilight zone.” Sing’Oei highlighted efforts of the Kenyan government to de-risk the electoral process, including the creation of a parallel ballot system to complement the electronic transmission of ballots, an issue at the heart of the August 8 election dispute.

A discussion, moderated by Bruton, followed Kimani’s and Sing’Oei’s prepared remarks. Participants engaged the speakers on Kenya’s electoral laws and the US-Kenya relationship, while questioning the Kenyan government’s securitized response to opposition protests.

Also in attendance and participating in the roundtable were a number of US and non-US government officials, business leaders, and civil society actors.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/briefing-on-the-electoral-commission-s-plans-in-the-democratic-republic-of-the-congo/ Thu, 05 Oct 2017 17:48:24 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/briefing-on-the-electoral-commission-s-plans-in-the-democratic-republic-of-the-congo/ On Thursday, October 5, the Atlantic Council’s Africa Center hosted an exclusive briefing with Mr. Corneille Nangaa Yobeluo, President of the Independent Electoral Commission (CENI) of the Democratic Republic of the Congo (DRC). Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham welcomed guests and introduced Mr. Nangaa. In his remarks, Mr. […]

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]]> On Thursday, October 5, the Atlantic Council’s Africa Center hosted an exclusive briefing with Mr. Corneille Nangaa Yobeluo, President of the Independent Electoral Commission (CENI) of the Democratic Republic of the Congo (DRC).

Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham welcomed guests and introduced Mr. Nangaa.

In his remarks, Mr. Nangaa briefed attendees on the DRC’s upcoming electoral timetable, structure, and procedures, which are due to be announced publicly in Kinshasa next week. He also spoke about the logistical difficulties the DRC faces, but expressed optimism for the future. Mr. Nangaa discussed the ongoing voter registration efforts, noting that approximately 42 million people have been registered country-wide, and claimed that the improved security situation in the Kasai region should allow authorities to complete the process by year’s end.

A discussion, moderated by Africa Center Director of Programs and Studies and Deputy Director Bronwyn Bruton, followed Mr. Nangaa’s prepared remarks. The conversation was an energetic exchange during which the majority of participants challenged the integrity of the process outlined by Mr. Nangaa.

Mr. Nangaa was accompanied by H.E. François Balumuene, Ambassador of the DRC to the United States. In attendance and participating in the roundtable were a number of US and non-US government officials, business leaders, and civil society actors.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/double-issue-brief-launch-consumers-and-competition/ Thu, 07 Sep 2017 18:21:00 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/double-issue-brief-launch-consumers-and-competition/ On September 7, 2017, the Atlantic Council’s Africa Center launched two new issue briefs that tackle the complexities of investing in Africa. The first, titled Escaping China’s Shadow: Finding America’s Competitive Edge in Africa, was written by senior fellow Aubrey Hruby, and the second, Capturing the African Consumer Market: Truths, Trends, and Strategies for the […]

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]]> On September 7, 2017, the Atlantic Council’s Africa Center launched two new issue briefs that tackle the complexities of investing in Africa. The first, titled Escaping China’s Shadow: Finding America’s Competitive Edge in Africa, was written by senior fellow Aubrey Hruby, and the second, Capturing the African Consumer Market: Truths, Trends, and Strategies for the Road Ahead, by Aleksandra Gadzala.

Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham welcomed attendees, and Africa Center Director for Programs and Studies and Deputy Director Bronwyn Bruton set the stage for remarks by Hruby.

In her remarks, Hruby argued that Chinese dominance in African markets does not automatically preclude US business successes on the continent. She asserted that US companies should invest in sectors where the United States has a competitive advantage, such as professional and business services, finance, and agribusiness. Additionally, the US government should do more to encourage small- and medium-sized enterprises to invest in Africa, namely through the mobilization of the Department of Commerce and Small Business Administration, larger investments in institutions such as the Export-Import Bank and the Overseas Private Investment Corporation, and movement of US-Africa investment seminars outside of the Washington, DC region.

In Capturing the African Consumer Market, Gadzala argues that the much-vaunted African “middle-class” is truly a bifurcated entity. While recent investments in Africa cater to a wealthier upper segment, Gadzala warns that there are many pitfalls in misjudging trends and spending habits of a large, lower “entry-level consumer” segment involved in the informal sector. Investors in Africa should factor this in to their calculus, as well as consider the power of mobile technology and specialized “secondary cities” outside of national capitals and metropolises. 

Linda Oramasionwu, co-founder of Kupanda Capital and veteran of the emerging and frontier market spaces, joined Hruby in a discussion moderated by Bruton. Oramasionwu spoke of the diverse investment opportunities in Africa, highlighting Nigeria’s film industry, which has maintained impressive growth despite national economic woes. Hruby and Oramasionwu also took questions from the audience, which consisted of US and non-US government officials, business leaders, and civil society actors.

These issue briefs are part of a partnership between the Atlantic Council’s Africa Center and the OCP Policy Center and are made possible by generous support from the OCP Foundation. 

Escaping China’s Shadow: Finding America’s Competitive Edge in Africa is available for download here.

Capturing the African Consumer Market: Truths, Trends, and Strategies for the Road Ahead is available for download here.

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]]> https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/capturing-the-african-consumer-market-2/ Thu, 07 Sep 2017 15:56:01 +0000 https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/ For America’s consumer goods companies, the latest shifts in African consumer trends hold much promise. Africa’s population is growing at an outstanding rate and spending by consumers and businesses on the continent is forecast to grow significantly over the next decade.

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For America’s consumer goods companies, the latest shifts in African consumer trends hold much promise. Africa’s population is growing at an outstanding rate and spending by consumers and businesses on the continent is forecast to grow significantly over the next decade. However, US investors often oversimplify and misunderstand African markets, which remain highly segmented, fluid, and absent of a discernible “middle.”

“Capturing the African Consumer Market: Truths, Trends, and Strategies for the Road Ahead,” by Aleksandra W. Gadzala, unpacks this complexity, and in doing so offers effective strategies for American companies to capture the opportunities afforded by Africa’s growth.

This issue brief is part of a partnership between the Atlantic Council’s Africa Center and the OCP Policy Center and is made possible by generous support through the OCP Foundation.

Truths, trends, and strategies for the road ahead

Headlines about Africa’s emerging middle class are grabbing the attention of analysts and investors. A decade of strong economic growth, rising consumption, an African shopping mall boom, and a growing number of gated residential communities in some urban centers seem to suggest that a significant societal shift, and an accompanying surge in spending, is afoot.

This perception that a substantial new African marketplace is on the horizon has been reinforced by journalistic essays and private sector reports, such as McKinsey & Company’s Lions on the Move (2010) and Deloitte’s The Rise and Rise of the African Middle Class (2012), which enthusiastically tout the advent of a “middle class” consumer segment in Africa.

There are real economic opportunities associated with the burgeoning African consumer market, but they are often exaggerated and poorly understood. As it exists today, the African consumer market is highly segmented and fluid—and absent a discernible “middle.” Africa’s consumer market is continually reshaped, most significantly by technological advances and urbanization. These trends do not unfold linearly, and they have varying implications for different consumer groups. The picture is messy. This brief will help potential investors unpack some of these details, better understand African consumers, and appreciate the complexities of the continent’s development. Finally, it will reflect on effective strategies for capturing the opportunities offered by Africa’s growth.

Africa’s two consumer classes

What is often referred to as Africa’s “middle class” is a heterogeneous and not easily quantifiable cluster. In its 2011 report The Middle of the Pyramid: Dynamics of the Middle Class in Africa, ¹ the African Development Bank (AfDB) estimated that 355 million people—34 percent of the continent’s total population—were middle class. Somewhat controversially, this included anyone with a daily per capita expenditure of between $2 and $20. Of this group, the AfDB estimated that 60 percent fall into a “floating class,” with a daily per capita expenditure of $2–$4.² A daily expenditure of $2 is only slightly above the developing world poverty line and just enough to purchase a hot drink in most of Africa’s shopping malls. Others suggest Africa’s middle class accounts for only fifteen million households in the largest eleven subSaharan economies.³ Based on more internationally accepted definitions of middle class (daily incomes of $10 or more), the Pew Research Center suggests only 6 percent of Africa’s total population can be classified as middle income.⁴

Disparities stem from both monetary and sociocultural differences in defining the “middle class.” There is today no single African population group with a shared character, position, or impact on society that brings about the kind of political and economic shifts seen in “middle-class” groupings elsewhere. Competing kinships, ethnicities, and divergent living conditions have historically complicated such ascriptions. “Middle class” in Nigeria is unlike “middle class” in South Africa or Côte d’Ivoire. That individuals in Nigeria’s Lagos and Bayelsa states feel part of the same “class” is equally unlikely.

Optimism about the African consumer story will pay off for American companies over the long term, but not immediately. Despite uncertain definitions, consumption in Africa is rising. Rather than a middle class, it is more useful to speak of an African “consumer class.” Consumer demand is being driven by two key segments. The first is “entry-level consumers,” with daily per capita expenditures of $2–10. They are the largest in terms of size, the fastest growing, and the most rapidly urbanizing. Rapid technological uptake is also reducing the costs and barriers that have previously prevented companies from accessing this demographic. Consumption is also driven by a much smaller upper segment that already enjoys many of the trappings of the Western middle class: access to credit and savings, and a significant disposable income. This consumer segment, comprised of an estimated twenty million people,⁵ will spur the sales of higher-end brands and luxury goods in Africa, although with limited volumes in the near term. These two consumer groups are key targets for consumer companies.

Africa’s entry-level consumers

Many of Africa’s entry-level consumers are those who broker trade in goods and services among informal and fragmented markets.⁶ They are wholesalers and retailers, drivers, manufacturers, construction workers, chefs, delivery couriers, technicians, and those who might in the United States be considered early stage entrepreneurs. As economic conditions in their communities improve, they are often the first to notice and the first to scale up their operations; informal sector workers are the primary drivers of Africa’s rapid urbanization.⁷4 As a collective, they comprise over 60 percent of the continent’s workforce and contribute 38 percent of its gross domestic product (GDP).⁸

The informal sector in Africa has little to do with black market activities, or what may otherwise be considered dubious transactions in the United States or in Europe. Informal economic activity includes any unregulated commercial transactions, any business that is not taxed, and any worker who does not receive social protections. While many who labor in Africa’s informal economy are marginalized from formal sector employment and forced to pursue informal work out of necessity, others enter voluntarily. In Ghana, for example, university graduates become entrepreneurs in search of better professional status.⁹ Heterogeneity within Africa’s informal sector means market and consumer behaviors vary widely and are unlikely to follow trends observed elsewhere. Those who hover on $2 a day and rely on volatile revenue streams are at constant risk of slipping below the poverty line. And although theirs are the fastest growing incomes, they emerge from low bases—some as low as 70¢ per day.¹⁰ Among more educated informal segments, tastes and spending patterns also vary. As more and more governments enact policies that make it easier to open, own, and operate businesses, the structure of this constituency will continue to shift, opening the door for companies to reap the gains.

Around 90 percent of sub-Saharan commerce takes place in the informal sector, at open-air markets and kiosks, and at the hands of table-top sellers and street hawkers. Consumers generally pay for goods in cash, although the advent of mobile money is starting to change this. Sales of fast-moving consumer goods like cosmetics, toiletries, foodstuffs—especially perishable and ready-to-eat items—and other necessities dominate this consumer segment. Consumers shop often, and make purchases in small quantitates. In Madagascar, for example, entry-level consumers shop an astonishing seventy times per month on average, in some cases visiting the same kiosk or table top two or three times a day to buy items like a spoonful of sugar, a single piece of fruit, or a cup of rice.¹¹ Patterns vary widely by country: in Kenya, low-income consumers shop on average thirty-eight times a month.¹² In South Africa, where formal retail is more developed, consumers tend to buy monthly supplies of staple foods from larger supermarkets and perishable items on an as-needed basis from informal retailers.¹³ Because cash flows are tight, consumers place a premium on price and reputation. Brand and retailer familiarity, as well as word-of-mouth recommendations, are strong purchase drivers, with levels of consumer caution varying by geography.

The retail consumers

Twenty-seven shopping malls opened across Africa in 2015, with another 204 malls projected to open by 2020.¹⁴ These retail centers carry local and foreign high-street and designer brands like Hugo Boss and Lacoste, and have evolved to include cafés, restaurants, and cinemas. Their expansion coincides with the rapid build up of African supermarkets. While supermarkets have existed for decades in some parts of the continent, they have taken off in the last decade, propelled by a combination of foreign direct investment, regulatory reforms, and consumer demand. Sub-Saharan Africa’s supermarket industry is projected to see compound annual growth of 10 percent in value sales by 2021, with shoppers purchasing an estimated $704 billion in products.¹⁵ Local and regional supermarket chains like Shoprite, Uchumi, and Nakumatt are expanding domestically and across borders, and into new formats. Pick n Pay, a subsidiary of South Africa’s Shoprite, has partnered with BP to build 120 convenience stores at petrol stations, while Kenya’s Nakumatt has introduced Nakumatt on Wheels (NoW), a pop-up-style portable supermarket delivered on trucks.

Through NoW and similar innovations, supermarkets are beginning to cater to entry-level consumer segments. Overwhelmingly, however, supermarkets and shopping malls still cater almost exclusively to the small segment of Africans with significant disposable incomes. Most of these consumers occupy skillintensive formal sector jobs, with stable incomes and annual salaries ranging anywhere from $10,000 to over $1 million. These consumers are generally educated, connected, cosmopolitan, and willing and able to pay for quality and convenience. A management consultant working long hours in Lagos and battling the city’s incessant traffic will most certainly place a premium on convenient shopping. In Cameroon, the growing number of women entering the formal workforce is creating demand for easy-to-prepare foods.¹⁶ Higherincome consumers seek sophisticated and diverse goods, and tend to spend less on vital commodities. They are more interested in product details and specifications than in finding the cheapest option.

With the number of African millionaires set to double to 234,000 by 2024,¹⁷ spending among this demographic will increase and preferences will become more refined, paving the way for luxury brands to expand their market reach in Africa. The trouble is that this consumer segment constitutes a very small percentage of the larger consumer class, which totals close to 20 million individuals.¹⁸ And while its appetite for high-end goods is fast evolving, the segment’s size is not. The bulk of consumer growth in Africa will therefore remain concentrated on entry-level consumers, presenting companies with immense challenges and opportunities. Among Africa’s upper consumer segment, product sales will also grow, but in much smaller volumes.

Trends to watch

Rapid demographic change—the infamous “youth bulge”—will roil many African countries and make it harder to make predictions about the continent’s consumer marketplace. African economies have been hit hard by falling global commodity prices, rising youth unemployment, environmental changes, and a host of other factors, including poor governance and political crises. Though many analysts have held fast to the narrative of an “Africa rising” over the long term, many nations are suffering setbacks. Consumer incomes and tastes are likewise in a state of flux. The rapid uptake of mobile technology, urbanization, and the rise of intermediary cities are promising trends that may also prove disruptive to the consumer market and upend previous assumptions and patterns.

Technology and the African consumer

Mobile phone giant Ericsson estimates that the number of mobile phones in Africa will rise to one billion by 2019—almost one per African—of which some eight hundred million will be smartphones. Mobile phones are becoming common across age groups, and are the primary method of engaging in online activity.¹⁹ Pew Research suggests that the same number of eighteento thirty-four-year-old Africans and those thirty-five and older own mobile phones, though the proportions vary across countries. In South Africa, for example, 41 percent of those between the ages of eighteen and thirty-four own smartphones, compared with 27 percent of those thirty-five and older.²⁰ Across the continent, smartphones are being used to communicate, transfer funds, mingle on social media, and shop.

Access to smartphones is giving consumers more control over their shopping experiences. In 2014, the number of online queries regarding price and quality of goods increased 33 percent in Kenya, 49 percent in Nigeria, and 37 percent in South Africa.²¹ Consumers are becoming more informed and more discerning, putting pressure on retailers for superior online content and product differentiation. In more established retail markets, nearly all formal brick-and-mortar retailers have an online presence, including a growing number of supermarkets (including Woolworths across the continent and Uchumi in Kenya). A quick online search allows consumers to compare grocery prices and order products online, though in-store shopping is still the preferred method for many consumers. E-commerce companies like Jumia, Konga, Kilimall, and others sell a wide assortment of goods, including fashion, electronics, and beauty products. And platforms like Nigeria’s Mall for Africa connect high-earning Africans with high-end global retailers. Upper-class consumers who previously travelled overseas or relied on relatives coming from abroad for American or British brands can now access them with a click on their mobile device.

What is likely to dominate the African e-commerce story, however, are the millions of informal traders who barter goods in and across countries. Although still nascent, the continent’s informal sector is gradually coming online. One particularly successful example is Chochote (the Swahili word for “everything”), a Nairobi-based start-up that distributes informalsector products on behalf of a wide array of vendors. It provides these vendors with free photography and delivery in exchange for a commission of 7 to 15 percent of the purchase price. On a larger scale, Nigeria’s Kaymu connects buyers and sellers across fourteen sub-Saharan countries²² in a transparent and fixed-price environment. In Cameroon, sellers using the Kaymu platform range from individuals wanting to sell a single item, to informal retailers hoping to reach a wider consumer base and attain a degree of income stability. As more African governments move to impose and refine e-commerce tax regulations, too, informal online activity will steadily move into the formal sector. This could increase incomes and bolster economic growth. If the purchasing power of the informal economy could be captured, government revenues would rise and international investors would see a far more promising marketplace.

African e-commerce faces many challenges and varies greatly by country. While South Africa and Nigeria already have numerous e-commerce players, the industry is less developed in countries like Ghana and Zambia, where mobile connectivity is still comparatively low. But the foremost challenge facing the sector in any country is that of trust: many low- and high-income consumers do not trust online interactions and are extremely wary of being defrauded online. The overwhelming method of payment therefore remains cash-on-delivery; e-commerce will develop gradually and over the long term. But some of the larger and better-recognized retailers, such as Kaymu and Jumia, have begun to build reputations and establish enough consumer confidence to adopt new payment options, encouraged by the success of mobile money in Africa. Many larger players now accept payments via M-Pesa, a mobile phone money transfer platform used by over thirty million Africans. M-Pesa allows users to perform traditional banking services, pay bills, send money, save, and make purchases—all using their mobile phones. Through Kaymu’s SafePay electronic system, buyers pay directly to Kaymu; sellers receive payment only when the purchased items have been shipped. Pesapal, a Nairobi-based aggregator for online and mobile payments, similarly facilitates e-commerce and point-of-sale payments (it is not unlike the American application Square). In Africa’s fragmented and informal markets, mobile money is spurring e-commerce and is expanding the consumer segment. Because platforms like M-Pesa allow for savings, too, individuals with irregular cash flows are increasingly able to achieve smoother consumption habits.²³

Urbanization and its discontents

Africa is urbanizing rapidly.²⁴ Already, sub-Saharan Africa is home to six megacities. Lagos and Kinshasa have already passed the ten million–resident threshold, while Johannesburg, Luanda, Dar es Salaam, and Nairobi are expected to surpass the ten million mark by 2030. Naturally, Africa’s regions are urbanizing at different rates: while East Africa is the least urbanized and fastest urbanizing, Southern Africa is the most urbanized and more slowly urbanizing.²⁵ The rapid growth of Africa’s cities means they are becoming consequential units of market analysis. Yet while the bullish urbanization narrative champions this trend as a harbinger of higher per capita incomes, increased consumption, and consolidated consumer markets, the realities of African urbanization suggest that, absent adequate reforms, the upshot will be a more deeply segmented consumer demographic.

Urbanization in Africa is not replicating earlier global patterns. In contrast to much of Asia, where urbanization has generally given rise to safer cities, improved infrastructure, and private sector growth, movement from rural to urban areas in Africa is generally characterized by a move into slum conditions and the informal economy. Nearly 60 percent of Africa’s urban population live in slums,²⁶ and only 40 percent of urban residents have access to sanitation facilities.²⁷ Infrastructure and housing are unable to keep pace with Africa’s urban expansion. Most residential property developments are high-end enclaves spearheaded by commercial developers whose projects cater to affluent residents,²⁸ such as Eko Atlantic in Lagos and Cité du Fleuve in Kinshasa. Single-family homes that are legally built are prohibitively expensive across the continent. In the economic hub of Ethiopia, for example, the cheapest privately built house cost around $68,783 in 2013.²⁹ Even in conflict-ridden Mali, the cheapest legally built private homes cost around $5,800, a price that is far out of reach for most residents.³⁰ The result is an influx of residents into illegal housing, often located in slums. Poor-quality roads and a lack of transportation links isolate neighborhoods and discourage firms from clustering where poorer populations live and work. Many in Africa’s urban informal economies do not frequent supermarkets not only because they cannot afford to, but because they cannot access them. In South Africa, the average commute by bus from the slums into the city centers is seventy-four minutes each way.³¹ The isolation of poorer residents prevents them from accessing goods and services, and frustrates the expansion of the consumer market. While much is made of Africa’s isolation from international markets, a far greater impediment to growth is the disenfranchised segments within the continent’s own cities.

African nations tend to lack infrastructure and have not developed industrial sectors that can absorb the continent’s rapidly expanding, low-skilled youth workforce.³² Africa’s working-age population will increase to 793 million in 2030 from 466 million in 2013.³³ Because manufacturing jobs are scarce, urban labor has shifted into low-skill services. This trend is not inherently problematic; in theory, service-led economic expansion can bring about high-productivity jobs and rapid income growth. The type of service sectors that can jumpstart this type of high-productivity employment, however, are skill-intensive fields such as finance and information technology that are not common among most of Africa’s urban dwellers. Most urban Africans occupy non-tradable and lowtechnology positions in the informal sector, in fields such as transportation and hospitality.³⁴ Except among a very small elite, incomes for service sector employees are low,³⁵ and the positive shifts in consumption that have been associated with urbanization in other regions—from spending on food to spending on manufactured products—mostly have not happened in Africa. Most urban Africans continue to spend primarily on fast-moving consumer goods and essential items. If Africa’s urbanization remains unaccompanied by formal employment and broad-based economic gains, its cities will remain concentrations of relatively richer individuals purchasing low-level services from those migrating to cities.

Africa’s intermediary cities

Contrary to widely held assumptions, African urbanization is not being driven by the movement of people into the megacities, but by the growth of intermediary cities and towns. Between 2000 and 2010, urban centers with three hundred thousand or fewer inhabitants accounted for 58 percent of Africa’s urban growth; towns with three hundred thousand to one million inhabitants accounted for a further 13 percent, and those with over one million inhabitants accounted for 29 percent. Two-thirds of the growth in Africa’s urban population by 2030 is expected to take place in cities of fewer than five hundred thousand.³⁶ Intermediary cities play complementary roles to megacities; they increasingly specialize in the development of mature industries, giving cause for guarded optimism about Africa’s industrialization and its urban future.

In Arusha, a Tanzanian city of 416,000, food processing is becoming an established sector.³⁷ The city has numerous medium-sized companies with nationwide market presence and significant quality differentiation. In the megacity of Dar es Salaam, some 380 miles away, food retail dominates: Dar es Salaam has around a dozen supermarket chains and hundreds of small format stores, with new outlets opening frequently. Generally, supermarkets first open in Dar es Salaam and gradually expand to Arusha and neighboring cities.³⁸ While megacities tend to facilitate innovation and the adoption of new concepts, intermediary cities often specialize in advanced industries like manufacturing, and they are able to absorb a low-skilled workforce. For example, Jinja, a city of 80,000 fifty-three miles east of Uganda’s largest city, Kampala, is home to four steel companies. The Dutch ship building firm Veka Group is constructing a shipyard there, and China’s Foton Motor Group is building a vehicle assembly plant.

As in Africa’s megacities, transport connectivity is a significant challenge. Infrastructure and transportation links are poor. This is problematic because intermediary cities need to be outwardly connected to access wide pools of labor and key inputs. Because many intermediary cities tend to rely on a single economic sector, too, they are additionally vulnerable to external shocks.³⁹ Economic diversification is, however, steadily occurring. Manufacturing is the great multiplier: for every manufacturing job created, service jobs follow.⁴⁰ As Ron Bloom, President Barack Obama’s former senior manufacturing advisor, liked to say, “If you get an auto assembly plant, Walmart follows; if you get a Walmart, an auto assembly plant does not follow.” ⁴¹

The Walmarts of Africa are indeed starting to follow. Through its majority stake in Massmart Holdings, Walmart itself is opening over four hundred stores in South Africa and twelve other sub-Saharan countries. In 2014, Nakumatt opened a branch in Arusha. In Kumasi, Ghana, a booming commercial and trading center, African property developer Atterbury is constructing a $95 million shopping mall, with Shoprite and Walmart as anchor tenants. Zambeef, a leading Zambian food producer and retailer, is similarly moving into intermediary cities. For food retailers, the tendency of intermediary cities to be located near agricultural regions offers the possibility of efficient and locally sourced supply chains. Despite complications with quality and regularity of supply from local farmers, more and more retailers and consumer goods manufacturers are assisting African farmers to boost their capacity. For example, multinational brewing company SABMiller, whose origins are in South Africa, has partnered with thousands of small-scale farmers to grow cassava for its brewing operations. Ruralurban agricultural linkages additionally hold the longterm promise of spurring development in surrounding regions, possibly pulling even more people into Africa’s entry-level consumer demographic.

Approaching the African opportunity

There is no magic bullet for succeeding in Africa or anywhere else in the world. Africa is a continent of fifty-four countries with over three thousand distinct ethnic groups speaking some two thousand languages, with divergent cultures and histories. The consumer segment itself is equally diverse, encompassing people who earn as little as $2 a day to those making $1 million a year. For American companies, diversified strategies that focus on city rather than national markets are imperative, as are local partnerships. US companies should also capitalize on the boom in digital and mobile technologies—including opportunities presented by e-commerce.

Take a customized, city-centric approach

A city-based strategy is essential in Africa. This is true not only because cities are Africa’s foremost centers of growth, but also because the rapid and uneven pace of urbanization is creating disparities in demographics and affluence levels, which are shaping market trends. In Nigeria’s cities, growth in the number of professional working mothers is spurring growth in baby food sales.⁴² This is unlike in Cape Town where most of the population is between the ages of twenty-five and sixtyfour, which drives demand for organic foodstuffs.⁴³ The average monthly per capita consumption in Kenya’s capital city of Nairobi is 19,625 shillings ($187), more than twice Kenya’s national average—it is 11,827 shillings ($113) in the intermediary city of Kisumu, and only 2,705 shillings ($26) in Wajir, in the economically disadvantaged northeast.⁴⁴

Identifying market niches and successfully tailoring offerings to local conditions give companies a distinct edge. SABMiller, for example, created a beer specifically for Onitsha, a commercial city in southeastern Nigeria, and gave it a local identity: the label features a rising sun, the symbol of the local Igbo people. The beer is brewed with fewer hops than a European lager, giving it a less bitter and more refreshing taste, suitable for the hot climate.⁴⁵ The African consumer goods company Promasidor, which sells products ranging from dairy and soy products to beverages in over twenty-five African countries, substituted vegetable fat for animal fat in its milk powder, which it sells in small sachets. The small product size and elimination of animal fat allow the firm to target consumers in remote areas without access to consistent electricity supply. With Africa’s urbanization increasingly taking place beyond the continent’s megacities, such localized product adaptations are essential for capturing market opportunities and consumers.

Pay attention to intermediary cities

For companies willing to invest for the long term, Africa’s intermediary cities present interesting opportunities. Intermediary cities offer cheaper real estate, largely unsaturated markets, and possibly better profit margins. Early entry into these markets may provide significant first-mover advantages, including limited competition and substantial brand recognition; the latter is particularly valuable given that African consumers across all income brackets are highly brand-conscious. Despite its challenges, Uber’s expansion into the continent is a prime example. Since its entry into Africa in 2013, the ride-sharing app Uber has enjoyed an unrivaled status. Even though competitors like Taxify and Jozibear may offer better quality at cheaper rates, customers remain attracted to Uber because of its brand. To be competitive, new entrants must develop flawless platforms and successfully attract both passengers and drivers.

Intermediary cities are not without their challenges. Without concerted action by African policy makers, undiversified economies, poor infrastructure, and limited transit connectivity will hamper their potential. But many companies will nevertheless find the risk/ reward proposition in these cities attractive.

Forge strategic partnerships

Strategic partnerships are key. While identifying the right local partners may be time- and resourceintensive, it is among the most crucial investments a market entrant can make. The partnerships may vary from geographic and technical expertise to distribution channels and localized sales forces. Of essence, too, are partners with matched visions who want more than just a transactional relationship. As most African investments are long term, it is critical to ensure vision and culture are aligned. This becomes especially important in intermediary cities where local etiquette and culture, and a sense of doing well by the community, are paramount.

The Coca-Cola Company’s partnership with the nonprofit TechnoServe and the Bill and Melinda Gates Foundation is a great example of how successful local partnerships can pay off. The collaboration has improved the productivity of around fifty-three thousand Kenyan and Ugandan mango and passion fruit farmers and integrated them into Coca-Cola’s supply chain. This has been a boon for the farmers and Coca-Cola, which was previously importing fruit for its juice beverages at a higher cost, as it had struggled to obtain a steady supply of quality produce. Coca-Cola’s reach in Africa is unparalleled: it operates around thirty-five thousand micro-distribution centers—some merely roadside kiosks—throughout Africa. Often located in hard-toreach communities, the centers are independently owned and operated by locals who have been financed and trained by Coca-Cola.⁴⁶ Through its partnership with Coca-Cola, SABMiller has also been able to diversify into the non-alcoholic beverage segment and achieve synergies stemming from Coca-Cola’s size and expertise. Selecting distribution partners with sufficient scale ensures wider market reach, as well as longevity: smaller players often struggle with cash flow and may not remain in business for long. Partnering with experienced local businesses additionally helps to navigate local cultural and regulatory environments, identify trends and opportunities, diversify portfolios, and eventually move into new sectors.

Explore innovative payment solutions

Among the strategic partnerships worth considering are those with digital payment companies, like M-Pesa, which allow consumers to purchase goods using mobile money accounts linked to their handheld devices. Partnerships with mobile money platforms may facilitate integration with local markets, and may attract otherwise unbanked and low-income consumers. M-Kopa, a Kenyan solar energy company, for example, provides its customers with credit: clients pay $35 up front for a solar kit, and agree to make daily payments of 45¢ for a year, after which the system is theirs. Payments are made directly from their mobile phones, through M-Pesa. Such solutions align with the tight cash-flows of entry-level consumers and make otherwise out-of-reach products affordable.

The growing popularity of mobile wallets in Africa additionally gives companies the opportunity to differentiate through loyalty programs targeting both high- and low-income consumers. Whether in the form of digital coupons, free products, or other perks, these programs can instill brand loyalty. This is worthwhile because African consumers reward brands that they trust. Loyalty programs tend to take hold in more formalized retail markets; for example, most South African retailers already have fairly sophisticated loyalty programs, with the average South African belonging to at least five.⁴⁷ With retail markets still in the early stages of formalization in the rest of the continent, opportunities for new market entrants are ripe. But a customized, local approach is imperative. As more consumers transact on their mobile devices, a growing body of consumer data will allow companies to better customize their offerings.

E-commerce

Although still in its infancy and riddled with challenges, e-commerce holds a unique long-term value proposition for companies in sub-Saharan Africa. Highend consumers are drawn to online retail because it offers convenience and broader choices—particularly, it provides access to global brands that are generally not available in brick-and-mortar stores. With time, e-commerce may also prove an attractive offering for those in intermediary cities and remote areas where choice of available goods may be limited, as well as for traders in the continent’s informal sector.

Successfully selling products online requires tie-in with innovative payment solutions and bespoke lastmile distribution networks. For example, Jumia relies on its fleet of over five hundred motorbikes and trucks to deliver to customers in Nigeria’s eight largest cities. The growth of e-commerce has also spurred the emergence of new players in the logistics space. Ondemand couriers like South Africa’s WeChat-powered service Rush, which allows for payment through the Chinese-owned payment platform WeWallet, and Mozambique’s moWoza, which uses text messaging to deploy available taxi drivers to deliver parcels from wholesalers to traders, are shortening delivery times for e-retailers. In cooperation with China’s DJI Innovations, Kenyan e-retailer Kilimall is even testing delivery via drones. In the long term, strategic partnerships with successful on-demand players will help companies unlock innovative logistics solutions. With Africa’s population rapidly shifting and dispersing, logistics firms will have to continually upgrade to keep up.

Conclusion

The African consumer opportunity is real, albeit less straightforward and imminent than often suggested. There is no singular “middle class,” but a bifurcated consumer demographic: an extremely large group that is barely hovering above the subsistence level, and a much smaller group whose purchasing power is on a par with the American middle and lower-upper classes. Both of these groups are heterogeneous: their tastes vary by age, gender, religion, and social demographic, and not only by region and country, but by city and even by neighborhood. Urbanization continues to happen quickly, and it is expanding the ranks of the continent’s entry-level consumer segment. While all eyes are on cities like Lagos and Nairobi, intermediary cities like Arusha are starting to make their mark; significant low- and high-income demand may yet concentrate in these hubs, and this presents opportunities for early entrants into the markets. Technology is changing the way some Africans shop, and is steadily bringing others into the shopping fold.

For American companies that enter this expanding marketplace, challenges and frustrations are certain. But with an entrepreneurial mindset and long-term vision, success in Africa is well within reach.

Aleksandra Gadzala is a geopolitical risk consultant focused on emerging and frontier markets. She is editor of Africa and China: How Africans and Their Governments are Shaping Relations with China, and her writings have appeared in numerous publications including The National Interest and China Review and have been cited in US congressional testimony. She holds a PhD in Politics from the University of Oxford.

 

1    African Development Bank, The Middle of the Pyramid: Dynamics of the Middle Class
in Africa, April 2011.

2    Ibid

3    Standard Bank, “Rise of the Middle Class in Sub-Saharan Africa.”
Standard Bank Blog, August 2014, https://blog.standardbank.
com/node/61428

4    Pew Research Center, A Global Middle Class Is More Promise than
Reality, July 2015, 24.

5    African Development Bank, The Middle of the Pyramid

6    Bright Simons, “Beware Africa’s ‘Middle Class,’” Harvard Business
Review, June 2013, https://hbr.org/2013/06/beware-africas-middle-class

7    United Nations, World Urbanization Prospects, 201

8    International Monetary Fund, Regional Economic Outlook:
Sub-Saharan Africa Restarting the Growth Engine, April 2017.

9    Franklin Obeng-Odoom and Stephen Ameyaw, “A New Informal Economy in Africa: The Case of Ghana.” African Journal of
Science, Technology, Innovation and Development 6 (3): 223–30,
2014.

10    Laurence Chandy, Veronika Penciakova, and Natasha Ledlie“Africa’s Challenge to End Extreme Poverty by 2030: Too Slow or
Too Far Behind?” The Brookings Institution, 2013, https://www.
brookings.edu/blog/up-front/2013/05/29/africas-challenge-toend-extreme-poverty-by-2030-too-slow-or-too-far-behind/

11    The Nielsen Company, Africa: How to Navigate the Retail Distribution Labyrinth, 2015, 16.

12    Ibid., 3.

13    Ann Steensland, “Informal Food Economy Vital for Producers and
Consumers,” Global Harvest Initiative, 2017, http://www.globalharvestinitiative.org/index.php/2017/02/informal-food-economy-vital-for-producers-and-consumers/

14    Helen Sullivan, “Trends in Shopping Mall Development,” How We
Made It in Africa, September 16, 2016, https://www.howwemadeitinafrica.com/interview-trends-in-shopping-mall-development/

15    Emily Jarvis, “The Future of Grocery Retailing in Sub-Saharan
Africa,” Africa Outlook Magazine, August 3, 2016

16    H. Anton, H. Charmaine, et. al., Prospects in the Retail and Consumer Goods Sector in Ten Sub-Saharan Countries, PwC, 2016, 9

17    Ami Sedghi and Mark Anderson, “Africa Wealth Report 2015: Rich
Get Richer Even as Poverty and Inequality Deepen,” The Guardian,
July 31, 2015

18    African Development Bank, The Middle of the Pyramid

19    Ericsson, Sub-Saharan Africa: Ericsson Mobility Report, 2016

20    Pew Research Center, Cell Phones in Africa: Communication Lifeline, April 2015, 6.

21    ENCA.com, “Google Predicts Massive African Ecommerce Growth
by 2017,” February 6, 2015

22    Angola, Cameroon, Ethiopia, Gabon, Ghana, Ivory Coast, Kenya,
Mozambique, Nigeria, Rwanda, Senegal, Tanzania, Uganda, Zambia

23    William Jack and Tavneet Suri, “Risk Sharing and Transactions
Costs: Evidence from Kenya’s Mobile Money Revolution,” American Economic Review: 104, no. 1, January 2014.

24    United Nations, World Urbanization Prospects, 2014

25    United Nations Economic Commission for Africa, Urbanization
and Industrialization for Africa’s Transformation, 2017.

26    United Nations, Millennium Development Goals Report, 2013.

27    The World Bank, “Improved Sanitation Facilities, Urban (% of the
Urban Population with Access),” 2015, http://data.worldbank.org/
indicator/SH.STA.ACSN.UR?end=2015&start=1990&view=chart

28    Oxford Analytica, “Africa: Cities Shape Investment and Growth
Outlook,” Oxford Analytica Daily Brief Service, May 19, 2014.

29    “For Most Urban Africans, Owning Anything other than a Slum
Home Is Out of Reach: If You Build It, Will They Come?” The
Economist, December 14, 2015. For comparison, the average per
capita income in Ethiopia in 2013 was $590.

30    Ibid

31    “Left Behind; Africa’s Cities,” The Economist, September 17, 2016

32    The United Nations Economic Commission for Africa suggests
that the continent has been de-industrializing. Between 2000
and 2015, most African countries recorded a decrease in their
share of manufacturing value added in GDP, averaging 2.3 percentage points. (See United Nations Economic Commission for
Africa, Urbanization and Industrialization for Africa’s Transformation, 2017).

33    D. Lam and M. Leibbrandt, Global Demographic Trends and Their
Implications for Employment, Paper prepared as background research for the Post-2015 United Nations Millennium Development
Goals Development Agenda on Employment and Employment
Growth, New York: United Nations, 2013.

34    Dani Rodrik, Premature Deindustrialization, Institute for Advanced Study, School of Social Science, 2015

35    Sedghi and Anderson, “Africa Wealth Report 2015.”

36    Organisation for Economic Co-operation and Development, African Economic Outlook 2016: Sustainable Cities, 2016.

37    C. Ijumba et al., “Stages of Transformation in Food Processing
and Marketing: Results of an Initial Inventory of Processed Food
Products in Dar Es Salaam, Arusha, and Mwanza,” Tanzania Policy
Research Brief, Innovation Lab for Food Security, Michigan State
University, no. 3, 2015.

38    Ibid.

39    Lochner Marais and Jan Cloete, “The Role of Secondary Cities in
Managing Urbanisation in South Africa,” Development Southern
Africa: 34, no. 2, 2016, 1–14

40    Enrico Moretti, The New Geography of Jobs (New York, NY: First
Mariner Books, 2012).

41    As quoted in Adam Ozimek, “What the Facebook IPO Debacle
Doesn’t Tell Us,” Forbes, May 27, 2012.

42    EuroMonitor International, “Baby Food in Nigeria,” September
2016.

43    F.A. Mare et al., “Consumer Preferences for Beef with Specific
Reference to Fat Color: The Case of Cape Town, South Africa,”
International Journal of Agricultural Management: 2, no. 3, 2013

44    Dorothy Otieno, “Nairobians Spend Averagely Sh20K per Month,
Analysis Shows.” The Daily Nation, June 7, 2016.

45    “SABMiller in Africa: The Beer Frontier,” The Economist, May 31,
2014.

46    Kate Douglas, “Coca-Cola on How Efficient Partnerships Drive
Big Business Success in Africa,” How We Made It in Africa, June
11, 2015, https://www.howwemadeitinafrica.com/coca-cola-onhow-efficient-partnerships-drive-big-business-success-in-africa/

47    Yaron Assabi, “Mobile Is Changing the Customer Loyalty Game,”
SME SouthAfrica, September 8, 2014, http://www.smesouthafrica.
co.za/Mobile-is-changing-the-customer-loyalty-game/

The post Capturing the African consumer market appeared first on Atlantic Council.

]]> https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/capturing-the-african-consumer-market/ Thu, 07 Sep 2017 15:56:01 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/capturing-the-african-consumer-market/ For America’s consumer goods companies, the latest shifts in African consumer trends hold much promise. Africa’s population is growing at an outstanding rate and spending by consumers and businesses on the continent is forecast to grow significantly over the next decade. However, US investors often oversimplify and misunderstand African markets, which remain highly segmented, fluid, […]

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]]> Download PDF

For America’s consumer goods companies, the latest shifts in African consumer trends hold much promise. Africa’s population is growing at an outstanding rate and spending by consumers and businesses on the continent is forecast to grow significantly over the next decade. However, US investors often oversimplify and misunderstand African markets, which remain highly segmented, fluid, and absent of a discernible “middle.”

“Capturing the African Consumer Market: Truths, Trends, and Strategies for the Road Ahead,” by Aleksandra W. Gadzala, unpacks this complexity, and in doing so offers effective strategies for American companies to capture the opportunities afforded by Africa’s growth.

This issue brief is part of a partnership between the Atlantic Council’s Africa Center and the OCP Policy Center and is made possible by generous support through the OCP Foundation.

 

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]]> https://www.atlanticcouncil.org/blogs/africasource/germany-s-compact-with-africa/ Wed, 06 Sep 2017 17:29:40 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/germany-s-compact-with-africa/ Over the past three years, as thousands of refugees drowned off Europe’s coasts, Germany’s open-door policy towards asylum seekers propelled the country to a position of global humanitarian leadership, and turned its chancellor, Angela Merkel, into a global icon for human rights advocates. As of 2016, the nation of 82.5 million absorbed 890,000 refugees, and […]

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]]> Over the past three years, as thousands of refugees drowned off Europe’s coasts, Germany’s open-door policy towards asylum seekers propelled the country to a position of global humanitarian leadership, and turned its chancellor, Angela Merkel, into a global icon for human rights advocates. As of 2016, the nation of 82.5 million absorbed 890,000 refugees, and a majority of the German population has warmly supported the influx of foreigners. However, the Berlin Christmas attack by a rejected asylum seeker, and the 1,200 sexual assaults reported in numerous German cities over New Year in 2016 (allegedly perpetrated by immigrants of North African descent), has sparked widespread outrage fueling debate to reduce the number of refugees granted asylum. Facing a competitive reelection race in September, Merkel has responded to public pressure on the migration question without surrendering Germany’s moral and thought leadership on the issue.

The Compact with Africa (CwA) has emerged from these competing political pressures, and capitalizes on Germany’s current presidency of the Group of 20 (G20), which is focused on Africa.

In January, Germany launched the blueprint for a “Marshall Plan with Africa.” Several months later, the CwA was officially launched by Merkel in Baden-Baden, Germany, with guests including the heads of state from Côte d’Ivoire, Morocco, Rwanda, Senegal, Tunisia, Ghana, and Ethiopia. As one of the core projects of Germany’s G20 presidency, the CwA’s objective is to prepare “comprehensive, coordinated, and country-specific Investment Compacts” that will use partnerships among the G20 countries, African governments, International Financial Institutions, and private investors to promote economic reform and make countries more attractive to future investment.

The CwA is designed to slow migration from Africa by improving the business environment, increasing the in-flow of private investment to the continent, and jumpstarting African economies. Like the United States’ Millennium Challenge Corporation (MCC), the CwA is aimed at rewarding high-performers by using a competitive process to grant development support to countries that have already met certain economic and governance benchmarks. Unlike the MCC, however, the CwA is focused exclusively on Africa. Another important difference is that, while MCC compacts are essentially apolitical – awarded on the basis of merit, not on the strategic relevance of the recipient country – the CwA is explicitly linked to German national security objectives, and targets the countries that are most relevant to Germany’s strategic interests.

Thus far, Germany has pledged 300 million Euros starting in 2017 to three CwA recipients: Ghana, Tunisia, and Cote d’Ivoire. (Senegal, Morocco, and Rwanda were also signed onto the Compact, but not selected as beneficiaries.) What sets apart Ghana, Tunisia, and Côte d’Ivoire as candidates for reform is not only their domestic policies that “have a strong focus on transparent budgets, fighting corruption, promoting democracy and realizing economic reform,” but the nations’ importance to Germany.

Historically, Ghana has been Germany’s third largest trading partner in Sub-Saharan Africa and has received an aggregate of 1.37 billion Euros in bilateral development from 1961 to 2015. Ghana’s economic policies and programs currently continue to yield a positive indication of 6.6 percent gross domestic product growth for the first quarter of 2017. Similarly, Côte d’Ivoire was the fastest growing African economy in 2016, making these two countries attractive destinations for future foreign investments in West Africa (they could also, potentially, become attractive alternative destinations for refugees who might otherwise attempt to reach Europe). Tunisia, on the other hand, is emerging as a democracy in the aftermath of the Arab Spring, and its struggling government is the West’s ally in the fight against terrorism. In early 2017, Germany signed a deal with Tunisia giving 250 million Euros in support of development projects, in return for Tunisia’s pledge to speed the repatriation of rejected Tunisian asylum seekers from Germany.

Merkel has been clear that the CwA is part of a broader effort by Germany, and Europe, to reduce the number of refugees pouring out of Africa. During remarks at a G20 preparatory event, she said, “If there’s too much hopelessness in Africa, of course there will be young people who say they need to find a life elsewhere in the world. By cooperating with those countries, we are also creating more security again for ourselves.”

This is a laudable goal, but it faces several obstacles. The G20 presidency only lasts a year, Germany’s long-term commitment to the initiative may not survive, particularly if Merkel loses the upcoming election. Germany, moreover, is not rich enough to boost African economies on its own, so the program’s success will depend in large part on whether Germany succeeds in bringing the other G20 nations on board. (Argentina, which has the next rotation of the G20 presidency, is in talks with Germany to continue with the CwA, but this has not been confirmed). Critics of the Compact also argue that until average per capita income within Sub-Saharan African countries rises dramatically, from the current $1,594 to $7,000-$9,000, the rate of migration to Europe will not decrease. And if rates of migration remain at crisis levels, Germany – and the rest of the European governments – may fail to see the benefit of pouring more aid money into Africa.

Xaviera Gitau was an intern with the Atlantic Council’s Africa Center.

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]]> https://www.atlanticcouncil.org/blogs/africasource/doubling-down-on-africa-s-trafficking-problem/ Thu, 17 Aug 2017 19:50:12 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/doubling-down-on-africa-s-trafficking-problem/ Across Africa, trafficking is on the rise. Boko Haram’s kidnapping and sale of some of the 276 Chibok schoolgirls into slavery, Guinea-Bissau regressing into a “narco state,” and rebels loyal to the Mozambican National Resistance using poaching to sustain their fledgling movement are several examples in recent memory. These crimes are not isolated incidents. Rather, […]

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]]> Across Africa, trafficking is on the rise. Boko Haram’s kidnapping and sale of some of the 276 Chibok schoolgirls into slavery, Guinea-Bissau regressing into a “narco state,” and rebels loyal to the Mozambican National Resistance using poaching to sustain their fledgling movement are several examples in recent memory. These crimes are not isolated incidents. Rather, they all concern conflict, security, and governance and unite under a single banner: human, drug, and wildlife trafficking that is thriving off—and promoting—instability in Africa.

A new Atlantic Council report draws attention to illicit trafficking’s lofty profits. They make up part of the $50 billion—just slightly over Tanzania’s gross domestic product (GDP) in 2016—that African governments lose in illicit financial flows per year. Trafficking far outpaces the earning potential of local security forces and law enforcement, sowing the seeds of corruption and undermining efforts to eliminate bribery and illicit trading. The same report notes that both terrorist groups and organized crime syndicates are accruing substantial profit from trafficking and using those profits to spoil peace efforts and perpetuate insecurity in their respective regions.

Broadly speaking, progress in eliminating human trafficking is not promising. The global human trafficking problem has risen to the forefront of policy conversations, as the world has seen over 1 million refugees and migrants flee conflict zones and attempt to cross the Mediterranean since 2015. Hundreds of thousands of people enter Europe illegally every year, often departing from Libya’s coast, where ungoverned spaces have allowed brutal human traffickers and smugglers to operate freely and with impunity. Despite greater engagement from Europe, weak governance in African countries means that African migrants, refugees, and asylum seekers are not well protected by their own governments—twelve African countries are on Tier 3 of the US’ Trafficking Victims Protection Act, meaning they do not meet the minimum standards to eliminate trafficking and are not making efforts to do so.

In the mid-2000s, Guinea-Bissau became the world’s first “narco-state,” or a country whose economy is dependent entirely on the illicit drug trade. In 2012, the United States estimated that 30 tons of cocaine pass through Guinea-Bissau per year, accounting for almost 13 percent of the country’s GDP. The drug trade was a key driver of corruption in Guinea-Bissau, as government officials at the highest levels have become involved in the movement of illicit drugs. In a show of the problem’s severity, the United States went as far as indicting Guinea-Bissau’s army chief of staff and its former navy chief for facilitating the transport of cocaine into the United States. Unfortunately, the illegal drug trade is not isolated to Guinea-Bissau or even West Africa—the Tanzanian archipelago of Zanzibar has become a major mid-point in the rising global heroin trade between Afghanistan and greater Europe. This has had domestic implications on the island, with an increase in local heroin abuse likely stemming from the greater supply in-country.

The trafficking of wildlife products, estimated to be worth at least $19 billion per year globally, is not merely an environmental or conservation concern. It entails both a loss of conservation-based revenues for economies that depend on tourism and an increase in profits for criminal groups facilitating this illicit trade, both of which are fueling instability—directly and indirectly— on the continent. According to a new report by  the Enough Project, elephant ivory sells for up to $250 per kilogram on the Ugandan black market; in 2013, rhino horns in Vietnam and China sold for upwards of $80,000 per kilogram. The math explains the appeal of poaching—just one illicit transaction could accrue such profits that a poacher could live comfortably for years. Poachers are also often better armed, better organized, and more efficient than park rangers detailed to deter poaching, and linkages between organized crime syndicates and terrorist groups provide significant arms and infrastructure support that anti-poaching officials just do not have. Punishment for poaching and wildlife trafficking across the continent is generally weak in practice, with offenders being released without charges or forced to pay small fines relative to damage done.

There is increasing recognition that trafficking fuels conflicts and undermines peace efforts. The Obama Administration recognized this in its 2012 US Strategy Toward Sub-Saharan Africa, calling the illegal wildlife trade “an international crisis.” In the past, the United States has invested in building partner capacity by conducting anti-poaching training exercises for Gabonese park rangers. These same rangers went on to stop a heavily armed gang of poachers from killing forest elephants in 2013. That training cost $78,000 and is an example of how the United States can spend a moderate sum and create sustained anti-poaching abilities in our partner’s militaries. Several non-governmental foundations, including the Clinton Global Initiative, have also created anti-poaching and conservation programs.

Although promising, private philanthropy cannot fill the void left by poor governance that enables trafficking—but neither can the United States alone. With the many issues facing African governments today, states cannot afford to put trafficking on the back burner behind “traditional” security concerns. While there is no cure-all in the short term, governments can start by adhering to standards outlined in the Trafficking Victims Protection Act, such as criminalizing human trafficking and enacting harsh punishments for human traffickers. Creating—and enforcing—harsh penalties for trafficking drugs and wildlife products will change the status quo of impunity for poachers and traffickers and raise the risk of committing those crimes. Looking ahead, there will be no substitute for job creation and income generation, which would dissuade people from turning to trafficking for income and reduce the supply of trafficked individuals by providing better economic opportunities.

Liviya David was an intern with the Africa Center. 

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]]> https://www.atlanticcouncil.org/blogs/africasource/anthrax-to-zika-the-lurking-threat-of-outbreaks-and-bioterrorism-in-africa/ Wed, 19 Jul 2017 13:36:23 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/anthrax-to-zika-the-lurking-threat-of-outbreaks-and-bioterrorism-in-africa/ The global HIV/AIDS epidemic and the 2014 West Africa Ebola outbreak varied in length, number of lives lost, and geographic areas affected. However, both posed national security risks to the United States, and both therefore prompted large-scale US government responses: the President’s Emergency Plan for AIDS Relief (PEPFAR) and Operation United Assistance in Liberia, respectively. […]

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]]> The global HIV/AIDS epidemic and the 2014 West Africa Ebola outbreak varied in length, number of lives lost, and geographic areas affected. However, both posed national security risks to the United States, and both therefore prompted large-scale US government responses: the President’s Emergency Plan for AIDS Relief (PEPFAR) and Operation United Assistance in Liberia, respectively. Today, the United States is confronting these kinds of public health crises as well as a score of terrorist threats, and it is possible that the two problems could merge as terrorists seek to use bioterrorism to achieve their goals. US national security has traditionally focused on security’s “hard” elements—terrorism, state collapse, and crime. But public health threats—whether introduced deliberately through bioterrorism or emerging from natural causes as the 2014 Ebola outbreak did—also pose a significant threat to the homeland and thus deserve to be prioritized by the United States.

World leaders are increasingly attuned to the potentially disastrous consequences of the unchecked spread of disease, which, in addition to human suffering, can cause political unrest and long-term economic downturn. A combination of governance issues, fragile health systems, urbanization and population growth, porous borders, and frequent migration could make Africa ground zero for the emergence of such public health threats. Three of the six Center for Disease Control’s “category A” bioterrorism agents—considered the most lethal and difficult-to-stop diseases, including Viral Hemorrhagic Fevers like Ebola—already exist on the continent. A new Atlantic Council report argues that the United States should be more worried about health threats emerging from Africa, particularly as an increasingly interconnected world makes it easier than ever for disease to spread across oceans and borders. The 2014 Ebola outbreak, for example, killed over eleven thousand people in six countries in just twenty-one months and could have killed many more but for vigorous international and local efforts to contain the virus.

During a disease outbreak, air travel from Africa’s densely populated urban areas could prove disastrous for the United States. Forecasts show that Africa’s total air traffic will grow at a rate above 6 percent for the next two years, slightly above the global average. With 951,000 Americans traveling to Africa in 2015 (up from 663,000 in 2006), 420,000 African visitors to the US in 2015, and over 2 million Africa-born people living in the United States, strong diasporic ties and tourism escalate the risk of uncontained spread of an illness. This issue was of particular concern to the United States during the 2014 Ebola outbreak and even sparked calls from some Americans to terminate all air links with West Africa.

Closing America’s borders proved unfeasible, however, as there were no direct flights from Ebola-affected countries to the US and no easy means of ensuring that passengers from those countries could not simply board another airline’s flight in a European transit hub. To contain the disease, United States executed Operation United Assistance (OUA) in Liberia, the first ever US military operation focused on disease-driven humanitarian assistance abroad. Before OUA launched, the World Health Organization forecast that there would be thousands of new Ebola cases per week in the region, with regional air travel and under-prepared and overwhelmed healthcare workers and family caretakers facilitating the disease’s spread. The launch of a military operation highlighted US seriousness in responding to this threat. When cases of Ebola were diagnosed in New York City and Dallas via travel from West Africa, it sparked a media frenzy. Multilateral institutions also felt a need to respond—the United Nations Mission for Ebola Emergency Response (UNMEER), authorized in September 2014, was the first ever UN mission confronting a global health crisis. Given the likelihood of another epidemic, it is unlikely to be the last.

Though Operation United Assistance rapidly and successfully shored up infrastructure and shortages of personnel, the mission was ill-equipped to respond to an urban outbreak of Ebola, a disease which had previously been contained in rural areas. In the dense slums of Monrovia, the virus spread with unprecedented speed. The United States cannot afford to be caught flat-footed when the epidemic occurs and must plan for an increasingly urbanized Africa in its future measures. As Africans migrate to cities in ever-larger numbers, they mostly will be absorbed into the already-densely populated informal settlements (or “slums”). Strong urbanization trends also point to an increase in the number of Africa’s megacities, potentially growing to six by 2030. In urban settings, infected persons without symptoms can pass a disease easily and quickly to others, making typical means of epidemic control more difficult to fulfill.

Terror groups seeking to carry out attacks may turn to utilizing disease to their advantage. Diseases do not respect borders, and there is potential for a bioterrorist attack to affect—or emanate from—Africa. While far less common than conventional terrorism, the 2001 anthrax attacks in the United States and the 1995 Tokyo sarin gas attacks are recent and deadly examples of bioterrorism. Of particular concern is Boko Haram’s relationship with, and mirroring of, al-Qaeda in the Islamic Maghreb, which reportedly has experimented with chemical or biological weapons. During the Ebola outbreak, national security analysts were increasingly worried about a weaponized version of Ebola, especially one that could spread via passengers on transatlantic flights. Luckily, while the threat does exist, it does not appear imminent. There are major obstacles to achieving a bioterror attack, namely the massive amounts of space and supplies needed and high levels of organization that even the more sophisticated groups do not have.

US investment in health systems’ resiliency across the African continent both saves millions of lives per year and protects US citizens in the long run. Presidents Bush and Obama acknowledged these facts in the creations of PEPFAR and OUA, respectively. Recognizing, the lack of available global guidance on countering the HIV/AIDS epidemic, PEPFAR addressed the national security issues presented by a high prevalence of HIV and AIDS in military personnel and in many African countries’ working populations. Via PEPFAR, the United States has positioned itself as the global leader in responding to the HIV/AIDS crisis. The program boasts major successes, giving 11.5 million HIV-positive people access to antiretroviral treatment, 1.1 million of those being children. This number is up from fifty thousand prior to PEPFAR’s inception. In Malawi, Zambia, and Zimbabwe, the epidemic is no longer growing among adults and babies, quickly approaching the UNAIDS target goals. Moreover, the program has enjoyed bipartisan support and lends the United States an unprecedented degree of good will and moral leadership in Africa, while simultaneously promoting US interests abroad.

Critics of PEPFAR note that the program is expensive and unsustainable, costing US taxpayers over $70 billion since its conception, and that it does little to strengthen existing health systems in target countries. To address this criticism, the United States should focus specifically on capacity building—training doctors and other health professionals, developing healthcare infrastructures, and strengthening early warning mechanisms—with the end goal that PEPFAR eventually will be unnecessary. In lockstep with the development of stronger health systems is the bolstering of governance capabilities—which not only monitor borders and ensure that malevolent actors do not get their hands on potential bio-agents, but also instill public trust in the government to respond to a crisis. While this supports countries in reaching certain development goals, it also ensures US security by countering public health threats that could negatively impact US interests in Africa and its population at home.

Liviya David is a Project Assistant in the Atlantic Council’s Africa Center. Follow her on Twitter @LiviyaDavid.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/roundtable-with-louis-mazel/ Tue, 27 Jun 2017 20:40:38 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/roundtable-with-louis-mazel/ On Tuesday, June 27, the Atlantic Council’s Africa Center hosted a roundtable discussion with Mr. Louis Mazel, former chargé d’affaires at the embassy of the United States to the State of Eritrea. In his remarks, Mazel stressed the importance of Eritrea’s extensive coastline and strategic location in the Horn of Africa. He also discussed Eritrea’s […]

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]]> On Tuesday, June 27, the Atlantic Council’s Africa Center hosted a roundtable discussion with Mr. Louis Mazel, former chargé d’affaires at the embassy of the United States to the State of Eritrea.

In his remarks, Mazel stressed the importance of Eritrea’s extensive coastline and strategic location in the Horn of Africa. He also discussed Eritrea’s potential contribution to counterterrorism measures in the region.

Former Assistant Secretary of State for African Affairs and Africa Center Senior Fellow Ms. Constance Berry Newman introduced Mazel and Amb. Princeton Lyman, former assistant secretary of state for African affairs and senior adviser to the President at the United States Institute of Peace, moderated the ensuing discussion, which included current and former US government officials and representatives from the non-profit and private sectors.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/why-africa-matters-to-us-national-security-2/ Thu, 25 May 2017 20:11:50 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/why-africa-matters-to-us-national-security-2/ On May 25, 2017, on the occasion of the fifty-fourth celebration of Africa Day, the Atlantic Council’s Africa Center launched its newest report, “Why Africa Matters to US National Security.” The author, former Special Assistant to the President and Senior Director for African Affairs at the National Security Council Grant Harris, argues that a re-assessment […]

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]]> On May 25, 2017, on the occasion of the fifty-fourth celebration of Africa Day, the Atlantic Council’s Africa Center launched its newest report, “Why Africa Matters to US National Security.” The author, former Special Assistant to the President and Senior Director for African Affairs at the National Security Council Grant Harris, argues that a re-assessment of Africa’s strategic importance to US national security is overdue.

Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham welcomed attendees, and Africa Center Director for Programs and Studies and Deputy Director Bronwyn Bruton set the stage for Harris’s remarks, which she noted were especially timely given that a new administration has settled into Washington.

In his remarks, Harris noted that Africa affects US national security in three different ways. The first is transnational threats—the traditional lens of hard security—and the importance of preventing terror groups like Boko Haram, al-Shabaab, and al-Qaeda in the Islamic Maghreb from metastasizing in ungoverned or poorly governed parts of the continent. The second is economic prosperity:  Africa has the potential to become a key destination for American goods and services, but without policies that support economic prosperity, youth unemployment and mass migration will grow and derail both economic and social progress, and will surely undermine US counterterror efforts. Third, Harris noted the importance of African cooperation in maintaining US global leadership, because as a voting bloc, the African nations have the power to promote or impede US initiatives and priorities at the United Nations and in other multilateral fora.

Karen Attiah, Global Opinions Editor at the Washington Post, moderated a discussion with Harris following his remarks. Harris and Attiah also took questions from the audience, which consisted of representatives from the US and other government as well as the private sector.

This report is part of a partnership between the Atlantic Council’s Africa Center and the OCP Policy Center and is made possible by generous support from the OCP Foundation. 

Download the report here. Watch our coverage of the event here. 

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]]> https://www.atlanticcouncil.org/commentary/event-recap/roundtable-with-angolan-defense-minister/ Thu, 18 May 2017 21:10:32 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/roundtable-with-angolan-defense-minister/ On Thursday, May 18, the Atlantic Council’s Africa Center hosted a roundtable discussion with H.E. João Lourenço, Minister of National Defense of the Republic of Angola.  Lourenço traveled to Washington this week on behalf of President José Eduardo dos Santos to sign a historic Memorandum of Understanding with the United States, represented by US Secretary […]

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]]> On Thursday, May 18, the Atlantic Council’s Africa Center hosted a roundtable discussion with H.E. João Lourenço, Minister of National Defense of the Republic of Angola. 

Lourenço traveled to Washington this week on behalf of President José Eduardo dos Santos to sign a historic Memorandum of Understanding with the United States, represented by US Secretary of Defense Gen James Mattis, USMC (Ret.). The agreement, which was signed on Wednesday, May 17, will deepen bilateral engagement on a variety of security-related matters.

In his remarks, Lourenço underscored the substantial progress Angola has made over the last decade to put its economy on more stable and diversified footing and to tackle corruption. He also discussed Angola’s role in peace and security initiatives in the Great Lakes region, including the ongoing conflict in many provinces of the Democratic Republic of the Congo.

Lourenço was recently named the candidate for the governing Popular Movement for the Liberation of Angola (MPLA) in this year’s presidential elections, scheduled to take place this August. The upcoming elections mark a historic transition, as the longtime president will step down after thirty-eight years in office. In his remarks, he quoted the motto of the MPLA’s campaign when describing his vision for Angola: Melhorar o que está bem, corrigir o que está mal (“Improve what is going well, correct what is bad”).

The Angolan delegation also included H.E. Manuel Augusto, Secretary of State for External Relations, and H.E. Agostinho Tavares da Silva Neto, Ambassador of the Republic of Angola to the United States. Also in attendance and participating in the discussion were The Hon. Helen La Lime, US Ambassador to the Republic of Angola; Lt. Col. Rudolph Atallah, USAF (Ret.), Senior Director for African Affairs-designate, National Security Council; Peter Barlerin, Acting Assistant Secretary of State for African Affairs; and Gen James L. Jones, Jr., USMC (Ret.), Chairman of the Atlantic Council’s Brent Scowcroft Center on International Security and former National Security Advisor to President Barack Obama.

Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham moderated the discussion.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/roundtable-on-the-central-african-republic/ Tue, 16 May 2017 19:40:00 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/roundtable-on-the-central-african-republic/ On Tuesday, May 16, the Atlantic Council’s Africa Center, in partnership with the Enough Project, hosted Nathalia Dukhan, Field Researcher and Analyst for the Enough Project, for a private roundtable discussion on the current situation in the Central African Republic (CAR). CAR has experienced waves of sectarian violence since 2013, destabilizing an already weak state […]

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]]> On Tuesday, May 16, the Atlantic Council’s Africa Center, in partnership with the Enough Project, hosted Nathalia Dukhan, Field Researcher and Analyst for the Enough Project, for a private roundtable discussion on the current situation in the Central African Republic (CAR).

CAR has experienced waves of sectarian violence since 2013, destabilizing an already weak state and displacing thousands of people. Durkhan discussed her research on the status of the numerous armed factions operating across the country, the various landholdings they occupy, and the barriers they pose to reintegration and reconciliation efforts.

The discussion that followed focused on regional dynamics that influence the conflict in CAR, policy instruments that could be used to place pressure on the leaders of armed groups, and the ability of humanitarian organizations to operate and deliver fundamental aid in the country. Africa Center Deputy Director Bronwyn Bruton moderated the discussion.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/roundtable-with-un-special-representative-for-somalia-michael-keating/ Wed, 19 Apr 2017 18:56:20 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/roundtable-with-un-special-representative-for-somalia-michael-keating/ On Wednesday, April 19, the Atlantic Council’s Africa Center hosted an expert’s roundtable with Michael Keating, special representative of the UN secretary-general for Somalia and head of the United Nations Assistance Mission in Somalia. Somalia recently concluded its presidential selection process, and now faces the challenge of completing a constitutional review and finalizing details for […]

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]]> On Wednesday, April 19, the Atlantic Council’s Africa Center hosted an expert’s roundtable with Michael Keating, special representative of the UN secretary-general for Somalia and head of the United Nations Assistance Mission in Somalia.

Somalia recently concluded its presidential selection process, and now faces the challenge of completing a constitutional review and finalizing details for the country’s re-constituted security forces. All this takes place amid renewed international conversations about the status of the African Union-led peacekeeping mission (AMISOM), a key player in the fight against al-Shabaab.

In his remarks, Keating detailed the UN’s role in supporting Somali and AU security forces, and in providing humanitarian assistance to the millions of Somalis in need of emergency food aid. He also commended the recent agreement between the Somali federal government and  the country’s federal member states to form a National Security Council and undertake a series of security-related reforms.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/israel-in-africa-a-roundtable-with-african-ambassadors/ Tue, 28 Mar 2017 20:16:45 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/israel-in-africa-a-roundtable-with-african-ambassadors/ On Tuesday, March 28, the Atlantic Council’s Africa Center hosted a luncheon for African ambassadors with an Israeli delegation, including Ambassador Jeremy Issacharoff, vice director general and head of multilateral affairs directorate for the Israeli Ministry of Foreign Affairs, and Ambassador Gil Haskel, deputy director general of the foreign ministry and head of Israel’s international […]

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]]> On Tuesday, March 28, the Atlantic Council’s Africa Center hosted a luncheon for African ambassadors with an Israeli delegation, including Ambassador Jeremy Issacharoff, vice director general and head of multilateral affairs directorate for the Israeli Ministry of Foreign Affairs, and Ambassador Gil Haskel, deputy director general of the foreign ministry and head of Israel’s international development agency, MASHAV.

In his opening remarks, Issacharoff detailed Israel’s deep and expanding commitment to Africa, which spans diplomatic, security, and economic interests. In 2016, Israeli Prime Minister Benjamin Netanyahu embarked on a four-country tour of Africa, the first such trip for an Israeli head of state in some three decades. In 2017, Togo will host the inaugural Israel-Africa Summit in Lomé.

Haskel detailed four specific areas of concern to MASHAV in Africa: water, food, and border security, as well as human security. Israel’s own experience with each challenge has led to home-grown, innovative, and sustainable solutions—and Haskel noted Israel’s interest in sharing that technology with its African partners. As Haskel noted, Africa’s prosperity is very much tied to the rest of the world.

Participants at the roundtable included His Excellency Miguel Ntutumu Evuna Andeme, ambassador of the Republic of Equatorial Guinea; His Excellency Daouda Diabaté, ambassador of the Republic of Côte d’Ivoire; His Excellency Seydou Kaboré, ambassador of Burkina Faso; His Excellency Ammon Mutembwa, ambassador of the Republic of Zimbabwe; His Excellency Hector Posset, ambassador of the Republic of Benin; His Excellency Carlos Wahnon Veiga, ambassador of the Republic of Cabo Verde; Mr. Hakeem Balogun, chargé d’affaires of the Embassy of the Federal Republic of Nigeria; and Mr. Jeff Dowana, deputy chief of mission of the Embassy of the Republic of Liberia.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/africa-s-place-on-the-world-stage-a-public-address-by-assistant-secretary-of-state-linda-thomas-greenfield/ Fri, 10 Mar 2017 16:14:27 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/africa-s-place-on-the-world-stage-a-public-address-by-assistant-secretary-of-state-linda-thomas-greenfield/ On Thursday, March 9, the Atlantic Council’s Africa Center hosted a public address by Assistant Secretary of State for African Affairs the Honorable Linda Thomas-Greenfield on the future of US and global relations with Africa. Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham welcomed participants and introduced Thomas-Greenfield, who will leave […]

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On Thursday, March 9, the Atlantic Council’s Africa Center hosted a public address by Assistant Secretary of State for African Affairs the Honorable Linda Thomas-Greenfield on the future of US and global relations with Africa.

Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham welcomed participants and introduced Thomas-Greenfield, who will leave her post at the head of the State Department’s Bureau of African Affairs on March 10 after a thirty-five-year career in the US Foreign Service.

Read her remarks here:

 

Thomas-Greenfield opened by noting the great progress she has witnessed since she began her career in Liberia—where she was also ambassador from 2008 to 2012—nearly four decades ago. She remarked on the progress made by countries like Ghana and Nigeria, which emerged from military dictatorships to become examples of vibrant democracies, as well as broader gains in economic growth, health outcomes, and education across the continent.

In addition to this progress, Thomas-Greenfield noted five key, and inter-related, challenges for the continent in the coming decades: the youth bulge; boosting and sustaining economic growth; supporting democratic governance; ensuring security; and meeting ongoing humanitarian needs.

Thomas-Greenfield concluded her prepared remarks by underlining the importance of a strong US-Africa relationship to tackle the problems of the future while securing progress of the past.

In a dialogue with Pham at the start of the question-and-answer period, Thomas-Greenfield characterized the US-Africa Leaders Summit in August 2014 as the top achievement, among several, of her tenure as assistant secretary. She also described the outbreak of civil war in South Sudan in December 2013 as the nadir of the period, lamenting the “man-made” famine that now threatens millions of people in Africa’s newest state as a result of the continuing conflict.

The program was followed by a reception in honor of the outgoing assistant secretary.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/roundtable-discussion-with-nigerian-army-delegation/ Fri, 17 Feb 2017 19:26:00 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/roundtable-discussion-with-nigerian-army-delegation/ On Thursday, February 16, the Atlantic Council’s Africa Center hosted a roundtable discussion on the status of the fight against Boko Haram with Major General Johnny Hamakim, director general of the Nigerian Army Resource Centre; Major General David Ahmadu, chief of training and operations for the Nigerian Army; and Brigadier General Sadiq Ndalolo, the Nigerian […]

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]]> On Thursday, February 16, the Atlantic Council’s Africa Center hosted a roundtable discussion on the status of the fight against Boko Haram with Major General Johnny Hamakim, director general of the Nigerian Army Resource Centre; Major General David Ahmadu, chief of training and operations for the Nigerian Army; and Brigadier General Sadiq Ndalolo, the Nigerian Army Resource Centre’s director of international alliances and linkages.

Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham welcomed participants and introduced the speakers.

Hamakim remarked on Boko Haram’s continued threat to Nigeria’s security and emphasized the importance of US security assistance in securing the Nigerian military’s tenuous gains. Ahmadu then gave an overview of multiple recent Nigerian army operations, including Operation Gama Aiki, a joint offensive operation with Cameroon, Chad, and Niger, and rescue operations, including the capture of Boko Haram’s “Camp Zero,” which led to the liberation of more than 30,300 abductees. Despite these successes, the panel remarked on Boko Haram’s ability to cross borders to avoid capture, and the group’s worrying employment of children as suicide bombers. They noted serious equipment gaps and deficiencies that they hoped the United States could fill.

The discussion that followed focused on how to provide basic services to communities liberated from Boko Haram control, the linkage between Boko Haram and the Islamic State, the impact of Boko Haram’s ideology on its recruitment practices, and the need for further equipment and services from the United States. Some participants also voiced concerns about reported instances of human rights violations.

Among those in attendance were General Carter Ham, USA (ret.), former commander of US Africa Command; the Honorable Dan Mozena, senior coordinator on Boko Haram for the US Department of State; and Amanda Dory, deputy assistant secretary of African affairs for the US Department of Defense. Other participants in the discussion included current and former US government officials including former US Ambassadors to Nigeria, John Campbell and Robin R. Sanders, as well as representatives of US academic and civil society organizations.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/roundtable-discussion-with-moise-katumbi/ Thu, 16 Feb 2017 16:25:53 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/roundtable-discussion-with-moise-katumbi/ On Thursday, February 16, the Atlantic Council’s Africa Center hosted Moïse Katumbi, joint opposition candidate for the presidency of the Democratic Republic of the Congo (DRC) and former governor of Katanga Province, for a roundtable discussion on the evolving political situation in the country. Vice President and Africa Center Director J. Peter Pham welcomed participants […]

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]]> On Thursday, February 16, the Atlantic Council’s Africa Center hosted Moïse Katumbi, joint opposition candidate for the presidency of the Democratic Republic of the Congo (DRC) and former governor of Katanga Province, for a roundtable discussion on the evolving political situation in the country.

Vice President and Africa Center Director J. Peter Pham welcomed participants and introduced Katumbi.

In his remarks, Katumbi provided an update on his planned return to the DRC in the coming days, in the wake of a CENCO review of his conviction on fraud charges largely viewed as political inference in the justice system. Katumbi expressed that his work is best served with the Congolese people and stated that he will comply with CENCO’s decision regardless of the outcome. He laid out his hope for progress in the Congolese democratic process and looks forward to free and fair elections and the first peaceful, democratic transition of power in DRC. According to Katumbi, the CENCO agreement provides Kabila with legitimacy and any further breaches of the agreement would result in the loss of internal authority for the president. Finally, he stated that opposition has abided by the terms of the CENCO agreement by providing Kabila with a candidate for prime minister. Katumbi called for president Kabila and his government to do the same.

Read his remarks here: 

 

The discussion that followed focused on the choice of the timing of Governor Katumbi’s return, his security upon arrival in the country and the pending decision on his conviction, recent estimates on the inflated costs of the next election compared to those in years past, the role of the bishops and the international community in enforcing the CENCO agreement, and benchmarks for progress for the Kabila government on abiding by its terms.

Among those in attendance were Ambassador Herman Cohen, former Assistant Secretary of State for African Affairs; Lieutenant General William Ward, former commander of AFRICOM; and Ambassador William Garvelink, former US Ambassador to the DRC. Other participations in the discussion included current and former US government officials, as well as representatives of US academic and civil society organizations.

Before the event, Africa Center Assistant Director Julian Wyss interviewed Katumbi on Facebook Live:

Moïse Katumbi parle de son retour en RDC

Julian Wyss, directeur adjoint du centre africain à l’Atlantic Council, parle avec Gouverneur Moïse Katumbi de son retour en RDC, l’état de l’accord politique Saint Sylvestre et la situation politique dans le pays.

Posted by Atlantic Council on Thursday, February 16, 2017

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]]> https://www.atlanticcouncil.org/commentary/event-recap/drc-s-cenco-agreement-a-foundation-for-real-political-transition-2/ Wed, 18 Jan 2017 22:03:55 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/drc-s-cenco-agreement-a-foundation-for-real-political-transition-2/ On Wednesday, January 18, in partnership with the Enough Project, the Atlantic Council’s Africa Center hosted a discussion on the political situation in the Democratic Republic of the Congo (DRC) and the impact of the recent political deal brokered by the National Episcopal Conference of the Congo (CENCO). Discussants included Atlantic Council Vice President and […]

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On Wednesday, January 18, in partnership with the Enough Project, the Atlantic Council’s Africa Center hosted a discussion on the political situation in the Democratic Republic of the Congo (DRC) and the impact of the recent political deal brokered by the National Episcopal Conference of the Congo (CENCO). Discussants included Atlantic Council Vice President and Africa Center Director J. Peter Pham; Pierre Englebert, professor of international affairs and politics at Pomona College, and author of Congo Blues: Scoring Kabila’s Rule; and Sasha Lezhnev, associate director for policy at the Enough Project.

Africa Center Deputy Director and Director for Research and Programs Bronwyn Bruton welcomed the audience, introduced the discussants, and, following their brief remarks, moderated the discussion.

The discussion focused on the content of the CENCO agreement, the likelihood that the agreement would be lead to a political transition in the country, what the international community, and specifically the incoming US administration, should do to encourage implementation of the agreement, and what comes next for the country if the deal were to fall through.

Among those in attendance were Ambassador Herman Cohen, former Assistant Secretary of State for African Affairs; Ambassador James Swan, former US Ambassador to the Democratic Republic of the Congo; Ambassador Laurence Wohlers, acting head of the Office of the Special Envoy for the Great Lakes Region and the Democratic Republic of the Congo; and Tony Gambino, former DRC mission director at the US Agency for International Development.

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]]> https://www.atlanticcouncil.org/blogs/africasource/africa-s-economic-prospects-in-2017-ten-countries-to-watch/ Mon, 09 Jan 2017 15:13:22 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/africa-s-economic-prospects-in-2017-ten-countries-to-watch/ The continued failure of commodity prices to recover significantly and the global slowdown of economic growth, especially in China and other emerging markets, made 2016 a tumultuous year for many African economies, indeed, “the worst year for average economic growth” in the region in over twenty years, according to a report from Ernst & Young. […]

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]]> The continued failure of commodity prices to recover significantly and the global slowdown of economic growth, especially in China and other emerging markets, made 2016 a tumultuous year for many African economies, indeed, “the worst year for average economic growth” in the region in over twenty years, according to a report from Ernst & Young. Compounding these trends, varying dynamics within the continent’s biggest economies meant that Nigeria slipped into recession while South Africa barely lurched forward with anemic 0.2 percent growth in the third quarter. Looking ahead, those countries which have diversified their economies, focused on energy infrastructure, and promoted industrialization will be best poised to overcome the current challenges and succeed in 2017.

As Aubrey Hruby and I documented in a report last year, those countries that rely heavily on the export of one or two resources to drive their economic growth have suffered as a result of the emerging market downturn and its knock-on effects, both in terms of demand for their commodities and in availability of financing for their major infrastructure and other development projects.

Nigeria, Africa’s most populous country and one which only emerged as the continent’s biggest economy three years ago, is bedeviled not only by low petroleum prices, but decreased production due to attacks by the militants in the oil-producing Niger Delta region—at one point last year, the amount of crude being pumped nearly reached the lowest point in three decades. The rest of the economy in the West African giant essentially stagnated, hammered both by the government’s maladroit management of the currency float and by the failure of President Muhammadu Buhari’s administration to make much headway in improving the country’s overall business climate, as witnessed by Nigeria’s abysmal 169^th place ranking among 190 countries analyzed in the World Bank’s Doing Business 2017 report. 

Angola nudged ahead of Nigeria early last year to become Africa’s biggest oil producer, thanks in part to the latter country’s problems with its militants, but the distinction means less in a world of depressed hydrocarbon prices. With inflation projected to have been around 45 percent in 2016, while the country’s currency, the kwanza, lost nearly 20 percent of its value during the same period, the country’s grim prospects heading into the new year add to the uncertainty with the announced plans of longtime President José Eduardo dos Santos to retire later this year (elections are scheduled for August).

Similarly, Algeria’s heavy dependence on energy exports caused the growth to slow down to an estimated 3.6 percent in 2016 with the World Bank estimating it will plunge further in the coming year. Low oil prices will continue to weigh on government finances as inflation and unemployment both increase; the dinar has nominally depreciated 20 percent over the last two years. The 2017 budget signed by the country’s octogenarian President Abdelaziz Bouteflika in late December raises taxes to compensate for declining revenues from hydrocarbons, signaling that the heavy public spending that enabled the regime to weather the so-called Arab Spring is no longer an option.

While South Africa was spared an end-of-the-year downgrade by Standard & Poor’s of its sovereign credit—it remains at BBB-, one notch above “junk” status—Moody’s opened 2017 by placing the country on a downgrade review, a step which serves notice to investors, some of whom have fiduciary obligations barring them from doing business in places branded with “junk” status. Moreover, the numerous corruption scandals surrounding President Jacob Zuma have divided the ruling African National Congress, already reeling from unprecedented rebuff in the August 2016 local government and municipal elections, adding to the political volatility that undermines investor confidence just as the country regained its title as Africa’s largest economy.

Despite its wealth of natural resources, both in terms of extractives and in potential for renewable energy, to say nothing of the extraordinary human capital in its people, the Democratic Republic of the Congo will struggle economically in the coming year. Notwithstanding a rickety last-minute political deal pushed by the country’s influential Roman Catholic bishops that is supposed to lead to presidential elections before the end of 2017, President Joseph Kabila’s decision to violate the constitution and hold on to power despite the December 19, 2016, expiration of his final term casts a long shadow over the fourth most-populous country on the African continent and the largest country by area in Sub-Saharan Africa. As Sasha Lezhnev of the Enough Project pointed out recently, the political crisis is not without its connection to economic woes, past and present: “Corruption has increased and prices for the key commodities that Congo produces have plummeted in recent years, e.g. with the price of copper going down by nearly half over the past five years. Average Congolese people are bearing the brunt of this. The price of some foodstuffs is up as high as 80 percent; the Congolese Franc has lost 27 percent of its value in 2016; inflation has increased to nearly 6 percent; Central Bank foreign exchange reserves have decreased by nearly half (45 percent) over the past two years. The Congolese government is also slashing state services, with budget cuts of 22 percent and a further 14 percent, including a 90 percent cut in spending on healthcare equipment.”

If some of the bigger and resource-dependent economies in Africa are in the doldrums, some of the continent’s medium-sized and more diversified economies will make interesting watching in the new year.

Côte d’Ivoire may well be Africa’s new economic powerhouse, with a diversified economy and growth in 2016 expected to hit 8.5 percent, the second-highest in the world. While there are occasional hiccups like the mutiny this past weekend by some soldiers left over from the country’s civil war a decade ago, by and large President Alassane Ouattara, an economist and former International Monetary Fund (IMF) director, is widely credited with sound macroeconomic management. Overwhelmingly reelected to a second and final four-year term in 2015, he has laid out an ambitious National Development Plan with major structural reforms to consolidate the private sector as well as to achieve inclusive growth. The IMF’s most recent regional economic outlook projects Côte d’Ivoire’s real gross domestic product (GDP) to continue growing at roughly 8 percent annually over the next few years, while the median for Sub-Saharan Africa will be just shy of 4.5 percent. According to data from the Ivorian government’s Center for the Promotion of Investments in Côte d’Ivoire (CEPICI), through in the first nine months of 2016, some 5,720 new enterprises were started in the country, many drawn by the business-friendly regulatory environment.

Fresh off hosting the 22^nd Conference of Parties (COP22) of the United Nations Framework Convention on Climate Change two months ago in Marrakech, Morocco continues to forge a role as an African—and, indeed, a global—leader on renewable energy. The kingdom, which is on track to meet more than 40 percent of its needs through renewable energy, primarily solar and wind, by 2020—an extraordinary turnaround given that just a few years ago the country was, according to the World Bank, the Middle East’s largest energy importer, depending on fossil fuels for over 97 percent of its energy. Moreover, in pursuit of the goal of making Morocco the commercial gateway to Africa as well as Africa’s bridge to Europe, King Mohammed VI has been busy implementing his strategy of making Africa the “top priority” of his foreign policy, with a string of official visits across Africa, including recent forays to Rwanda, Ethiopia, and Nigeria, that have resulted in agreements for multibillion-dollar cross-investments in the agriculture, energy, and financial sectors, as well as the historic announcement last month of a Moroccan-Nigerian joint venture to build a gas pipeline to connect the two countries that will eventually link up to Europe. 

Senegal has long been a bastion of political stability in West Africa, a reputation consolidated in 2016 when voters in a constitutional referendum not only reaffirmed the two-term limit on the presidency, but cut the term of office itself down to five years from the current seven years, as well as enacted a raft of other measures to further good governance. President Macky Sall’s Plan for an Emerging Senegal, crafted with help from McKinsey consultants, includes twenty-seven flagship projects and seventeen major reforms, encompassing diverse sectors ranging from agriculture to energy to education to health to financial services to tourism. The objective of all this is to increase the West African country’s productivity in order to grow its GDP, create jobs, and facilitate industrialization. According to the year-end update to Ernst & Young’s Africa Attractiveness Index, Senegal—along with Côte d’Ivoire, Ethiopia, Kenya, and Tanzania—is expected to continue growing in the high single digits in 2017.

One possible bump in Senegal’s road to the future is that the country was counting on a second Millennium Challenge Compact from the United States to help address regional obstacles to economic growth. The Millennium Challenge Corporation (MCC) board selected the country a year ago, but the Senegalese government’s December 2016 decision to only vote for, but to actively co-sponsor, United Nations Security Council Resolution 2334 on Israeli settlements not only in Judea and Samaria (the West Bank), but also in the Jewish Quarter of Jerusalem, may cause Congress to closely scrutinize of a major appropriation for Senegal like an MCC compact, given the broad bipartisan support in the House of Representatives last week—by a margin of 342 to 80 votes—for a measure condemning the UN resolution and the Obama administration’s abstention on it. 

A largely diversified economic base, Kenya has largely been resilient through the emerging markets downturn of the last year. While final numbers for 2016 are still being crunched, it looks like East Africa’s largest economy grew by at least the 5.9 percent forecasted by the World Bank and that may even approach the 6.8 percent growth the revised IMF prediction estimated in October. One of Kenya’s advantages has been its membership in the East African Community, which has evolved from a customs union to a common market and has long-term aspirations of a monetary union and a political federation. On the other hand, the country faces not-insignificant political, security, and economic uncertainty in 2017 with presidential, parliamentary, and local government elections scheduled for August; the ongoing threat posed by al-Shabaab terrorists operating out of neighboring Somalia (recall that 2016 began with more than 100 Kenyan soldiers killed when the al-Qaeda-linked militants overran a peacekeeping base in El Adde, Somalia); and yet-to-be-determined impact on private-sector credit following the signing last year by President Uhuru Kenyatta of legislation capping interest rates at 4 percent above the benchmark central bank rate.

If it can weather the political crises that have led to mass demonstrations and the declaration of a state of emergency in late 2016, Ethiopia will, according to IMF estimates, be positioned to overtake Kenya as East Africa’s largest economy sometime in the coming year, having posted 10.8 percent average annual growth over the last decade, before drought hit the core agricultural sector this year (and anti-government protests erupted). Nevertheless, investors continue to flock to there—some $500 million in new foreign direct investment entered in the last three months of 2016 and an additional $3.5 billion was being processed, according to one analysis—and its large internal market (Ethiopia is the 13^th most populous country in the world) and low labor costs make it an attractive location to manufacture fast-moving consumer goods. In addition, Ethiopia’s investment in hydropower—last month authorities inaugurated Africa’s tallest dam, the Gibe III dam on the Omo River, doubling the country’s electrical output—will not only give it a reliable source of energy, but provide electricity to the region, including Kenya, which has signed up to buy some of the power produced.   

African countries face many challenges in 2017, but, alongside these, there are the fundamentally positive dynamics of many of their economies, including a growing labor force, increased urbanization, and advances in technology, as I argued recently in a new Atlantic Council Strategy Paper, A Measured US Strategy for the New Africa. The 2016 Republican Party Platform affirmed: “We recognize Africa’s extraordinary potential. Both the United States and our many African allies will become stronger through investment, trade, and promotion of the democratic and free market principles that have brought prosperity around the world. We pledge to be the best partner of all African nations in their pursuit of economic freedom and human rights.” As a new US administration takes office in less than two weeks, it’s time to look for ways to fulfill that pledge so that American citizens and business can join their African counterparts in grasping the continent’s burgeoning opportunities.

J. Peter Pham is Vice President of the Atlantic Council and Director of its Africa Center. Follow the Africa Center on Twitter @ACAfricaCenter.

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]]> https://www.atlanticcouncil.org/commentary/event-recap/roundtable-discussion-with-noah-manyika-2/ Tue, 13 Dec 2016 18:51:56 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/roundtable-discussion-with-noah-manyika-2/ On Tuesday, November 29, the Atlantic Council’s Africa Center hosted Noah Manyika, convenor of the Build Zimbabwe Alliance, for a roundtable discussion on Zimbabwe’s opposition parties and the political landscape in the country ahead of the 2018 presidential elections. Africa Center Visiting Fellow Chloë McGrath welcomed participants, introduced Manyika, and moderated the discussion. In his […]

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]]> On Tuesday, November 29, the Atlantic Council’s Africa Center hosted Noah Manyika, convenor of the Build Zimbabwe Alliance, for a roundtable discussion on Zimbabwe’s opposition parties and the political landscape in the country ahead of the 2018 presidential elections.

Africa Center Visiting Fellow Chloë McGrath welcomed participants, introduced Manyika, and moderated the discussion.

In his remarks, Manyika focused on the need for political renewal in Zimbabwe, highlighting the need for opposition parties to unite around a common strategy if they are to provide a credible alternative to President Robert Mugabe’s Zimbabwe African National Union Patriotic Front (ZANU-PF) in the 2018 elections. Manyika emphasized the need to invest in viable candidates seeking to run for political office, particularly at the parliamentary level. Manyika explained that, regardless of the outcome of the ongoing factional battles within ZANU-PF, it is important for Zimbabwean citizens to focus on holding their leadership to account.

The discussion that followed focused largely on the importance of a united political opposition in the run up to the presidential election, as well as the concern about state-sanctioned violence against social movements gaining traction in the country.

Following the event McGrath interviewed Manyika and Munatsi Manyande, operations director of the Build Zimbabwe Alliance, on Facebook Live: 

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]]> https://www.atlanticcouncil.org/commentary/event-recap/a-measured-us-strategy-for-the-new-africa-3/ Tue, 06 Dec 2016 22:46:00 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/a-measured-us-strategy-for-the-new-africa-3/ On Tuesday, December 6, the Atlantic Council’s Africa Center, in coordination with the Brent Scowcroft Center’s Strategy Initiative, launched the latest Atlantic Council Strategy Paper, “A Measured US Strategy for the New Africa,” authored by Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham, with a foreword by General James L. Jones, […]

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On Tuesday, December 6, the Atlantic Council’s Africa Center, in coordination with the Brent Scowcroft Center’s Strategy Initiative, launched the latest Atlantic Council Strategy Paper, “A Measured US Strategy for the New Africa,” authored by Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham, with a foreword by General James L. Jones, Jr., USMC (Ret.), former National Security Advisor to President Barack Obama.

The report launched at an Atlantic Council panel discussion featuring Pham, Amanda J. Dory, deputy assistant secretary of defense for African affairs at the US Department of Defense, and GEN Carter F. Ham, USA (Ret.), former commander of US Africa Command.

In his overview of the report, Pham focused on Africa’s rising strategic importance to the United States and to the world as evidenced by both its burgeoning economic dynamism as well as the political and security challenges present there. As such, the incoming US administration would do well to prioritize engagement with African states and peoples.

Pham argues the next administration should focus on:

• Earned engagement: The United States should shift away from trying to pick the “right” winners in political disputes internal to African countries, and toward engaging those who prove themselves to be good bets. This approach puts the onus squarely on Africans themselves to create governance structures that are appropriate to their circumstances and whose legitimacy they accept, without prejudice from the United States or other outside actors. 
• More realistic expectations: For much of the history of US engagement in Africa, the United States has operated with overly optimistic notions of what African partners are capable of and willing to do. That must change. 
• Effective partners and partnerships: It is imperative that the United States develop “special” relationships with key African partners, as well as better coordinate strategy and operations on the continent with historical treaty allies like France and the United Kingdom. 
• Flexible structures: US diplomatic and foreign aid structures are inefficient and ill adapted to meet today’s realities, and should be reformed as much as possible to reflect political, security, and economic realities on the continent.

Dory and Ham joined for a panel discussion covering the principles laid out in the report and how they might be practically implemented. A lively question and answer session followed, in which several members of the African diaspora raised issues with US policy toward Africa in general and specific countries in particular. 

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]]> https://www.atlanticcouncil.org/in-depth-research-reports/report/a-measured-us-strategy-for-the-new-africa-2/ Tue, 06 Dec 2016 14:10:26 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/a-measured-us-strategy-for-the-new-africa-2/ Africa’s story is increasingly one of economic dynamism that is driven, in part, by political reform and improvements in governance. But, there are also very real security, humanitarian, and developmental challenges that remain to be confronted. The United States has a stake in helping to tackle these challenges, not least because it is in its own national interest to do so.

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]]> Download PDF

Africa’s story is increasingly one of economic dynamism that is driven, in part, by political reform and improvements in governance. But, there are also very real security, humanitarian, and developmental challenges that remain to be confronted. The United States has a stake in helping to tackle these challenges, not least because it is in its own national interest to do so.

To complicate matters, some African countries are still grappling with the conception of “statehood,” since, in many cases, the state was an imposition of European colonialism. In this seventh Atlantic Council Strategy Paper, Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham argues that the United States needs to modernize its relations with a changing Africa to best engage a new range of actors and circumstances.

The change of US administration in January offers a unique opportunity to recalibrate US strategy toward a rapidly transforming continent.

The Atlantic Council Strategy Papers series is designed to enrich the public debate and build consensus on the great strategic challenges of our time, as well as to help shape strategic thinking in US and allied governments, the private and nonprofit sectors, and the global media.

 

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]]> https://www.atlanticcouncil.org/commentary/event-recap/roundtable-discussion-with-mo-se-katumbi/ Tue, 29 Nov 2016 22:31:07 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/roundtable-discussion-with-mo-se-katumbi/ On Tuesday, November 29, the Atlantic Council’s Africa Center hosted Moϊse Katumbi joint opposition candidate for the presidency of the Democratic Republic of the Congo (DRC) and former governor of Katanga Province, for a roundtable discussion on the evolving political situation in the country. Vice President and Africa Center Director J. Peter Pham welcomed participants […]

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]]> On Tuesday, November 29, the Atlantic Council’s Africa Center hosted Moϊse Katumbi joint opposition candidate for the presidency of the Democratic Republic of the Congo (DRC) and former governor of Katanga Province, for a roundtable discussion on the evolving political situation in the country.

Vice President and Africa Center Director J. Peter Pham welcomed participants and General James L. Jones, Jr., USMC (ret.), chairman of the Atlantic Council’s Brent Scowcroft Center on International Security and former National Security Advisor to President Barack Obama, introduced Katumbi.

In his remarks, Katumbi provided an update on recent events in the country in light of the rapidly approaching expiration of President Joseph Kabila’s second and final mandate on December 19. Katumbi reminded the audience that over the last year, the Kabila regime has failed to take a single step, physical or administrative, in preparation of elections mandated by the country’s constitution. Instead, the regime violently repressed opposition political parties, civil society, and the media.

According to Katumbi, Kabila’s strategy thus far has been to organize an “artificial and false” national dialogue that has culminated in a “unilateral agreement,” which delays presidential elections until 2018, lacks a precise date for when these elections will occur, and fails to acknowledge the constitutional provision barring Kabila from running for a third term.

Katumbi also laid out his position, calling for a formal promise from Kabila that he will step down as president on December 19^th and several additional steps aimed at relieving political tension and increasing the public’s trust in the political negotiation. Finally, he called on the United States and the international community to support a democratic transition of power in the DRC by maintaining and event stepping up pressure on the regime, including targeted sanctions against individuals complicit in either the illegal holding on to power or repression of peaceful protests.

Other participations in the discussion included current and former US government officials, as well as representatives of US and foreign civil society organizations.

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]]> https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/congo-blues-scoring-kabila-s-rule/ Wed, 11 May 2016 14:19:54 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/congo-blues-scoring-kabila-s-rule/ Across Africa, leaders are tinkering with term limits and prolonging their tenures. In an increasingly unstable Central African region, Joseph Kabila, President of the Democratic Republic of the Congo (DRC), appears poised to be the next African leader to sidestep the relinquishing of power and the election of his successor, constitutionally mandated for November 2016. […]

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Across Africa, leaders are tinkering with term limits and prolonging their tenures. In an increasingly unstable Central African region, Joseph Kabila, President of the Democratic Republic of the Congo (DRC), appears poised to be the next African leader to sidestep the relinquishing of power and the election of his successor, constitutionally mandated for November 2016. A new Atlantic Council study by Dr. Pierre Englebert, “Congo Blues: Scoring Kabila’s Rule,” examines Kabila’s leadership of sub-Saharan Africa’s largest country and traces the contours of the ineptitude, massive corruption, and frequent resort to violence in the face of criticism that characterize his decade and a half in power.

 

Englebert argues that, despite being in power for fifteen years amid relatively buoyant recent macroeconomic growth, Kabila has done painfully little to improve the lives of Congo’s citizens. At best, his tenure has been characterized by willful neglect, and, at worst, by adverse and bloody manipulation of the country’s political system. The study makes that case that his regime’s reliance on confusion, dithering, meaningless dialogue, absenteeism, theft, patronage, violence, and repression has effectively set the country back to the days of Mobutu Sese Seko’s klepocratic dictatorship.

What’s worse, Kabila doesn’t appear to be finished. Though constitutionally ineligible for a third term, he is now attempting to employ administrative technicalities to delay the upcoming presidential election. These maneuverings are dangerous, and lay the groundwork for renewed civil unrest led by frustrated political opponents—with potentially catastrophic consequences for both the Congo and the broader Central African region.

This issue brief was made possible through generous support from United for Africa’s Democratic Future.

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]]> https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/embracing-impact-how-africa-can-overcome-the-emerging-market-downturn/ Thu, 14 Apr 2016 13:54:00 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/embracing-impact-how-africa-can-overcome-the-emerging-market-downturn/ In January 2016, oil prices fell to their lowest levels in more than a decade. Meanwhile, China, the world’s second-largest economy, is experiencing its most sluggish growth in a quarter-century—dragging down commodity prices and dampening the global economic outlook. The effects of this broad slowdown will hurt African economies more than most, because China and […]

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In January 2016, oil prices fell to their lowest levels in more than a decade. Meanwhile, China, the world’s second-largest economy, is experiencing its most sluggish growth in a quarter-century—dragging down commodity prices and dampening the global economic outlook. The effects of this broad slowdown will hurt African economies more than most, because China and other emerging markets are not only primary consumers of African commodities, but also are the primary source of financing for the major infrastructure and other development projects that are essential to Africa’s future growth.

 

Its release coinciding with the 2016 Spring Meetings of the International Monetary Fund and the World Bank Group, a new issue brief, “Embracing Impact: How Africa Can Overcome the Emerging Market Downturn,” by Africa Center Director J. Peter Pham and Senior Fellow Aubrey Hruby explores this new phenomenon, offering recommendations to African governments and US policymakers on the way forward.

The news is not all bad. The fundamentals behind Africa’s growth—a young, urbanizing population, increasing economic diversification, and growing discretionary spending—have not changed, and they continue to justify optimism about the continent’s long-term prospects. The International Monetary Fund, for example, predicts that growth will rebound in Africa by the end of the year.

The current downturn might even incentivize much-needed reforms, the elimination of widespread inefficiencies, and investment in productivity increases—unlocking latent growth in the process. Whether African nations seize this opportunity, or merely look for a short-term fix through outside donor support, will depend on strength of leadership and the capacity to implement new policy.

Growth projections, and degrees optimism, vary greatly across a complex continent. But it is possible to make some generalizations about which countries will emerge unscathed—or even, better off—after the emerging market downturn passes, and which countries must act quickly and decisively to alter their negative economic course.

This report is part of a partnership between the Atlantic Council’s Africa Center and the OCP Policy Center and is made possible by generous support through the OCP Foundation.

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]]> https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/why-the-congo-matters/ Mon, 14 Mar 2016 20:49:34 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/why-the-congo-matters/ With a population of almost 80 million people and unparalleled natural resources, the Democratic Republic of the Congo (the DRC or the Congo) is a country of tremendous potential—but only that. One of the most violent places on earth, its people suffer from the brutality of armed groups and political instability. Now, President Joseph Kabila’s […]

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With a population of almost 80 million people and unparalleled natural resources, the Democratic Republic of the Congo (the DRC or the Congo) is a country of tremendous potential—but only that. One of the most violent places on earth, its people suffer from the brutality of armed groups and political instability. Now, President Joseph Kabila’s steadfast refusal to move forward with constitutionally required elections in 2016 is a worrying indicator that new waves of violence may not be far off.

 

“Why the Congo Matters,” a new issue brief by Atlantic Council Africa Center Senior Fellow Dr. Gérard Prunier, makes the case for increased global engagement with the Congo at this vital juncture in its history. He situates the present-day DRC in its complex historical setting, beginning with the brutal Belgian colonial rule and chaotic decolonization process. In the 1990s, “Africa’s World War,” as the thirteen nation conflict became known, decimated the Congo and left a war-weary population with weak leaders and even weaker institutions.

Kabila, who has been in power for fifteen years, is ineligible to run for President under strict term limits enshrined in the constitution that he himself promulgated in 2005. Nevertheless, while simultaneously declaring respect for the constitution, he is attempting to employ administrative technicalities to delay the election of a successor. Citing Article 8 of the constitution, he claims that it is not lawful to hold elections without first updating the voter lists, a process that his government says may take anywhere from one to four years—a delay so significant that it would effectively amount to another term in office, and would likely result in wide-spread civil unrest led by frustrated opposition parties.

As one of the largest countries in Africa and a lynchpin of regional security, the DRC is an important front in the African public’s revolt against “presidents for life.” In 2016, the United States and its allies now confront a troubling—and potentially explosive—democracy deficit in one of the continent’s most strategic nations.

In the study, Prunier examines relevant US and European interests in the Congo, which range from security and economic concerns to humanitarian imperatives. He concludes that there is still time to prevent a new conflagration in the Great Lakes region, but not much.

This issue brief was made possible through generous support from United for Africa’s Democratic Future.

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]]> https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/nigeria-s-oil-revenue-crunch/ Mon, 11 Jan 2016 15:47:46 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/nigeria-s-oil-revenue-crunch/ As oil prices fall to their lowest in decades, Nigeria's oil revenue has plummeted nearly $2 billion since the start of 2014. What is the impact of falling oil prices and increased competition on the economy and stability in Nigeria?

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As oil prices fall to their lowest in decades, Nigeria’s oil revenue has plummeted nearly $2 billion since the start of 2014. While Africa’s most populous nation has continued to sell roughly 1 million barrels of crude oil per day, it has struggled to achieve a robust price. Brent crude—the benchmark against which Nigerian oil is priced—traded last week below $35 a barrel, the lowest price in more than a decade and considerably down from the $100 or higher that oil commanded between 2011 and 2014.

 

“Nigeria’s oil revenue crunch,” a new issue brief by Aaron Sayne and Atlantic Council Africa Center Senior Fellow Aubrey Hruby, examines the impact of falling oil prices and increased competition on the economy and stability in Nigeria.

Nigeria’s stability depends upon the government’s ability to achieve sustainable economic growth, create robust investor confidence, and build stronger institutional capacity to deliver critical services to the rapidly expanding population.

The country is unlikely to recapture the high oil revenues of the past decade, and now needs to do everything possible to maximize remaining revenues by cutting corruption and increasing efficiency in the oil sector. Most importantly, though, Nigeria must rapidly improve growth in the non-oil sectors that have so far kept the economy out of recession. These sectors are the unsung heroes of Nigeria’s economic story.

Hailed as a milestone for African democracy, the election of and subsequent peaceful transition of the presidency to Muhammadu Buhari generated significant domestic and international goodwill for Nigeria. Fast-tracking key reforms to both the oil and non-oil sectors will help leverage this political capital into sustained economic growth.

Key recommendations include:

• Restructure the state-owned Nigerian National Petroleum Corporation to increase revenue and accountability after a comprehensive performance audit;

• Complement structural reforms with greater official accountability by empowering oversight institutions and sanctioning past malfeasance;

• Develop new markets for Nigerian oil, including domestically, by decreasing reliance on private commodities traders and lifting barriers to domestic crude oil refining;

• Promote non-oil export sectors by focusing political will and resources on valuable agricultural products including cocoa, cassava, and dairy;

• Bank the “unbanked” and energize Nigeria’s underperforming financial sector through promotion of the Nigerian mortgage market, credit card usage, and mobile money.

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]]> https://www.atlanticcouncil.org/in-depth-research-reports/report/diversifying-african-trade/ Wed, 16 Dec 2015 15:00:00 +0000 http://live-atlanticcouncil-wr.pantheonsite.io/diversifying-african-trade/ As World Trade Organization members meet in Nairobi, Kenya, for their 2015 Ministerial, the potential economic impact of African trade—for Africa, but also the rest of the world—has never been more relevant. Home to thirty-three of the world’s least developed countries and only responsible for 3 percent of global trade, Africa stands to reap enormous […]

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As World Trade Organization members meet in Nairobi, Kenya, for their 2015 Ministerial, the potential economic impact of African trade—for Africa, but also the rest of the world—has never been more relevant. Home to thirty-three of the world’s least developed countries and only responsible for 3 percent of global trade, Africa stands to reap enormous benefit from investing in trade as a vehicle for economic development and growth.

However, African countries face substantial challenges, as the global collapse of commodity demand and China’s recent economic slowdown will test the resilience of the numerous economies that rely on a small range of products and partners.

To fully harness the transformative potential of trade, African countries will have to learn to navigate this constrained global environment and fully embrace opportunities to diversify their international trade flows. Diversifying African Trade: The Road to Progress, a new report by Atlantic Council Africa Center Senior Fellow Aubrey Hruby, examines the current obstacles hampering international trade across the continent and provides recommendations for policy makers in Africa and across the world.

Key recommendations include:

• Speed up regional integration through targeted political will and enhanced financial and technical support, specifically for regional economic communities;

• Maximize product diversity by improving Africa’s Export Processing Zones to create competitive export-orient clusters;

• Invest in infrastructure with a particular focus on the power sector;

• Eliminate trade inefficiencies by continuing to reduce both tariff and non-tariff trade barriers with the help of new technologies, as well as streamlining immigration policies and removing onerous visa requirements.

This report is part of a partnership between the Atlantic Council’s Africa Center and the OCP Policy Center and is made possible by generous support through the OCP Foundation.

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