Volunteer, civil society and governmental delegates from 22 nations gathered in Johannesburg this month for the Southern Africa Conference on Volunteer Action for Development. The conference was co-convened by United Nations Volunteers (UNV) and Volunteer and Service Enquiry Southern Africa (VOSESA), in observance of the 10th anniversary of the United Nations International Year of Volunteers (IYV).

Naheed Haque, deputy executive coordinator for United Nations Volunteers, gave tribute to the late Nobel Laureate Wangari Mathai and her Greenbelt tree planting campaign as the “quintessential volunteer movement.” Haque called for a “new development paradigm that puts voluntarism at the center of community-centered sustainable development.” In this paradigm, human happiness and service to others would be key considerations, in addition to economic indicators and development outcomes including health and climate change.  

The international gathering developed strategies to advance three key priorities for the 15 nations in the Southern Africa Development Community (SADC): combating HIV/ AIDS; engaging the social and economic participation of youth; and promoting regional integration and peace. Research data prepared by Civicus provided information on the rise of voluntary service in Africa, as conferees assessed strategies to advance “five pillars” of effective volunteerism: engaging youth, community involvement, international volunteers, corporate leadership and higher education in service.

VOSESA executive director, Helene Perold, noted that despite centuries of migration across the region, the vision for contemporary regional cooperation between southern African countries has largely been in the minds of heads of states with “little currency at the grassroots level.” Furthermore, it has been driven by the imperative of economic integration with a specific focus on trade. Slow progress has now produced critiques within the region that the strategy for integrating southern African countries cannot succeed on the basis of economic cooperation alone. Perold indicated that collective efforts by a wide range of civic, academic, and governmental actors at the Johannesburg conference could inject the importance of social participation within and between countries as a critical component in fostering regional integration and achieving development outcomes. 

This premise of voluntary action’s unique contribution to regional integration was underscored by Emiliana Tembo, director of Gender and Social Affairs for the Common Market of Eastern and Southern Africa (COMESA). Along with measures promoting free movement of labor and capital to step up trade investment, Tembo stressed the importance of “our interconnectedness as people,” citing Bishop Desmond Tutu’s maxim toward the virtues of “Ubuntu – a person who is open and available to others.”

The 19 nation COMESA block is advancing an African free-trade zone movement from the Cape of South Africa, to Cairo Egypt. The “tripartite” regional groupings of SADC, COMESA and the East Africa Community are at the forefront of this pan-African movement expanding trade and development.

Preliminary research shared at the conference by VOSESA researcher Jacob Mwathi Mati noted the effects of cross border youth volunteer exchange programs in southern and eastern Africa. The research indicates positive outcomes including knowledge, learning and “friendship across borders,” engendered by youth exchange service programs in South Africa, Mozambique, Tanzania and Kenya that were sponsored Canada World Youth and South Africa Trust.   

On the final day of the Johannesburg conference, South Africa service initiatives were assessed in field visits by conferees including loveLife, South Africa’s largest HIV prevention campaign. loveLife utilizes youth volunteer service corps reaching up to 500,000 at risk youths in monthly leadership and peer education programs. “Youth service in South Africa is a channel for the energy of youth, (building) social capital and enabling public innovation,” Programme Director Scott Burnett stated. “Over the years our (service) participants have used their small stipends to climb the social ladder through education and micro-enterprise development.”

Nelly Corbel, senior program coordinator of the John D. Gerhart Center for Philanthropy and Civic Engagement at the American University in Cairo, noted that the Egyptian Arab Spring was “the only movement that cleaned-up after the revolution." On February 11^th, the day after the resignation of former Egyptian President Hosni Mubarak, thousands of Egyptian activists  removed debris from Tahrir Square and engaged in a host of other volunteer clean-up and painting projects. In Corbel's words: “Our entire country is like a big flag now,” from the massive display of national voluntarism in clean-up projects, emblematic of the proliferation of youth social innovation aimed at rebuilding a viable civil society.

At the concluding call-to-action session, Johannesburg conferees unanimously adopted a resolution, which was nominated by participating youth leaders from southern Africa states. The declaration, “Creating an Enabling Environment for Volunteer Action in the Region” notes that “volunteering is universal, inclusive and embraces free will, solidarity, dignity and trust… [creating] a powerful basis for unity, common humanity, peace and development.”  The resolution, contains a number of action-oriented recommendations advancing voluntarism as a “powerful means for transformational change and societal development.” Policy recommendations will be advanced by South African nations and other stakeholders at the forthcoming Rio + 20 deliberations and at a special session of the United Nations General Assembly on December 5, the 10^th anniversary of the International Year of the Volunteer.

       

INTRODUCTION

In December 2011, the United Nations State of the World’s Volunteering Report was released at the U.N. headquarters in New York along with a General Assembly resolution championing the role of volunteer action in peacebuilding and development. The United Nations Volunteers (UNV) Program report states that:

The contribution of volunteerism to development is particularly striking in the context of sustainable livelihoods and value-based notions of wellbeing. Contrary to common perceptions, the income poor are as likely to volunteer as those who are not poor. In doing so, they realize their assets, which include knowledge, skills and social networks, for the benefit of themselves, their families and their communities…Moreover, volunteering can reduce the social exclusion that is often the result of poverty, marginalization and other forms of inequality…There is mounting evidence that volunteer engagement promotes the civic values and social cohesion which mitigate violent conflict at all stages and that it even fosters reconciliation in post-conflict situations...

The “South Africa Conference on Volunteer Action for Development” convened in Johannesburg in October 2011, and the July 2012 “Africa Conference on Volunteer Action for Peace and Development” co-hosted with the Kenya’s Ministry of East African Community, the United Nations and partners in Nairobi give further evidence to the rise of and potential for volunteer service to impact development and conflict. Indeed, in the aftermath of the 2011 Arab Spring, youth volunteer service and empowerment have emerged as a pivotal idea in deliberations aimed at fostering greater regional cohesion and development.

In “Foresight Africa: Top Priorities for the Continent in 2012,” Mwangi S. Kimenyi and Stephen N. Karingi note that: “One of the most important pillars in determining whether the positive prospects for Africa will be realized is success in regional integration… This year is a crucial one for Africa’s regional integration project and actions by governments, regional organizations and the international community will be critical in determining the course of the continent’s development for many years to come.”

The authors note the expected completion of a tripartite regional free trade agreement by 2014 and the expected boost to intra-African trade, resulting in an expanded market of 26 African countries (representing more than half of the region’s economic output and population). At the same time, the declaration from the “South Africa Conference on Volunteer Action for Development” calls on “Governments of Southern African member states and other stakeholders to incorporate volunteering in their deliberations from Rio +20 and to recognize the transformational power as well as economic and social value of volunteering in achieving national development goals and regional priorities, which can be achieved by facilitating the creation of an enabling environment for volunteering to support, protect and empower volunteers.” This speaks directly to the urgent need to factor the social dimension into the regional integration agenda in the different African subregions.

This paper includes examples of the growth of volunteer service as a form of social capital that enhances cohesion and integration across three regions: southern, western, and eastern Africa. It further highlights civil society best practices and policy recommendations for increased volunteering in efforts to ensure positive peace, health, youth skills, assets and employment outcomes.

The importance of volunteering to development has been noted in recent United Nations consultations on the Rio+20 convening on sustainable development and the post-2015 development framework. As the U.N. reviews its Millennium Development Goals (MDG) process, Africa’s regional service initiatives offer vital lessons and strategies to further achieve the MDGs by December 2015, and to chart the way forward on the post-2015 development framework.

But how does volunteerism and civic service play out in sub-Saharan Africa? What are its institutional and non-institutional expressions? What are the benefits or impacts of volunteerism and civic service in society? Our specific purpose here is to provide evidence of the different manifestations and models of service, impact areas and range of issues in three African regions. In responding to these questions, this analysis incorporates data and observations from southern, western and eastern Africa.

In conclusion, we provide further collective insights and recommendations for the roles of the Africa Union and regional economic communities (RECs), youth, the international community, the private sector and civil society aimed at ensuring that volunteerism delivers on its promise and potential for impact on regional integration, youth development and peace.

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INTRODUCTION

Over the past decade, the focused attention of African nations, the United States, U.N. agencies and other multilateral partners has brought significant progress toward achievement of the Millennium Development Goals (MDGs) in health and malaria control and elimination. The potential contribution of these strategies to long-term peace-building objectives and overall regional prosperity is of paramount significance in sub-regions such as the Horn of Africa and Western Africa that are facing the challenges of malaria and other health crises compounded by identity-based conflicts.

National campaigns to address health Millennium Development Goals through cross-ethnic campaigns tackling basic hygiene and malaria have proven effective in reducing child infant mortality while also contributing to comprehensive efforts to overcome health disparities and achieve higher levels of societal well-being.

There is also growing if nascent research to suggest that health and other humanitarian interventions can result in additional benefits to both recipients and donors alike.

The social, economic and political fault lines of conflicts, according to a new study, are most pronounced in Africa within nations (as opposed to international conflicts). Addressing issues of disparate resource allocations in areas such as health could be a primary factor in mitigating such intra-national conflicts. However, to date there has been insufficient research on and policy attention to the potential for wedding proven life-saving health solutions such as malaria intervention to conflict mitigation or other non-health benefits.

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At a time of decelerating regional growth in sub-Saharan Africa, South Africa—one of the continent’s leading economies—is facing the brunt of concurrent external and domestic growth shocks. During a Brookings event on April 14, 2016 moderated by Africa Growth Initiative Director Amadou Sy, South African minister of finance, the Honorable Pravin Gordhan, provided cause for encouragement, as he highlighted strategies that South Africa is implementing to reverse slowing growth trends, boost social cohesion, and springboard inclusive, sustainable development.

Throughout the event, Minister Gordhan emphasized that South Africa is refocusing its efforts on implementing homegrown policies to mitigate the effects of global and domestic shocks: “Our approach is not to keep pointing outside our borders and say, ‘That’s where the problem is.’ We've got our own challenges and difficulties, and potential and opportunities. And it's important to focus on those, and rally South Africans behind that set of initiatives so that we could go wherever we can in terms improving the situation.”

He began by explaining the major growth problems facing South Africa, including first-level structural challenges—consistent electricity supply and labor relations—as well as deeper structural challenges, for instance, reforming the oligopolistic sectors of its economy. To address these issues, he expanded on what collaborative, multi-stakeholder efforts would be necessary. Watch:

Contending with infrastructure needs—particularly energy and logistical, but also social, such as water and sanitation, health care, and educational facilities—will play a significant role in overcoming these aforementioned challenges. Minister Gordhan explained how the government aims to fill existing infrastructure gaps through innovative financing mechanisms. Watch:

Later in the event, Sy pressed Minister Gordhan on plans for implementation for the country’s ambitious goals. As an example, Minister Gordhan underlined “Operation Phakisa,” a results-driven approach to fast-track the implementation of initiatives to achieve development objectives. The government intends to use this methodology to address a number of social priorities, including unlocking the potential of South Africa’s coastlines and oceans. Watch:

Urbanization in South Africa and sub-Saharan Africa as a whole is widespread and increasing, creating a demand for governments to both maintain their infrastructure as well as harness their energy and human capacity. Cities, especially those in South Africa’s Gauteng Province (Johannesburg, Pretoria, and Ekurhuleni), will continue to be crucial engines of economic development if municipal governance systems effectively manage the region’s expected rapid urbanization in the years to come. Minister Gordhan discusses some of the lessons learned from the Gauteng city region. Watch:

In sum, referring to the confluence of adverse global conditions and internal problems currently affecting South Africa, Minister Gordhan stated, “Whenever you are in the middle of a storm it looks like the worst thing possible—but storms don’t last forever.” He did not doubt the ability of the South African people to weather and emerge stronger from the storm, offering: “Ultimately South Africans are hopeful, are optimistic and resilient.”

You can watch the full event here. 

Video

• Pravin Gordhan notes the major growth challenges in South Africa
• Pravin Gordhan on addressing South Africa’s infrastructure gaps
• Pravin Gordhan on implementation of South Africa's development objectives
• Pravin Gordhan on the vital role of cities in economic development in South Africa

       

Cliquez ici pour lire la version complète de ce blog en français »

2016: The turning point

Policymakers and development practitioners now face a new set of challenges in the aftermath of the global consensus triumvirate Addis Agenda—2030 Agenda—Paris Agreement: [1] implementation, follow-up, and review. Development policy professionals must tackle these while at the same time including the three pillars of sustainable development—social development, economic growth, and environmental protection—and the above three global consensus’ cross-sectoral natures—all while working in a context where policy planning is still performed in silos. They also must incorporate the universality of these new agreements in the light of different national circumstances—different national realities, capacities, needs, levels of development, and national policies and priorities. And then they have to significantly scale up resource allocation and means of implementation (including financing, capacity building, and technology transfer) to make a difference and enhance novel multi-stakeholder partnerships to contain the surge of global flows of all kinds (such as migration, terrorism, diseases, taxation, extreme weather, and digital revolution) in a resolutely interconnected world. Quite an ambitious task!

Given the above complexities, new national and global arrangements are being made to honor the commitments put forth to answer these unprecedented challenges. Several African governments have already started establishing inter-ministerial committees and task forces to ensure alignment between the global goals and existing national planning processes, aspirations, and priorities.

With the international community, Africa is preparing for the first High-Level Political Forum since the 2030 Agenda adoption in July 2016 on the theme “Ensuring that no one is left behind.” In order to inform the 2030 Agenda’s implementation leadership, guidance, and recommendations, six African countries [2] of 22 U.N. Member States, volunteered to present national reviews on their work to achieve the Sustainable Development Goals (SDGs), a unique opportunity to provide an uncompromising reality check and highlight levers to exploit and limits to overcome for impact.

Paralleling Africa’s groundwork, the United Nations’ efforts for coordination have been numerous. They include an inter-agency task force to prepare for the follow-up forum to Financing For Development timed with the Global Infrastructure Forum that will consult on infrastructure investment, a crucial point for the continent; an appointed 10-representative group to support the Technology Facilitation Mechanism that facilitates the development, transfer and dissemination of technologies for the SDGs, another very important item for Africa; and an independent team of advisors to counsel on the longer-term positioning of the U.N. development system in the context of the 2030 Agenda, commonly called “U.N. fit for purpose,” among many other endeavors.

These overwhelming bureaucratic duties alone will put a meaningful burden on Africa’s limited capacity. Thus, it is in the interest of the continent to pool its assets by taking advantage of its robust regional networks in order to mitigate this obstacle in a coherent and coordinated manner, and by building on the convergence between the newly adopted texts and Agenda 2063, the African Union’s 50-year transformation blueprint, with the help of pan-African institutions.

Regionalization in Africa: The gearwheel to the next developmental phase

Besides national and global, there is a third level of consideration: the regional one. Indeed, the three major agreements in 2015 emphasized support to projects and cooperation frameworks that foster regional and subregional integration, particularly in Africa. [3] Indeed, common and coherent industrial policies for regional value chains developed by strengthened regional institutions and sustained by a strong-willed transformational leadership are gaining traction towards Africa’s insertion into the global economy.

Africa has long made regional economic integration within its main “building blocs,” the eight Regional Economic Communities (RECs), a core strategy for development. The continent is definitely engaged in this path: Last summer, three RECs, the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC), and the Southern African Development Community (SADC), launched the Tripartite Free Trade Area (TFTA) that covers 26 countries, over 600 million people, and $1 trillion GDP. The tripartite arrangement paves the way towards Africa’s own mega-regional one, the Continental Free Trade Area (CFTA), and the realization of one broad African Economic Community. If regionalization allows free movement of people, capital, goods, and services, the resulting increased intra-African connectivity will boost trade within Africa, promote growth, create jobs, and attract investments. Ultimately, it should ignite industrialization, innovation, and competitiveness. To that end, pan-African institutions, capitalizing on the recent positive continental performances, are redoubling their efforts to build an enabling environment for policy and regulation harmonization and economies of scale.

Infrastructure and regionalization

Importantly, infrastructure, without which no connectivity is possible, is undeniably the enabling bedrock to all future regionalization plans. Together with market integration and industrial development, infrastructure development is one of the three pillars of the TFTA strategy. Similarly, the New Partnership for Africa’s Development (NEPAD) Agency, the technical body of the African Union (AU) mandated with planning and coordinating the implementation of continental priorities and regional programs, adopted regional integration as a strategic approach to infrastructure. In fact, in June 2014, the NEPAD Agency organized the Dakar Financing Summit for Infrastructure, culminating with the adoption of the Dakar Agenda for Action that lays down options for investment mobilization towards infrastructure development projects, starting with 16 key bankable projects stemming from the Programme for Infrastructure Development in Africa (PIDA). These “NEPAD mega-projects to transform Africa” are, notably, all regional in scope.

See the full map of NEPAD’s 16 mega-projects to transform Africa here »

Supplementing NEPAD and TFTA, the Continental Business Network was formed to promote public-private dialogue with regard to regional infrastructure investment. The Africa50 Infrastructure Fund was constituted as a new delivery platform commercially managed to narrow the massive infrastructure finance gap in Africa evaluated at $50 billion per annum.

The development of homegrown proposals and institutional advances observed lately demonstrate Africa’s assertive engagement towards accelerating infrastructure development, thereby regionalization. At the last AU Summit, the NEPAD Heads of State and Government Orientation Committee approved the institutionalization of an annual PIDA Week hosted at the African Development Bank (AfDB) to follow up on the progresses made.

The momentum of Africa’s regional energy projects

The energy partnerships listed below illustrate the possible gain from adopting trans-boundary approaches for implementation and follow-up: the Africa Power Vision (APV) undertaken with Power Africa; the ECOWAS Centre for Renewable Energy and Energy Efficiency (ECREEE) model accompanying the Sustainable Energy for All (SE4ALL) Africa Hub efforts; and the Africa GreenCo solution that is to bank on PIDA.

• Africa Power Vision: African ministers of power and finance gathered at the World Economic Forum (WEF) in Davos in 2014 decided to create the APV. The vision provides a strategic template harnessing resources to fast-track access to modern energy for African households, businesses, and industries. It draws up a shortlist of African-driven regional priority energy projects mostly extracted from the PIDA Priority Action Program, which is the PIDA short-term pipeline to be completed by 2020. The game changer Inga III hydropower project, the iconic DESERTEC Sahara solar project, and the gigantic North-South Interconnection Transmission Line covering almost the entire TFTA are among the 13 selected projects. The APV concept note and implementation plan entitled “From vision to action” developed by the NEPAD Agency, in collaboration with U.S. government-led Power Africa initiative, was endorsed at the January 2015 AU Summit. The package elaborates on responses to counter bottlenecks to achieve quantifiable targets, the “acceleration methodology” based on NEPAD Project Prioritization Considerations Tool (PPCT), risk mitigation, and power projects’ financing. Innovative design was thought to avoid duplication, save resources, improve coordination and foster transformative action with the setting up of dual-hatted Power Africa – APV Transaction Advisors, who supervise investment schemes up to financial closure where and when there is an overlap of energy projects or common interest. Overall, the APV partnership permits a mutualization of expertise while at the same time, since it is based on PIDA, promoting regional economic integration for electrification.

• ECOWAS Centre for Renewable Energy and Energy Efficiency: U.N. Secretary-General Ban Ki-moon launched the Sustainable Energy for All initiative worldwide as early as 2011 with the triple objective of ensuring universal access to modern energy services, doubling the rate of improvement of energy efficiency, and doubling the share of renewable energy in the global energy mix by 2030. Since its inception, SE4ALL prompted a lot of enthusiasm on the continent, and is now counting 44 opt-in African countries. As a result, the SE4ALL Africa Hub was the first regional hub to be launched in 2013. Hosted at the AfDB in partnership with the AU Commission, NEPAD Agency, and the U.N. Development Program (UNDP), its role is to facilitate the implementation of SE4ALL on the continent. The SE4ALL Africa Hub 3rd Annual Workshop held in Abidjan last February showed the potential of this “creative coalition” (Yumkella, 2014) to deliver on areas spanning from national plans of action, regionally concerted approaches in line with the continental vision, to SDG7 on energy, to climate Intended Nationally Determined Contributions (INDCs) made for the Paris Agreement. Above all, the workshop displayed the hub’s ability to efficiently kick-start the harmonization of processes for impact among countries. Forasmuch as all ECOWAS Member States opted-in to SE4ALL, the West African ministers mandated their regional energy center, ECREEE, to coordinate the implementation of the SE4ALL Action Agendas (AAs), which are documents outlining country actions required to achieve sustainable energy objectives, and from then Investment Prospectuses (IPs), the documents presenting the AAs investment requirements. As a result, the ECOWAS Renewable Energy Policy (EREP) and the Energy Efficiency Policy (EEEP) were formulated and adopted; and a regional monitoring framework to feed into a Global Tracking Framework, the SE4ALL measuring and reporting system, is now being conceived. The successful ECREEE model, bridging national inventory and global players, is about to be duplicated in two other African regions, EAC and SADC, with the support of the U.N. Industrial Development Organization (UNIDO).

• Africa GreenCo: Lastly, initiatives like Africa GreenCo are incubating. This promising vehicle, currently funded by a grant from the Rockefeller Foundation, envisions itself as an independently managed power trader and broker to move energy where needed. Indeed, Africa GreenCo aims to capitalize on PIDA power projects: In its capacity as intermediary creditworthy off taker, it plans to eventually utilize their regional character as a value addition to risk guarantee. To date, Africa GreenCo is refining the legal, regulatory, technical, and financial aspects of its future structure and forging links with key stakeholders in the sector (member states, multilateral development banks, African regional utilities for generation and interconnection called Power Pools) ahead of the completion of its feasibility study in June 2016.

Leapfrog and paradigm shift ahead: Towards transnationalism

The above-mentioned partnerships are encouraging trends towards more symbiotic multi-stakeholders cooperation. As they relate to home-crafted initiatives, it is imperative that we do not drift away from a continental vision. Not only do Africa-grown plans have higher chance of success than the one-size-fits-all imported solutions, but consistent and combined efforts in the same direction reinforce confidence, emulation, and attract supportive attention. It implies that the fulfillment of intergovernmental agreements requires first and foremost their adaptation to local realities in a domestication process that is respectful of the policy space. Mainstreaming adjustments can be later conducted according to evidence-based and data-driven experiments. Between these global engagements and national procedures, the regional dimension is the indispensable link: Enabling countries to bypass the artificiality of borders inherited from colonial times and offering concrete options to eradicate poverty in a united-we-stand fashion. Regional integration is therefore a prelude to sustainable development operationalization within Africa and a key step towards its active partaking in the global arena. Regionalization can also trigger international relations shift provided that it encompasses fair multilateralism and sustainable management of global knowledge. Indeed, the resulting openness and the complexity encountered are useful parameters to enrich the conception of relevant local answers.

These success stories show the great potential for new experiments and synergies. To me, they inspire the promise of a better world. The one I like to imagine is characterized by mutually beneficial ecosystems for the people and the planet. It encourages win-win reverse linkages, or in other words, more positive spillovers of developing economies on industrial countries. It is a place where, for example, an African region could draw lessons from the Greek crisis and the other way around: China could learn from Africa’s Maputo Development Corridor for its Silk Road Economic Belt. Twin institutes performing joint research among regional knowledge hubs would flourish. Innovative Fab Labs would be entitled to strive after spatial adventure with e-waste material recycled into 3D printers. In that world, innovative collaborations in science, technology, engineering, and math (STEM) would be favored and involve not only women but also the diaspora in order to develop environmentally sound technical progress. Commensurate efforts, persistent willingness, indigenous ingenuity, and unbridled creativity place this brighter future within our reach.

Beyond the recognition of the African voice throughout the intergovernmental processes, Africa should now consolidate its gains by firmly maintaining its position and safeguarding its winnings throughout the preliminary phase. The continent should urgently set singular tactics with the greatest potential in terms of inclusiveness and creation of productive capacity. While doing so, African development actors should initiate a “learning by doing” virtuous cycle to create an endogenous development narrative cognizant of adaptable best practices as well as failures. Yet the only approach capable of generating both structural transformation and informative change that are in line with continentally own and led long-term strategies is … regional integration.

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China’s meteoric rise lifted its economy but damaged its environment, and it has new aspirations to leadership on the global stage. Africa has enormous natural capital and is hungry for development. How can they collaborate? Their interests may intersect within a model of development that invests in natural capital instead of prizing only extraction.

On July 11th, the Brookings Tsinghua-Center, in collaboration with GreenPoint Group and School of Public Policy and Management at Tsinghua University, hosted the panel Sustainability within the China-Africa Relationship: Governance, Investment, and Natural Capital. The panel was moderated by SMPP Associate Professor and IMPA director Zheng Zhenqing, and featured Mr. Peter Seligmann, chairman and CEO of Conservation International; Professor Qi Ye, director of the Brookings Tsinghua-Center; Honorable Minister Anyaa Vohiri of the Environmental Protection Agency of Liberia; Professor Pang Xun, expert on official direct assistance and the politics of aid; and Mr. Rule Jimmy Opelo, Permanent Deputy Secretary of the Ministry of Environment, Wildlife and Tourism of Botswana.

Professor and Dean of School of Public Policy and Management Xue Lan gave the opening remarks, highlighting that both China and Africa face the challenge of balancing development and sustainability. Minister Vohiri then presented on the challenges and great potential of Africa's vast, untapped renewable energy resources before Professor Zheng opened the panel. Framing China and Africa as global partners with the common aspiration of growing sustainable, the panelists discussed the need for developing economies to recognize that the health of their environment is inseparable from the health of their economies.

Questions concerning the UN’s Sustainable Development Goals and Millennium Development goals presented conservation as a global issue requiring global governance. Mr. Seligmann forwarded the idea that sustainable development as enlightened self-interest has entered mainstream thought, asserting that the challenge now lies in crafting region-specific policies and plans of implementation. The importance of cooperation surfaced as a common theme. Mr. Opelo examined the possibilities of South-South cooperation, and Professor Qi provided a history for the emergence of natural capital as a concept before underlining the need for government to collaborate with civil society and the private sector.

The highlighted benefits of Sino-African cooperation ranged from the greater political freedom afforded to aid recipient countries when there is donor competition to Africa's potential "leapfrog" development to a green economy if it obtains sufficient investment. Professor Qi spoke of the lessons provided by China’s evolution from a parochial developing country into the world’s leader in sustainable development. Professor Pang emphasized the benefits both to China and to African countries when the influence of conditional aid from the United States is diluted by Chinese competition. Minister Vohiri and Mr. Opelo discussed the challenges of balancing conservation enforcement with the provision of basic needs, concluding that China's capital and knowledge could help Africa develop its economy in a sustainable direction. The panelists closed by addressing questions from the audience that problematical transparency problems with China's current model of development in Africa, the sustainability of green energy subsidies, the threats of mining and poaching, and Africa's role in addressing a global environmental crisis to which it largely did not contribute.

Xue Lan gave the opening remarks

Minister Vohiri delivered keynote remarks

Transcript

• Transcript (.pdf)

Event Materials

• Sustainability within the ChinaAfrica relationship governance investment and natural capital

       

South African court rules President Zuma violated the constitution

Thursday, South Africa’s highest court found President Zuma guilty of violating the constitution as he refused to reimburse the large sum of money spent on improvements to his personal home. Between 2010 and 2014, the home located in the president’s rural hometown of Nkandla received improvement which cost an estimated $23 million. The improvements include a chicken coop, an amphitheater, a swimming pool, and a helipad. President Zuma has stated that the improvements were necessary to ensure his security and should consequently be paid for with taxpayers’ money. In 2014, public prosecutor Thuli Madonsela ruled that the president should repay part of the taxpayers’ money spent on the improvements of his personal home. In refusing to do so, he violated the country’s constitution “by not complying with a decision by the public protector, the national watchdog.” The court has given the National Treasury 60 days to determine the sum the president must repay. The opposition has stated that they will seek Zuma’s impeachment.

In other South African news, this week, the rand strengthen against the U.S. dollar and reached its highest value since December 8, 2015, the day before President Zuma fired former Finance Minister Nhlanla Nene. The strengthening of the rand was coupled with the strengthening of other Emerging Markets currencies. This hike follows the statement from Federal Reserve Chair Janey Yellen, reiterating the importance to raise U.S. interest rates cautiously, amid risks in the global economy. Investors—weighting prospects of higher U.S. borrowing costs—were holding off in acquiring emerging-market assets.

Seventeen Angolan activists are sentenced to jail time

This week, 17 Angolan activists were sentenced to jail time for rebellion against the government of Jose Eduardo dos Santos. The sentences ranged from two years to eight and a half years. Last June, the activists were arrested during a book club meeting focusing on Gene Sharp’s book titled From Dictatorship to Democracy: A Conceptual Framework for Liberation—a book on nonviolence and resistance to repressive regimes. Monday, the activists were charged and sentenced with acts of rebellion, planning mass action of civil disobedience, and producing fake passports, among other charges. Amnesty International has accused the Angolan court of wrongfully convicting the activists and using the judicial system to “silence dissenting views.”

Later in the week, in response to the jailing of the young activists, the Portuguese branch of hacking group Anonymous claimed the shutdown of 20 government websites, including that of the Ministry of Education and the Ministry of Labor and Social Security, among others. In a Facebook post claiming the attack, the group states, “The real criminals are outside, defended by the capitalist system that increasingly spreads in the minds of the weak.” The functionality of the websites has been restored.  

Aid cuts due to disputed election rerun hit Tanzania

On Monday, March 28, the U.S. Millennium Challenge Corporation (MCC) withdrew $472 million in aid from the government of Tanzania after the result of the last weekend’s disputed presidential election rerun in the semi-autonomous archipelago of Zanzibar was announced. Incumbent President Ali Mohamed Shein of the ruling Chama Cha Mapinduzi party was declared the winner with 91.4 percent of the vote. However, the rerun was boycotted by the opposition Civic United Front party over the cancellation of last October’s election by the Zanzibar Electoral Commission. The commission claimed the October poll was fraudulent, while the opposition says the allegations of fraud were fabricated to thwart a victory by their candidate.

The MCC was planning a number of power and infrastructure projects in Tanzania, but its development assistance programming is conditional upon beneficiaries meeting certain standards of good governance. The MCC’s board of directors held a vote on Monday, in which they determined that Tanzania was no longer eligible to partner with the MCC given the election outcome. Although the loss of the MCC partnership is a sizable blow to the Tanzanian government, the Tanzanian finance minister appeared optimistic that the power projects would continue despite the MCC’s decision, as he stated: “We weren’t surprised at all because we were prepared for whatever the outcome. We will implement those projects using local sources of fund and the support of from other development partners.” Meanwhile, 10 out of the country’s 14 key western donors withdrew general budget support to Tanzania over the contested election.

       

       

       

       

       

       

INTRODUCTION

Over the past decade, the focused attention of African nations, the United States, U.N. agencies and other multilateral partners has brought significant progress toward achievement of the Millennium Development Goals (MDGs) in health and malaria control and elimination. The potential contribution of these strategies to long-term peace-building objectives and overall regional prosperity is of paramount significance in sub-regions such as the Horn of Africa and Western Africa that are facing the challenges of malaria and other health crises compounded by identity-based conflicts.

National campaigns to address health Millennium Development Goals through cross-ethnic campaigns tackling basic hygiene and malaria have proven effective in reducing child infant mortality while also contributing to comprehensive efforts to overcome health disparities and achieve higher levels of societal well-being.

There is also growing if nascent research to suggest that health and other humanitarian interventions can result in additional benefits to both recipients and donors alike.

The social, economic and political fault lines of conflicts, according to a new study, are most pronounced in Africa within nations (as opposed to international conflicts). Addressing issues of disparate resource allocations in areas such as health could be a primary factor in mitigating such intra-national conflicts. However, to date there has been insufficient research on and policy attention to the potential for wedding proven life-saving health solutions such as malaria intervention to conflict mitigation or other non-health benefits.

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Most sub-Saharan African countries have long had to rely on foreign assistance or loans from international financial institutions to supply part of their foreign currency needs and finance part of their domestic investment, given their low levels of domestic saving. But now many of them, for the first time, are able to borrow in international financial markets, selling so-called eurobonds, which are usually denominated in dollars or euros. 

The sudden surge in the demand for international sovereign bonds issued by countries in a region that contains some of the world’s poorest countries is due to a variety of factors—including rapid growth and better economic policies in the region, high commodity prices, and low global interest rates. Increased global liquidity as well as investors’ diversification needs, at a time when the correlation between many global assets has increased, has also helped increase the attractiveness of the so-called “frontier” markets, including those in sub-Saharan Africa. At the same time, the issuance of international sovereign bonds is part of a number of African countries’ strategies to restructure their debt, finance infrastructure investments, and establish sovereign benchmarks to help develop the sub-sovereign and corporate bond market. The development of the domestic sovereign bond market in many countries has also help strengthen the technical capacity of finance ministries and debt management offices to issue international debt.

Whether the rash of borrowing by sub-Saharan governments (as well as a handful of corporate entities in the region) is sustainable over the medium to long term, however, is open to question. The low interest rate environment is set to change at some point—both raising borrowing costs for the countries and reducing investor interest. In addition, oil prices are falling, which makes it harder for oil-producing countries to service or refinance their loans. In the medium term, heady economic growth may not continue if debt proceeds are only mostly used for current spending, and debt is not adequately managed.

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Strong Growth and Changing Composition 

External financial flows to sub-Saharan Africa (defined as the sum of gross private capital flows, official development assistance (ODA), and remittances to the region) have not only grown rapidly since 1990, but their composition has also changed significantly. The volume of external flows to the region increased from $20 billion in 1990 to above $120 billion in 2012. Most of this increase in external flows to sub-Saharan Africa can be attributed to the increase in private capital flows and the growth of remittances, especially since 2005 (see Figure 1).

Figure 1. Sub-Saharan Africa: External Flows (1990-2012, in USD billions)

As also displayed in Figure 1, in 1990 the composition of external flows to sub-Saharan Africa was about 62 percent ODA, 31 percent gross inflows from the private sector, and about 7 percent remittances. However, by 2012, ODA accounted for about 22 percent of external flows to Africa, a share comparable to that of remittances (24 percent) and less than half the share of gross private capital flows (54 percent). Also notably, in 1990, FDI flows were greater than ODA flows in only two countries (Liberia and Nigeria) in sub-Saharan Africa excluding South Africa, but 22 years later, 17 countries received more FDI than ODA in 2012—suggesting that sub-Saharan African countries are increasingly becoming less aid dependent (see Figure 2).

Figure 2. Sub-Saharan Africa: Number of Countries Where FDI is Greater than ODA (1990-2012)

But to what extent have these changes in the scale and composition of external flows to sub-Saharan Africa equally benefited countries in the region? Did the rising tide lift all boats? Is aid really dying? Are all countries attracting private capital flows and benefiting from remittances to the same degree? Finally, how does external finance compare with domestic finance? 

The False Demise of ODA

A closer look at the data indicates that, clearly, ODA is not dead, though its role is changing. For instance, middle-income countries (MICs) are experiencing the sharpest decline in ODA as a share of total external flows to the region, while aid flows account for more than half of external flows in fragile as well as low-income countries (LICs) and resource-poor landlocked countries (see Figure 3 and Appendix).

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The Central African Republic (CAR), a landlocked country roughly the size of Texas, has endured a nearly constant state of political crisis since its independence from France in 1960. In fact, in the post-colonial era, the CAR has experienced only 10 years of rule under a democratically elected leader, Ange-Félix Patassé, from 1993 to 2003. Four of the CAR’s past five presidents have been removed from power through unconstitutional means, and each of these transitions has been marred by political instability and violence. Fragile attempts to build democratic political institutions and establish the rule of law have been undermined by coups, mutinies, and further lawlessness, making cycles of violence tragically the norm in the CAR.

The country’s current crisis (2012–present) stems from political tensions and competition for power between the predominantly Muslim Séléka rebel coalition and the government of President Francois Bozizé, as well as unresolved grievances from the CAR’s last conflict (2006–2007). Since the Séléka’s overthrow of the government in March 2013 and concurrent occupation of large areas of the country, the conflict has evolved to encompass an ethno-religious dimension: So-called Christian defense militias named the anti-balaka emerged to counter the Séléka alliance, but in effect sought revenge against the CAR’s Muslim minority (about 15 percent of the population), including civilians. During a March 2014 trip to the Central African Republic, United Nations High Commissioner for Human Rights Navi Pillay remarked that “the inter-communal hatred remains at a terrifying level,” as reports of atrocities and pre-genocidal indicators continued to surface. Even today, horrific crimes against civilians are still being committed at a frightening frequency in one of the poorest countries in the world: The CAR has a per capita GNI of $588 and a ranking of 185 out of 187 on 2013’s United Nations Human Development Index.

Amid the escalating insecurity in 2013, African Union (AU), French, and European forces were deployed under the auspices of the African-led International Support Mission in Central Africa (MISCA) to disarm militant groups and protect civilians at a critical juncture in December, and their efforts contributed to the relative stabilization of the capital in early 2014. Meanwhile, in January 2014, Séléka leaders relinquished power to a transitional government led by former mayor of Bangui, Catherine Samba-Panza, who was then tasked with preparing for national elections and establishing security throughout the country. In September 2014, the United Nations incorporated the MISCA forces into the larger Multidimensional Integrated Stabilization Mission in the Central African Republic (MINUSCA) and then in 2015 extended and reinforced its presence through 2016, in response to the ongoing violence. Despite the international military intervention and efforts of the transitional authorities to address the pervasive insecurity, reprisal killings continue and mobile armed groups still freely attack particularly remote, rural areas in the central and western regions of the country. The unguarded, porous borders have also allowed rebel forces and criminal elements to flee into distant areas of neighboring countries, including Chad and South Sudan, in order to prepare their attacks and return to the CAR.

This paper will explore the origins of the complex emergency affecting the CAR, with a particular focus on the economic causes and potential economic strategies for its resolution. It will begin by providing an overview of the core issues at stake and enumerating the driving and sustaining factors perpetuating the violence. Then it will discuss the consequences of the conflict on the humanitarian, security, political, and economic landscape of the CAR. Finally, it will highlight strategies for addressing the underlying issues and persisting tensions in the CAR to begin building a durable peace, arguing that the national authorities and international partners adopt a holistic approach to peace building that prioritizes inclusive economic recovery given the economic roots of the crisis.

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Since 2000, China has emerged as Africa’s largest trading partner and a major source of investment finance as well. Large numbers of Chinese workers and entrepreneurs have moved to Africa in recent years, with estimates running as high as one million. China’s engagement with Africa has no doubt led to faster growth and poverty reduction on the continent. It is also relatively popular: In attitude surveys, 70 percent of African respondents have a positive view of China, higher than percentages in Asia, the Americas, or Europe.

While China’s deepening engagement with Africa has largely been associated with better economic performance, its involvement is not without controversy. This is particularly true in the West, as typical headlines portray an exploitive relationship: “Into Africa: China’s Wild Rush,” “China in Africa: Investment or Exploitation?,” and “Clinton warns against ‘new colonialism’ in Africa.” 

My forthcoming study, "China’s Engagement with Africa: From Natural Resources to Human Resources," aims to objectively assess this important new development in the world. It has six main findings:

1. First, on the scale of China’s activities in Africa: The media often portrays China’s involvement as enormous, potentially overwhelming the continent. According to data from China’s Ministry of Commerce (MOFCOM), the stock of Chinese direct investment in Africa was $32 billion at the end of 2014. This represents less than 5 percent of the total stock of foreign investment on the continent. Stocks naturally change slowly. But the "World Investment Report 2015" similarly finds that China’s share of inward direct investment flows to Africa during 2013 and 2014 was only 4.4 percent of the total. Of course, direct investment is not the only form of foreign financing. The Export-Import Bank of China and China Development Bank have also made large loans in Africa, mostly to fund infrastructure projects. In recent years, China has provided about one-sixth of the external infrastructure financing for Africa. In short, Chinese financing is substantial enough to contribute meaningfully to African investment and growth, but the notion that China has provided an overwhelming amount of finance and is buying up the whole continent is inaccurate.

2. The second main finding from the study concerns China’s direct investment and governance. China has drawn attention by making large resource-related investments in countries with poor governance indicators, such as the Democratic Republic of Congo, Angola, and Sudan. These deals are certainly part of the picture when it comes to China’s engagement with Africa. But the more general relationship between Chinese direct investment and recipients’ governance environments is different. After controlling for market size and natural resource wealth, total foreign direct investment is highly correlated with measures of property rights and rule of law, as one might expect. This is true both globally and within the African continent. China’s outward direct investment, on the other hand, is uncorrelated with measures of property rights and the rule of law after controlling for market size and natural resource wealth. In this sense, Chinese investment is indifferent to the governance environment in a particular country. While China has investments in the Democratic Republic of Congo, Angola, and Sudan, those are balanced by investments in African countries that have relatively good governance environments. South Africa, for instance, is the foremost recipient of Chinese investment. Furthermore, some of the big resource deals in poor governance environments are not working out well, so Chinese state enterprises may well rethink their approach in the future.

3. A third main finding emerges from examining MOFCOM’s registry of Chinese firms investing in Africa. In the aggregate data on Chinese investment in different countries, the big state enterprise deals naturally play an outsized role. MOFCOM’s database on Chinese firms investing in Africa, on the other hand, provides a snapshot of what small- and medium-sized Chinese firms—most of which are private—are doing in Africa. Unlike the big state-owned enterprise investments, these firms are not focused on natural resource extraction. The largest area for investment is service sectors, with significant investment in manufacturing as well. Many African economies welcome this Chinese investment in manufacturing and services.

4. The fourth finding relates to infrastructure finance. In recent years infrastructure financing has expanded and helped many African countries begin to rectify infrastructure deficiencies. Africa has been receiving about $30 billion per year in external finance for infrastructure, of which China provides one-sixth. Chinese financing is a useful complement to other sources, particularly as traditional finance from multilateral development banks and bilateral donors is concentrated on water supply and sanitation. Likewise, private participation in infrastructure is primarily aimed at telecommunications. China has filled a niche by focusing on transportation and power.

   Chinese financing of infrastructure has also enabled Chinese construction companies to gain a firm foothold on the continent. Evidence suggests that Chinese companies have become highly competitive, crowding out African construction companies. This is an area where a trade-off seems to exist between, on the one hand, getting projects completed quickly and cheaply and, on the other, facilitating the long-term development of a local construction industry.

5. This point leads to the fifth finding of the study. There are a lot of Chinese workers in Africa; the total is disproportionately high when compared to the amount of financing that China has provided and compared to migrants from other continents. This is a tentative conclusion because the data on this issue are particular weak. But estimates of Chinese migrants in Africa exceed one million. Many migrants initially move to Africa as workers on Chinese projects in infrastructure and mining and then, perceiving good economic opportunities, stay on. Similar to the dilemma confronting the continent’s construction industry, African countries face a tradeoff here: Chinese workers bring skills and entrepreneurship, but their large numbers limit African workers’ opportunities for jobs and training. The popular notion that Chinese companies only employ Chinese workers is not accurate, but the overall number of Chinese workers in Africa is large. Africa may want to take a page from China’s playbook and limit the ability of foreign investors to bring in workers, forcing them to train local labor instead.

The popular notion that Chinese companies only employ Chinese workers is not accurate, but the overall number of Chinese workers in Africa is large.

6. A final important finding of the study is that the foundation for the Africa-China economic relationship is shifting. China’s involvement in Africa stretches back decades, but the economic relationship accelerated after 2000, when China’s growth model became especially resource-intensive. It made sense for resource-poor China to import natural resources from Africa and to export manufactures in return.

These patterns of trade and investment are now likely to gradually shift in response to changing demographics. The working-age population in China has peaked and will shrink over the coming decades. This has contributed to a tightening of the labor market and an increase in wages, which benefits Chinese people. Household income and consumption are also rising. Compared to past trends, China’s changing pattern of growth is less resource-intensive, so China’s needs for energy and minerals are relatively muted. At the same time, China is likely to be a steady supplier of foreign investment to other countries, and part of that will involve moving manufacturing value chains to lower-wage locations.

Africa’s demographics are moving in the opposite direction. In fact, they resemble China’s at the beginning of its economic reform 35 years ago. About half of Africa’s population is below the age of 20, which means the working-age population will surge over the next 20 years, and will probably continue growing until the middle of the century or later. Roughly speaking, Africa needs to create about 20 million jobs per year to employ its expanding workforce. Twenty years from now, it will need to create 30 million jobs per year. Africa’s demographics present both an opportunity and a challenge. It is unrealistic to expect the China-Africa economic relationship to change overnight. Nor would it be reasonable to expect large volumes of Chinese manufacturing to move to the continent in the near future; it would be more natural for value chains to migrate from China to nearby locations such as Vietnam and Bangladesh. But if even small amounts of manufacturing shift, this could make a significant difference for African economies, which are starting out with an extremely low base of industrialization. And it is useful to have a long-term vision that an economic relationship that started out very much centered on natural resources should shift over time to a greater focus on human resources.

For more on China’s engagement in Africa, check out the Brookings event hosted by the John L. Thornton China Center and the Africa Growth Initiative this Wednesday, July 13, at 3:30pm. 

       

Throughout the 2000s, Chinese demand for primary goods like oil, iron, copper, and zinc helped Africa reduce poverty more than it had in decades. Even so, China’s total investment in the continent’s natural resources has been smaller than many imagine, and, with growth moving away from manufacturing and toward consumption, China’s appetite for raw materials will continue to diminish. China’s shifting economic growth model aligns with Sub-Saharan Africa’s imminent labor force boom, presenting a significant opportunity for both sides. Maximizing mutual gain will depend on China and Africa cooperating to address a host of challenges: Can African countries limit the flow of Chinese migrants and foster domestic industries? Will Chinese investors adopt global norms of social and environmental responsibility? Where does the West fit in?

This study aims to objectively assess China’s economic engagement on the African continent, the extent to which African economies are benefiting, prospects for the future, and ways to make this relationship more productive. David Dollar marshals evidence about the scale of trade, investment, infrastructure cooperation, and migration between China and Africa, all of which are relatively recent phenomena. In addition, Dollar addresses the question of whether and how China’s involvement differs from that of Africa’s other economic partners. The concluding chapter provides some tentative recommendations for African countries, China, and the West.

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The G-20 Summit begins in Brisbane, Australia this Saturday, November 15. Leaders are descending on the city to tackle the biggest economic challenges facing the planet. A major theme of the discussions will likely be convergence—the rapid approach of average incomes in low- and middle-income countries towards those in advanced economies—and its sustainability. In a recent brief in the Brookings Global Think Tank 20 series, I explore this issue in the sub-Saharan African context, examining what has been holding the region back, how Africa might reach the rapid convergence seen by other emerging economies, and if and how convergence might be sustained. For my full brief, see here.

As most know, despite the “growth miracles” happening on the continent, sub-Saharan Africa still has a long way to go. Africa’s economic growth started much later and has gone much slower than the rest of the developing world; thus its per capita income gap against advanced economies still remains quite large. In fact, Africa hasn’t even converged with other emerging economies (see Figure 1). 

In addition to slow growth, Africa faces many, many challenges: Conflict-ridden countries still face a declining income per capita, and inequality is rampant. While Africa’s poverty rate is dropping, its share in global poverty is not: In 1990, 56 percent of Africans lived on under $1.25 a day, meaning that they represented 15 percent of those in poverty worldwide. Over the next 20 years, the region’s poverty rate dropped to 48 percent, but its share of global poverty doubled. At this rate, many predict that by 2030 Africa’s poverty rate will fall to 24 percent, but represent 82 percent of the world’s poor (Chandy et al., 2013). 

Of the utmost importance for convergence, though, is the issue of structural transformation in the region. If sub-Saharan Africa can reduce its reliance on unproductive and volatile sectors, it will build a foundation on which economic growth—and convergence—can be sustained.

Current African Economies: Agriculture, Natural Resources and Services

Currently, African economies are characterized by a reliance on natural resources, agriculture and a budding services sector. Natural resources are, and will likely continue to be, major drivers of Africa’s economic growth: About 20 African countries derived more than 25 percent of their total merchandise exports in 2000-2011 from them. Unfortunately, this dependence on natural resources comes hand-in-hand with challenges such as financial volatility, rent-seeking behavior, and a loss of competitiveness, among many others—making a turn away from them necessary for long-term, sustainable growth. Similarly, most African economies depend heavily on the low-yield agriculture sector—its least productive sector and with the lowest income and consumption levels.

While labor has been moving out of the agriculture sector, it is moving into the services sector. From 2000-2010, the agriculture labor force share fell by about 10 percent while services grew by 8 percent (McMillan and Harttgen, 2014). While much of the movement into the services industry has been into productive areas such as telecommunications and banking, most service sector jobs in sub-Saharan Africa are informal.  Although informal activities offer earning opportunities to many people, they are often unstable and it is far from clear that they can be an engine of sustainable and inclusive high economic growth. In addition, growth in the services sector overall has historically not shown the economic returns that industry has.

If policymakers can enhance productivity in the services sector, then growth could take off even more rapidly, but until then, the highly productive manufacturing sector will be the key to Africa’s convergence. (For more on this, see the attached PowerPoint presentation.)

The Missing Piece: African Industry

Industrialization in Africa is low: Manufacturing–the driver of growth in Asia—employs less than 8 percent of the workforce and makes up only 10 percent of GDP on the continent (Rodrik, 2014). In comparison to the 8 percent growth in the services sector from 2000-2010, manufacturing saw only 2 percent growth (McMillan and Harttgen, 2014). In addition, the region’s manufacturing sector is dominated mostly by small and informal (and thus less productive) firms. Since the research has shown that industry was key to the explosive and continued growth in Asia and Europe, without concentration on or support of the manufacturing sector, African economies are not likely to replicate those convergence dynamics (Rodrik, 2014). Thus, Africa’s slow pace of industrialization means that, in addition to its late start time and its past sluggish growth, the region has another obstacle towards convergence.

There is hope, however; there are already hints that structural transformation might be happening. The recent rebasing of Nigeria’s economy revealed some important new trends. There, the contribution from oil and gas to GDP fell from 32 to 14 percent, and agriculture from 35 to 22 percent. At the same time, the telecommunication’s contribution sector rose from 0.9 to 9 percent, and manufacturing from 2 to 7 percent.

Achieving a successful economic transformation will help capitalize on improved growth fundamentals and achieve high and sustained per capita growth rates. However, for such a process to yield lasting benefits, it is crucial to better understand the ongoing structural changes taking place in Africa. This is an important task for economists studying Africa and, in addition to achieving a “data revolution,” both meta-analysis and case study methods can be useful complements to the current body of research on the continent.

References

Chandy, Laurence, Natasha Ledlie, and Veronika Penciakova. 2013. “Africa’s Challenge to End Extreme Poverty by 2030: Too Slow or Too Far Behind?” The Brookings Institution, Washington D.C. April 2013, http://www.brookings.edu/blogs/up-front/posts/2013/05/29-africachallenge-end-extreme-poverty-2030-chandy

McMillan, Margaret and Ken Harttgen. 2014. “What is Driving the Africa Growth Miracle?” NBER Working Paper No. 20077, April. http://www.nber.org/papers/w20077

Rodrik, Dani. 2014. “An African Growth Miracle?” NBER Working Paper No. 20188, June. http://www.nber.org/papers/w20188

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Expanding formal financial services—including traditional services (offered by banks) and digital services (provided via mobile money systems)—to individuals previously excluded from their access can improve their capacity to save, make payments swiftly and securely, and cope with economic shocks. Importantly, having access to financial services is also considered a critical component of women’s full economic participation and empowerment. Many countries, therefore, are working to increase accessibility to and usage of formal financial services as important strategies to improving individuals’ financial stability and, at a macro-level, supporting inclusive development and growth.

In sub-Saharan Africa, where the provision and uptake of traditional financial services is limited due to a wide range of factors (including poverty, lack of savings, and poor infrastructure, among others), a number of governments are working to promote digital financial service offerings by creating an enabling environment for various entities (including bank and non-bank formal providers) to offer them. In turn, the region is leading global progress in the adoption of digital financial services: 12 percent of sub-Saharan African adults have a mobile money account (nearly half of whom exclusively use digital services) compared with only 2 percent of adults at the global level. In fact, in five African countries (Cote d’Ivoire, Somalia, Tanzania, Uganda, and Zimbabwe) more adults have mobile money accounts than have conventional bank accounts.

In the first of a series of publications exploring and sharing information that can improve financial inclusion around the world, the Brookings Financial and Digital Inclusion Project (FDIP) takes stock of progress toward financial inclusion in 21 countries from various economic, political, and geographic contexts and scores them along four key dimensions of financial inclusion: country commitment, mobile capacity, regulatory environment, and adoption of traditional and digital financial services. The interactive rankings and report were launched on Wednesday, August 26 at an event entitled, “Measuring progress on financial and digital inclusion.” According to the report’s findings, four out of the five top-scoring countries are located in sub-Saharan Africa. On the other hand, some of the lowest ranked countries were also African, demonstrating regional diversity in the pathways toward financial inclusion and their subsequent outcomes.

Here are some of our main takeaways from four of the nine African case studies featured in the report: Ethiopia (ranked #21 overall), Kenya (ranked #1), Nigeria (ranked #9), and South Africa (ranked #2). Kenya and Ethiopia are the highest- and lowest-ranked African countries in the report, respectively, while Nigeria and South Africa represent the continent’s two largest economies, which have achieved disparate outcomes in terms of financial inclusion. (For the overall rankings of the nine African countries included in the report, see Figure 1.)

Figure 1. Overall FDIP rankings of African countries

Ethiopia: A developing mobile services ecosystem

• Ethiopia’s overall financial and digital inclusion score was low due in large part to its poor mobile capacity and the low adoption rates of formal (particularly digital) financial services. The World Bank’s Global Financial Inclusion Index (Findex)—one of the major datasets highlighted in the report—reveals that only 22 percent of adults in Ethiopia had a formal financial account and about 0.03 percent of adults had a mobile money account in 2014.
• In addition, limited development of the information and communications technologies (ICT) sector and mobile communications infrastructure have inhibited mobile and digital access, reducing the array of financial products and services available to underserved populations.
• However, Ethiopian digital financial inclusion has the potential and political support to grow: The government is taking steps to address shortcomings in the enabling environment for digital financial service provision, for example, by adopting a mobile and agent banking framework in 2013. This framework sets the foundation for allowing banks and microfinance institutions to provide services through mobile phones and agents. The government is also in the process of developing a dedicated Financial Inclusion Council and secretariat in order to enhance participation from non-financial institutions (namely, mobile network operators) in developing policies for achieving greater digital financial inclusion.

Kenya: Mobile money innovations drive uptake

• Kenya scored highest in the overall rankings due to its highly accessible mobile networks, regulatory framework conducive to the development of digital financial services, and products that cater to consumer needs and so promote adoption. Kenya also has the highest rate of financial account penetration among women.
• Between 2011 and 2014, Kenya increased its levels of formal financial and mobile money account penetration by 33 percentage points owing mostly to robust take-up within the country’s vibrant mobile money ecosystem. Nearly 90 percent of Kenyan households reported using mobile money services as of August 2014, and the M-Pesa system (operated by Safaricom) is widely considered the leading driver of success in adoption of mobile money usage.
• Innovative services that have helped spur financial inclusion among marginalized groups have been developed within Kenya’s mobile network operator-led (MNO-led) approach: For example, in 2012, the Commercial Bank of Africa and Safaricom partnered together to provide the M-Shwari service, which offers interest-bearing mobile money accounts and microfinance.
• Still, one aspect of the mobile money system upon which the Kenyan government could improve is consumer protection of clients of credit-only institutions, such as microfinance institutions (MFIs) and savings and credit cooperatives (SACCOs). Lack of oversight could potentially leave users without adequate consumer protection as these institutions are not adequately regulated and supervised.

Nigeria: A stalled bank-led approach

• Nigeria achieved a moderate score in the FDIP rankings because, despite a number of country commitments in recent years, low levels of adoption persist. In fact, Nigeria’s increase in financial inclusion has not been driven by uptake of mobile money services: While the proportion of adults age 15 and older who have a mobile money or traditional bank account increased from 30 percent in 2011 to 44 percent in 2014, only 0.1 percent of adults had a registered mobile money account in 2014 and had used it at least once in the 90 days prior, according to an Intermedia survey.
• The Central Bank of Nigeria (CBN) has taken a bank-led approach to mobile money, in which banks promote their traditional services via the mobile network. This is an alternative approach to the MNO-led approach seen in Kenya, where MNOs provide the network of agents and manage customer relations. Some experts have noted that in cases where a bank-led approach is adopted, for example in India, the financial incentives are not strong enough for banks to expand their services to the unbanked, while mobile network operators on the other hand have greater “assets, expertise, and incentives” to launch and scale mobile money services.

South Africa: Strong mobile capacity, yet room for growth in adoption

• South Africa was ranked highest of all countries in the report in mobile capacity for its robust mobile infrastructure and large proportions of the population subscribing to mobile devices (70 percent) and covered by 3G mobile networks (96 percent). It also tied for the highest score of formal account penetration, including among rural, low-income, and female groups.
• In the past decade, financial inclusion (as measured by the proportion of the population using financial products and services—formal and informal) has increased dramatically from 61 percent in 2004 to 86 percent in 2014. This uptick can be partially attributed to the increase in banking and ownership of ATM/debit cards. Disparities in penetration exist, however, among gender and race, with women and white populations being more likely to be banked than men and black populations.
• As cited in the Brookings FDIP 2015 report, the 2014 Global Findex found that 14 percent of adults (age 15 and older) possessed a mobile money account in 2014. The top 60 percent of income earners were more than twice as likely to have accounts as the bottom 40 percent of the income scale. So despite strong mobile capacity, there is still room for growth in terms of mobile money penetration especially among low-income adults.

So what’s next for expanding financial and digital inclusion?

The FDIP case studies offer a number of insights into the policies and frameworks conducive to the uptake of formal financial services. In several of African countries considered to be mobile money “success stories,” for example, in Kenya (also see the Rwanda country profile in the report), mobile network operators play a substantial role in spearheading the drive toward financial inclusion and have collaborated closely with central banks, ministries of finance and communications, banks, and non-bank financial providers. Ensuring the participation of all stakeholders—not just governments and banks—in setting the national financial inclusion priorities and agenda, then, is critical. Furthermore, actively participating in multinational financial inclusion networks can enhance knowledge-sharing among members and lead to further country commitments. Finally, leading surveys of the national financial inclusion landscape can also help governments and financial service providers better target their strategies and services to the local needs and context.