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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.

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.

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 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.

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.

As the first decade of the 2000s drew to a close, the two downturns that bookended the period, combined with slow job growth between, clearly took their toll on the nation’s less fortunate residents.

Over a ten-year span, the country saw the poor population grow by 12.3 million, driving the total number of Americans in poverty to a historic high of 46.2 million. By the end of the decade, over 15 percent of the nation’s population lived below the federal poverty line—$22,314 for a family of four in 2010—though these increases did not occur evenly throughout the country.

An analysis of data on neighborhood poverty from the 2005–09 American Community Surveys and Census 2000 reveals that:

After declining in the 1990s, the population in extreme-poverty neighborhoods—where at least 40 percent of individuals live below the poverty line—rose by one-third from 2000 to 2005–09. By the end of the period, 10.5 percent of poor people nationwide lived in such neighborhoods, up from 9.1 percent in 2000, but still well below the 14.1 percent rate in 1990.

Concentrated poverty nearly doubled in Midwestern metro areas from 2000 to 2005–09, and rose by one-third in Southern metro areas. The Great Lakes metro areas of Toledo, Youngstown, Detroit, and Dayton ranked among those experiencing the largest increases in concentrated poverty rates, while the South was home to metro areas posting both some of the largest increases (El Paso, Baton Rouge, and Jackson) and decreases (McAllen, Virginia Beach, and Charleston). At the same time, concentrated poverty declined in Western metro areas, a trend which may have reversed in the wake of the late 2000s housing crisis.

The population in extreme-poverty neighborhoods rose more than twice as fast in suburbs as in cities from 2000 to 2005–09. The same is true of poor residents in extreme-poverty tracts, who increased by 41 percent in suburbs, compared to 17 percent in cities. However, poor people in cities remain more than four times as likely to live in concentrated poverty as their suburban counterparts.

The shift of concentrated poverty to the Midwest and South in the 2000s altered the average demographic profile of extreme-poverty neighborhoods. Compared to 2000, residents of extreme-poverty neighborhoods in 2005–09 were more likely to be white, native-born, high school or college graduates, homeowners, and not receiving public assistance. However, black residents continued to comprise the largest share of the population in these neighborhoods (45 percent), and over two-thirds of residents had a high school diploma or less.

The recession-induced rise in poverty in the late 2000s likely further increased the concentration of poor individuals into neighborhoods of extreme poverty. While the concentrated poverty rate in large metro areas grew by half a percentage point between 2000 and 2005–09, estimates suggest the concentrated poverty rate rose by 3.5 percentage points in 2010 alone, to reach 15.1 percent. Some of the steepest estimated increases compared to 2005–09 occurred in Sun Belt metro areas like Cape Coral, Fresno, Modesto, and Palm Bay, and in Midwestern places like Indianapolis, Grand Rapids, and Akron.

These trends suggest the strong economy of the late 1990s did not permanently resolve the challenge of concentrated poverty. The slower economic growth of the 2000s, followed by the worst downturn in decades, led to increases in neighborhoods of extreme poverty once again throughout the nation, particularly in suburban and small metropolitan communities and in the Midwest. Policies that foster balanced and sustainable economic growth at the regional level, and that forge connections between growing clusters of low-income neighborhoods and regional economic opportunity, will be key to longer-term progress against concentrated disadvantage.

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• Concentrated Poverty Grips Communities

Last week international electronics mega-manufacturer Foxconn announced plans to invest $30 million in a new robotics plant in Harrisburg, PA. Foxconn, the notorious Chinese low-wage manufacturer of Apple’s iPhone, has become the poster child of U.S. outsourcing in the face of ruinous global labor cost competition. The calculus of manufacturing supremacy is seemingly simple: Low labor costs and taxes, proximity to a large consumer base, and manageable corruption levels equal a sure strategy to attract global firms.

So what’s going on in Harrisburg? Foxconn is beginning to realize what a number of global manufacturers have come to realize: Production sites that can leverage university, government, and private R&D, a market-ready STEM workforce, and a vibrant cluster of global manufacturing supply chains trump cheap labor and tax breaks. In this regard the Harrisburg region is a big win for Pennsylvania as well as Foxconn—a company trying to move away from a legacy of poor working conditions to one of high-value, high-skilled production.   

Harrisburg and the larger Rust Belt Pittsburgh-Youngstown region to the west are hotbeds of advanced manufacturing. Youngstown is home to the National Additive Manufacturing Innovation Institute—an internationally recognized hub for so-called “3D printing” that draws together public- and private-sector resources. Pittsburgh—with the University of Pittsburgh, Carnegie Mellon University, and firms like Google—has redefined itself from a gilded-era steel town to a modern technology leader in software and robotics. Indeed, Foxconn is investing $10 million in Carnegie Mellon’s world class advanced robotics R&D. Finally, also in the Rust Belt and including Harrisburg, Akron and Cleveland, cheap natural gas has helped push manufacturing job and firm growth in a region that was hit extremely hard by the recession.

While Foxconn may be one of the highest profile foreign firm to relocate to the United States it is certainly not, as we’ve discussed, the first. Again and again, global firms interested in high-end manufacturing are putting a renewed premium on geographic clusters of intensive innovation. To be sure, countries with low labor costs still maintain solid advantages in a number manufacturing industries that will help their economies grow—this is the benefit and reality of a global economy. But when it comes to advanced manufacturing, U.S. metro areas and regions that foster synergies between research, skills, and production will likely continue to be highly sought after from firms looking to move up the global value chain.

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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Mobile devices are making a big difference in the lives of billions of people around the world who use them every day. Internet-enabled smartphones and tablets provide access to information and a channel of communication for users. Building wireless networks to support mobile devices requires large capital investments from wireless carriers who must purchase wireless spectrum and infrastructure. To ensure that mobile services are reliable and affordable, national governments must allocate enough wireless spectrum to commercial carriers to satisfy demand. This is the subject of a new paper from Shamika Ravi and Darrell M. West titled “Spectrum Policy in India."

A scarce resource

Mobile devices typically operate on frequencies from 30 kHz to 300 GHz on the radio spectrum. Unless spectrum is allocated efficiently, the scarcity of available frequencies leads to poor quality and high costs for mobile broadband. The growing demand for mobile service in India currently exceeds the amount of spectrum available to wireless carriers. The scarcity of wireless spectrum limits reliable Internet access for mobile subscribers who have no alternative point of access. According to the Cellular Operators Association of India, nearly 60 percent of Internet users only have access through their mobile phones.

Mobile service in India is relatively expensive for many consumers because the Indian military reserves so much spectrum for their own use. Much of this spectrum goes underutilized, even as commercial carriers plead for more spectrum to be released. When the Indian government does release spectrum, it is typically through auctions with high starting bids. Setting high starting bids for blocks of spectrum can lead to high selling prices that force wireless carriers to take out large loans. Higher prices for spectrum raise costs for consumers and reduce private sector investment in wireless infrastructure. Rather than make spectrum artificially scarce, the Indian government should work with wireless carriers to lower the prices for consumers. 

Investing in India’s future

Reliable mobile service has the potential to greatly enhance economic growth in India. Analysis from the Boston Consulting Group found that the India’s mobile sector grew at 12.4 percent annually from 2009-2014; it now accounts for 2.2 percent of India’s gross domestic product. Potential growth comes from filling gaps in educational and health care spending in rural communities. Innovative mobile applications provide a low cost method of sending education and health care resources to underserved rural communities that lack physical infrastructure. In India’s rapidly growing cities, mobile services are seen as a way to improve the quality of government services and promote entrepreneurship. Prime Minister Narendra Modi recently designated 100 “smart cities” that would use technology to overcome the challenges of India’s rapid urbanization.

India could free up spectrum by adopting the “NATO Band” of spectrum for military uses and auctioning off the remaining spectrum.  The NATO band is used by the militaries of NATO member countries and several of their allies, and it already overlaps with much of the Indian military’s spectrum.  Furthermore, the Indian government must lower the minimum bids at spectrum auctions and lower taxes so that wireless carriers have enough profits to build their networks.  Mobile technologies are rapidly evolving, and each new generation has greater demands for spectrum. Regulators in India will not only have to maintain affordable prices for the current generation of mobile technology, but also anticipate upgrades that will deliver more data at faster speeds.