Abia to emerge strong economy in Nigeria
September 20, 2013 | 0 Comments
By COSMOS NDUKWE*
Planning is the process of thinking about and organizing the activities required to achieve a desired goal. Planning involves the creation and maintenance of a plan. As such, planning is a fundamental property of intelligent behavior.
Planning is the hallmark of the Governor Theodore Orji led administration in Abia State. No wonder His Excellency’s systematic approach to issues has endeared him to the people of the State.
Despite inheriting N29 billion when he took over leadership in 2007, Governor Theodore Orji has not borrowed money from any commercial bank to finance projects under his Legacy programme.
However, successes so far recorded by his administration in healthcare, security, agriculture, housing and road construction and rehabilitation are as a result of prudent management of scarce resources.
According to Orji, I inherited N29 billion when I took over mantle of leadership in 2007, which we are still battling to clear. We are also still paying other loans inherited by previous administrations in the State.
“What I met on ground here, as IGR was N150 million monthly. It is of recent that we started getting N250 to about N300 million monthly and whatever we generate internally, we add it up to our federal allocation to run government.
“All the projects you see us do are from these two revenue sources. We are not borrowing money. So, I attribute our success so far to planning and prudent management of scarce resources.”
The dream of the Governor Theodore Orji led administration in Abia State is to leave a lasting legacy of sustainable development and transformation in the State.
The Governor continued, “While in the last two years, we may not have accomplished all the things we set out to do, but we work with sincerity for Abians, which our impressive score card has shown.”
The Government in the past two years has resolved to put Abia State on a solid base that can stand the test of time. This process may be slow but the result will be enduring. And this is the only way to go for the sake of posterity.
It is in the pursuit of the above dreams that the legacy projects of the administration have to continue. We are building a befitting government House for Abians in Umuahia and the first State Government funded secretariat for our civil servants. The old secretariat built by the Federal Government which was in a dilapidated condition has been rehabilitated.
And this is because we recognize these projects including the building of a world-class conference centre as symbols of the State that have been ignored over the years.
In a bid to continue on this pedestal of prudent management of scarce resources, His Excellency, Governor Theodore Orji recently charged Ministries, Departments and Agencies (MDAs) in the State to ensure that their 2014 budget data is captured in the required degree of detail, with the source and reason for every transaction identified.
Governor Orji, affirmed that the measure will assist observers view the budget information in the appropriate context and implored them to show due diligence in the budget process, especially as the country moves from the current cash to public sector accounting standard and project to programme based budgeting approach.
The State Government in its effort to introduce a lasting legacy in the fiscal management process in the State consciously signed in with the comity of State’s in the country to evolve a budget process which has become robust in line with international best practices.
According to Orji, the budget defence session will bring about a budget system that is designed for better policy formulation, fiscal planning, budget analysis, accountability, routine financial management and international comparison.
Governor Orji maintained that it is for that reason that the State is witnessing the high level of infrastructural and social development that are ongoing in the state.
The truth is that Abia State is making giant strides to emerge as one of the strongest economies in Nigeria is not in doubt, given the infrastructural foundation laid by the current administration.
The 2014 Abia State budget will be programme based and capture the MDA’s proposals and reflect government policy priorities within the limit of the State’s fiscal targets, affirms Adanma Iheuwa, executive secretary, Abia State Planning Commission.
Abia is among the first State’s in the country to key into the new approach of International Public Sector Accounting standard (IPSAS) for public sector at all levels of government and approved by the Federal Government.
What we want the people of Abia to know is that Rome was not built in a day, if the past administration had laid a solid foundation, what the Governor would have done is to consolidate on it, however previous administrations did nothing, which HIS Excellency is now trying to put in place.
*Ndukwe is the chief of staff to Abia State Governor.
Tanzania Poised to Transform National Energy Sector with Influx of Renewables
September 13, 2013 | 0 Comments
Tunis, September 12, 2013 – On September 12, the Republic of Tanzania received endorsement from the Climate Investment Funds (CIF) of an investment plan which will help the country to scale-up the development of its abundant renewable energy resources. The plan is designed to transform the country’s energy sector, shifting from its increasing dependence on fossil fuels and climate-sensitive hydro resources to a more diversified energy mix making use of the country’s abundant, reliable and cost efficient geothermal and solar resources.
The plan will be funded by US $50 million from the CIF’s Scaling-Up Renewable Energy Program in Low-Income Countries (SREP) and the balance from the African Development Bank (AfDB), World Bank, Government, private sector, commercial sources and other development partners. It features a geothermal development component and a renewable energy for rural electrification component.
The geothermal development component, which is expected to receive US $25 million from SREP and US $45 million support from the AfDB, will catalyze development of more than 100 MW of geothermal power, principally by the private sector, and will establish an enabling environment for large-scale geothermal development.
The renewable energy for rural electrification component will seek to: (i) build an efficient and responsive development infrastructure for renewable energy-based rural electrification and (ii) demonstrate its effectiveness by supporting a time-slice of private-sector investments in off-grid electricity enterprises.
The plan will be implemented through an integrated approach that includes:
§ investments in renewable energy technologies, particularly the infrastructure needed for electricity production and distribution;
§ stakeholders capacity building;
§ integration with dynamic Public-Private Partnerships (PPPs);
§ provision of adequate technical assistance and advisory services.
It is expected that SREP Tanzania will have a transformative impact on the country by supporting low carbon development pathways through reducing energy poverty and increasing energy security. By 2020, it is expected that per capita electricity use will increase from 78 to 350kWh, with annual electricity output from renewable energy increasing from 370 to 2,000 GWh/year once the geothermal plant becomes operational.
An additional $1.7 million was also approved in project preparation grants for the two components of the plan.
About the Climate Investment Funds (CIF)
Established in 2008 as one of the largest fast-tracked climate financing instruments in the world, the US $7.6 billion CIF provides developing countries with grants, concessional loans, risk mitigation instruments, and equity that leverage significant financing from the private sector, multilateral development banks (MDBs), and other sources. Five MDBs—the African Development Bank (AfDB), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), Inter-American Development Bank (IDB), and World Bank Group (WBG)—implement CIF-funded projects and programs.
Contact: Mafalda Duarte, Chief Climate Change Specialist and CIF Coordinator, ONEC firstname.lastname@example.org
For further information on the CIF projects supported by the AfDB, visit “Financing Change: the AfDB and CIF for a Climate-Smart Africa”
Petroleum to the People
September 7, 2013 | 0 Comments
Africa’s Coming Resource Curse—and How to Avoid It
In October 2011, the U.S. Department of Justice filed a motion to seize a palatial cliff-top home in Malibu, California. The 16-acre property towers over its neighbors, with a palm-lined driveway leading to a plaster-and-tile mansion. Situated in the heart of one of the United States’ most expensive neighborhoods, the $30 million estate includes a swimming pool, a tennis court, and a four-hole golf course. In its complaint, the Justice Department also set its sights on high-performance speedboats worth $2 million, over two dozen cars (including a $2 million Maserati and eight Ferraris), and $3.2 million in Michael Jackson memorabilia — in total, assets equaling approximately $71 million. What made these extravagant possessions all the more remarkable was that they belonged to a government worker from a small African country who was making an official salary of about $80,000 a year: Teodoro Nguema Obiang Mangue, the oldest son of and heir apparent to Teodoro Obiang Nguema Mbasogo, the longtime president of Equatorial Guinea.
Home to over one billion barrels of oil reserves, Equatorial Guinea has exported as many as 400,000 barrels of oil a day since 1995, a bonanza that has made the country wealthier, in terms of GDP per capita, than France, Japan, and the United Kingdom. Little of this wealth, however, has helped the vast majority of Equatorial Guinea’s 700,000 people: today, three out of every four Equatorial Guineans live on less than $2 a day, and infant mortality rates in the country have barely budged since oil was first discovered there. The president’s family members and other elites connected to the Obiang regime, meanwhile, have prospered.
As a result, Equatorial Guinea has become a textbook example of the so-called resource curse, a global phenomenon in which vast natural resource wealth leads to rapacious corruption, decimated governance, and chronic underdevelopment. Worse still, for the last three decades, the Obiang family was able to trade and travel freely around the world, until the Justice Department finally moved to seize the younger Obiang’s home and possessions on the charge that he had used his position and influence to acquire illicit wealth. The United States’ recent crackdown is laudable, but the family’s ability to travel and conduct business in the United States and around the world for so long highlights the gaps in the architecture of international accountability and justice. Equatorial Guinea’s story yields many foreboding lessons, but none more obvious than this: oil-rich developing countries that want to avoid the resource curse cannot wait for the international system to fight corruption for them.
Equatorial Guinea’s example will become increasingly relevant over the next decade as a massive wave of new oil and gas discoveries transforms Africa’s economic and political landscape. Over the next ten years, new technologies will allow oil producers to extract billions of barrels of exportable oil from the East African Rift Valley and West Africa’s Gulf of Guinea. If current estimates are even close to accurate, trillions of dollars in oil revenue will ultimately descend on a dozen African countries that have never before experienced such influxes. In East Africa, that list will likely include Ethiopia, Kenya, Malawi, Mauritius, Tanzania, and Uganda; in West Africa, it will probably include Gambia, Ghana, Liberia, São Tomé and Príncipe, Senegal, and Sierra Leone. (Niger is another possibility, but given the lack of firm estimates of its oil reserves, it is not included in the calculations here.) And this windfall would come on top of the enormous oil revenues that some still-poor sub-Saharan African countries, such as Angola, Chad, Gabon, Nigeria, and Sudan (and South Sudan), have been earning for decades, as well as the new oil revenues that Ghana is beginning to accrue. All told, within a decade, a third or more of African countries may derive the majority of their export earnings from oil and gas.
Oil booms poison the prospects for development in poor countries. The surge of easy money fuels inflation, fans waste and massive corruption, distorts exchange rates, undermines the competitiveness of traditional export sectors such as agriculture, and preempts the growth of manufacturing. Moreover, as oil prices fluctuate on world markets, oil-rich countries can suddenly become cash poor when booms go bust (since poor countries rarely save any of these revenue windfalls). Oil booms are also bad news for democracy and the rule of law. In fact, not a single developing country that derives the bulk of its export earnings from oil and gas is a democracy. Rather than fostering an entrepreneurial middle class, oil wealth, when controlled by the government, stifles the emergence of an independent business class and swells the power of the state vis-à-vis civil society.
In Africa, then, where one-party dominance or outright authoritarian rule prevails, as in Ethiopia, Gambia, Tanzania, and Uganda, oil wealth will further entrench it. And where democracy is struggling to sink roots — as in Kenya, Liberia, Malawi, Senegal, and Sierra Leone — it could easily overwhelm weak state institutions. Even Ghana, the most liberal and stable democracy in West Africa, could fall victim to the problem of oil revenues. The country now exports fewer than 100,000 barrels a day, but that figure is estimated to soar to as much as half a million barrels by 2015.
If used wisely, this influx of capital has the potential to fund pathbreaking improvements in physical infrastructure and human well-being. But if state officials, enabled by the absence of meaningful institutions of transparency and accountability, manage to divert the oil revenues to themselves, then the new wealth will serve only to further consolidate the power and inflate the personal fortunes of the ruling elites. There is no reason to expect that newly rich oil producers in Africa will meet a fate much different from that of Angola, Equatorial Guinea, Nigeria, and Sudan, all of which rank in the worst fifth of all countries in terms of bribery and corruption.
Unless, that is, African governments embrace a radical policy approach: handing a large share of the new revenues directly to the people as taxable income. The influx of funds from new oil discoveries will be so large that if properly managed, it could catapult developing countries into genuine economic and social development. By taking control of these revenues out of the hands of the political elite and restoring the link between citizens and their public officials, this “oil to cash” strategy offers the best hope for tomorrow’s oil-rich African nations to avoid the fate that has befallen so many of yesterday’s.
THE CAUSE OF THE CURSE
For a long time, those who studied economic development assumed that valuable natural resources were a blessing — that, as the scholar Norton Ginsburg wrote in 1957, “the possession of a sizable and diversified natural resource endowment is a major advantage to any country embarking upon a period of rapid economic growth.” Since the 1980s, however, experts have come to the consensus that the opposite is true. In fact, the economies of resource-rich countries have performed far worse than those of their resource-poor neighbors, and increases in natural resource wealth are strongly correlated with greater corruption, authoritarianism, political and economic instability, and civil war.
The root cause of the curse is the divergent effect that resource wealth has on the incentives of citizens and public officials. When unearned income — or “rents,” as economists say — replaces taxes as the main source of government funding, the social contract between a population and its government is severed. In well-functioning states (especially democracies), citizens consent to be taxed in exchange for public services and protection. Since the government relies on tax revenues for its very existence, taxation becomes the binding force of accountability between public officials and their constituents: public servants are incentivized to meet the public’s expectations because the population at large is the most direct and important stakeholder in the government’s functions. As direct investors, citizens also have a powerful interest in seeing that their taxes are used properly and efficiently.
It follows that the introduction of nontax revenue — from foreign aid or the sale of valuable natural resources, for example — reduces a government’s reliance on revenue from its people and thus weakens the incentive to serve them. In the absence of the bonds of scrutiny and accountability that taxation forges, the external rents that fall into state coffers are seen not as belonging to the people but as up for grabs by the luckiest, the best connected, or the most brazen. Corruption, patronage, and rent seeking flourish. Elites grow rich; everyone else grows dependent, cynical, or detached.
The result is that oil states generate not public goods for development but private and political goods instead. When state revenue seems to gush up from the ground as free money, and when resource rents displace taxation as the main source of government revenue, political elites have incentives to focus on the private accumulation of wealth and limit distribution of it to their political support networks. They have little reason to use this public treasure to deliver roads, schools, fertilizers, clinics, medicine, and so on. Meanwhile, the people have incentives to plead and compete for whatever crumbs may fall from the political table.
These political dynamics already tend to impede progress in all low-income countries. They become insurmountable traps in ones where the state’s revenue is largely derived from external rents, especially a massive flow of oil revenues. Yet that is exactly what many African countries will likely soon experience.
AFRICA’S COMING OIL BOOM
In the next decade, thanks to innovations in exploration and extraction technologies, oil producers will be able to profitably tap areas in Africa where reserves have long been suspected to lie. Twelve African nations are likely to become new high-level oil exporters. Although estimates of oil reserves and exporting capacity are notoriously volatile, it is possible that more than 25 billion barrels of oil will become available for export in Africa over the next decade — enough to increase export earnings many times over in some countries and revolutionize the social well-being of over one billion Africans.
These new sources of oil are highly concentrated in two geographic areas: in West Africa, offshore in the Atlantic Ocean and the Gulf of Guinea, and in East Africa, in the Rift Valley, which runs through much of the region. Oil is not new to the Gulf of Guinea. With major long-term exporters, such as Equatorial Guinea and Nigeria, the area has been exporting as much as three million barrels of oil a day for over four decades. A period of unprecedented regional stability, however, has allowed for a new wave of investment in the exploration and production of previously untapped deep-water oil sources. In the past five years, commercial-quality oil sources have been found in or off the coasts of Senegal, Gambia, Sierra Leone, Liberia, Ghana, and São Tomé and Príncipe. Although the estimates of recoverable oil reserves vary greatly by country (four billion barrels in São Tomé and Príncipe, two billion in Ghana, 1.5 billion each in Senegal and Liberia, and one billion in Gambia), and although these estimates vary in their certainty, what is clear is that each country has enough exportable oil to transform its politics and economy.
In East Africa, tectonic plates have been splitting apart for millenia, creating a massive rift that runs for roughly 2,200 miles. As the plates have diverged, deep-seated plumes of magma have expelled oil into reservoir sands. Recent technological advances, including extended-reach drilling and long-distance imaging technology, have made the extraction of oil from these sands more economically efficient. Meanwhile, relative regional stability over the past decade has taken much of the financial risk out of long-term investment. As in West Africa, the estimates of reserves here vary. But the best ones available suggest that roughly nine billion new barrels of recoverable oil and gas could be found in the Rift Valley within the next decade: 3.5 billion barrels in Uganda, up to three billion each in Kenya and Tanzania, and at least half a billion in Ethiopia.
At current prices, the new sources of oil and gas could inject close to $3 trillion into the economies of some of Africa’s poorest and least developed nations. Consider this: the total annual GDP of the 12 future exporters in 2011 was $181 billion. If $3 trillion flows to these countries from oil over a period of 30 to 50 years, then the total annual increase in economic output would amount to $60 billion to $100 billion — an increase of over one-third (and much more if oil prices rise).
These future African oil exporters already rely heavily on another rent in the developing world: international assistance. Each of these governments already derives at least a quarter of its operating revenues from foreign aid; several of them, including Ethiopia, Liberia, Malawi, Sierra Leone, and Uganda, derive over half their income from it. Given current rates of economic growth, it is possible that every future African oil state (with the possible exception of Ghana) will derive more than half of its total revenue from some form of nontax income, whether it be oil or foreign aid. Historically, aid has generally come without conditions, although that has changed somewhat in the last decade or two, as donors have begun demanding political and economic reforms. For African elites who want to use state revenue as they wish, the beauty of new oil revenues is that they come with no conditions at all.
For every $1 that the 12 future exporters currently receive from taxation, an additional $1.50 is received from foreign aid. With the infusion of oil and gas into their economies, these countries will become much more dependent on external rents. The median ratio of external rents to domestic taxation is expected to increase by a multiple of nearly five, from just over one to one to nearly five to one. Put differently, this will mean that the median new oil producer will be almost as dependent on oil and aid as the continent’s most famous victims of the resource curse: Angola, Chad, and Nigeria.
External rents often ravage a state’s incentive structure when they significantly outstrip taxation — say, by a factor of two or more. That is already the case in some heavily aid-dependent countries, such as Liberia, Malawi, Sierra Leone, and Uganda. With the expected surge in oil income, these countries will see their revenue structures distorted to degrees even beyond those of Angola, Chad, and Nigeria. Even countries with more balanced revenue structures, such as Ethiopia and Tanzania, will experience major swings, with their ratios of rents to taxes likely soaring to above two to one.
Although several countries in Africa have made great strides in improving governance over the past decade, no continent has more obviously displayed the sad drama of the resource curse: Africa’s oil-rich states have become strikingly more corrupt than their resource-poor neighbors. According to the Worldwide Governance Indicators, compiled annually by the World Bank, Africa’s current oil exporters rank in the bottom quintile globally in their relative ability to control corruption, formulate and implement effective policies, regulate private-sector development, and enforce the rule of law. Conversely, Africa’s future exporters currently well outpace the regional average in these percentile rankings. Unless a new approach is tried, oil will drag the future exporters down to the miserable governance levels of the current exporters.
To date, no African country has been able to keep oil money from being largely usurped and misused by the powerful. Every one of the 12 current oil exporters currently falls into the bottom half of the UN’s Human Development Index. According to the World Bank, more than a tenth of all children born in oil-rich African countries die before the age of five, double the global average. If Africa is the worst-governed continent in the world, its oil states are the worst of the worst.
OIL TO CASH
At the heart of the resource curse lie weak institutions that fail to prevent public officials from exercising discretion over the revenue from oil and other external rents. Experts have traditionally recommended solving that problem by focusing on instilling transparency and accountability. If only the people knew how much oil revenue their government was receiving and how the money was being spent, the thinking went, they could hold their leaders accountable at the ballot box. And so the International Monetary Fund and the World Bank made increasing the transparency of resource revenue a condition for multilateral aid. Global efforts such as Publish What You Pay, a movement aimed at getting extractive industries to declare all the money they pay to governments for the rights to natural resources, and the Extractive Industries Transparency Initiative, a public-private partnership that sets global standards for transparency and accountability in resource-rich nations, have brought external pressure to bear on governments receiving income from natural resources.
These initiatives are vital to promoting good governance in resource-rich developing countries, and they should be extended to the new oil producers. But transparency initiatives alone are not nearly adequate to the task. Resource flows are complex, with countless steps in the process from the time oil is discovered, extracted from the ground, and sold on the international market to when it is transferred as revenue to government accounts and spent by officials. Efforts to expose how revenues are accrued and dispersed have not worked as well as expected because, as the scholar Todd Moss has written, they “only shed light on one link in the long chain from oil in the ground to development outcomes.” Although transparency is an integral piece of any country’s pursuit of effective and honest governance, transparency alone fails to reverse the underlying incentives afflicting oil-rich countries.
Given that reality, it is time to try a new policy approach, one that could drastically alter these incentives: the direct distribution of a portion of oil revenues to citizens as taxable income. In practical terms, this scheme would work as follows: When a government received revenue from oil and gas exports, a certain predetermined proportion of it (ideally, at least 50 percent) would immediately be distributed directly to the bank accounts of the country’s citizens. Then, the government would treat those distributed revenues as income and tax some of it back. Each country could adjust the rate of taxation to transfer only that amount of cash that economists determined could be absorbed by the average poor family without fueling inflation or distorting incentives.
This oil-to-cash system should not be confused with those of oil-rich Arab states, such as Kuwait, Qatar, and Saudi Arabia, that lavish on their citizens payments and cradle-to-grave services. These programs lack two key features. First, the money goes to the state and only then is distributed (often at its discretion), as financial payments, social services, increases in public salaries, and so on. Second, citizens in these countries do not pay any income tax, so the crucial bond of accountability never materializes. Instead of increasing citizen participation and strengthening accountability, state-to-citizen distributions in these countries simply use oil revenues to keep the people satiated while further entrenching the power of elites. In doing so, these payments serve to increase citizens’ dependence on the state, rather than increasing their ownership of it.
The oil-to-cash approach has been engineered by a team of scholars at the Center for Global Development (including Nancy Birdsall, Alan Gelb, Alexandra Gillies, Moss, and Arvind Subramanian) who contend that it would attack the fundamental causes of the resource curse. Directly distributing oil revenues as taxable income would create a broad and active constituency of citizens who were directly affected by the government’s management of their resources, in place of the often passive populations of corrupt, resource-cursed states. In a single step, it would build a broad domestic tax base — a fundamental piece of any modern, well-governed state. Moreover, immediately taxing the income through explicit deductions from the transfers would make citizens aware of the fiscal relationship, strengthening the ties of accountability between the officials who control the state and the people whose money they are spending. Citizens would come to realize that it is indeed their money that the state is spending.
To many, the concept of direct cash transfers of oil dollars seems like a well-intentioned but utterly infeasible option. For starters, one might ask, how can countries that lack modern banking sectors or even national identification systems be expected to implement cash-transfer programs? The answer is that many already have. As Moss has written, as of 2009, some 60 developing countries, including Botswana, Brazil, India, Mexico, and Panama, have made regular direct transfer payments to approximately 170 million people. That success owes to recent advancements in affordable and reliable personal-identification technologies that use biometric identifiers such as fingerprints and facial and retinal recognition. Gelb estimates that as many as 450 million people in developing countries have had their biometric data cataloged. Although governments will need to invest in systems that allow them to properly and transparently transfer money into citizens’ accounts, new technology in the area of electronic banking is making this process continuously cheaper and more logistically feasible. Africa has experienced explosive growth in cell-phone subscriptions, now estimated at over 800 million, which, even allowing for users with multiple devices, means that the majority of Africans now have access to cell phones. Moreover, mobile-banking platforms, such as Kenya’s M-Pesa, are proliferating.
Other skeptics might argue that it would be more efficient for states to spend their oil wealth on development projects than to put it into the hands of the poor and uneducated. But the argument that poor people don’t understand their best interests as well as bureaucrats and public servants do is a paternalist myth. Indeed, evidence from existing cash-transfer programs reveals that the transfers are most often spent on food, education, health care, and business investments. Moreover, most of the money is spent on local goods, stimulating community-level development.
The greatest obstacle to oil-to-cash programs is, of course, political. Why, many wonder, would any politician ever willingly give up control of oil money? Indeed, in developing countries, control over natural resource revenues fuels the patrimonial ties and patronage networks that keep leaders in power. And it is true that an autocrat is very unlikely to give up this vast opportunity to accumulate wealth and perpetuate his rule.
But nine of the 12 future oil exporters are democracies, and therein lies the hope for these revenue-distribution systems. In these countries, competitive elections with uncertain outcomes determine who rules. In some of them, democracy may well expire in the fever of sudden riches. But in others, a broad coalition of forces in civil society and politics could compel rulers to implement some kind of oil-to-cash model, or else vote into office an opposition party that has pledged to do so. It is hard to imagine a more compelling opposition platform than the distribution of at least some share of natural resource revenues directly to the long-impoverished people who are the real legitimate owners of the country and its resources. Public opinion survey data from the research project Afrobarometer show that Africans are more aware of their rights and more demanding of democracy than social science theories have traditionally assumed about the poor in developing countries.
Moreover, African civil societies are becoming better organized and more assertive, and with the growth of new communications technologies (including community FM radio stations), a more vigorous public sphere is emerging. Once African publics understand the possibilities of oil-to-cash programs, they may seize on the idea. At that point, it will not be easy for elected leaders to insist that the state monopolize these revenues, unless they rig elections and repress protests. Desecrating democracy to corner this wealth may be a tempting strategy, but it is one with huge risks, including being toppled from power and punished. Some democratically elected leaders could opt instead to become public (and international) heroes by embracing reform.
Unfortunately, the prospects for preempting the oil curse are much worse in Africa’s authoritarian states, for they lack the political competition and civic pressure that could induce reform. But despite the dangers that go along with challenging autocrats, public demands for reform may rise as corruption and misrule deepen, ultimately leading the regime to make meaningful concessions. Such a scenario is not unthinkable, for example, in Uganda, where, after nearly three decades of Yoweri Museveni’s presidency, the signs of governance rot are spreading, and the public is noticing. Embracing at least a limited oil-to-cash reform would burnish any autocrat’s tarnished legitimacy. After all, if presidents and ruling parties gave some of the new wealth to the people, that would still leave quite a lot of state revenue for them to manage. Even partial reform would begin to change the relationship between citizens and the state and create a new incentive for the public to monitor its rulers’ handling of oil wealth.
A RADICAL APPROACH
Nobody knows exactly how much oil will be pulled from the ground of Africa’s new oil exporters over the next decade. Current projections made by governments and oil exploration companies might be overly optimistic, or perhaps the current period of relative political stability in Africa will end, scaring off investment in oil infrastructure.
Regardless, oil will shape Africa’s future more than ever, and some groups and individuals will find themselves much wealthier in the next decade. The choice that Africa’s governments and people have to make is whether the winners will be, as before, well-connected elites or whether the pattern can be broken and a new premise can be embraced: that a country’s natural resources belong not to the state but to its people.
Admittedly, the oil-to-cash plan is an unwieldy and largely untested initiative. But in an area where every conventional approach has failed, only a radical departure is likely to succeed. The biggest mistake Africa’s new oil producers can make, one that several are already making, is to assume that their countries are different: that through good leadership, better statecraft, or incremental improvements in their legal systems, they can avoid the resource curse. The stakes are simply too high for anything but a radical new approach.
* Source Foreign Affairs Magazine.LARRY DIAMOND is a Senior Fellow at the Hoover Institution and at Stanford University’s Freeman Spogli Institute for International Studies, where he directs the Center on Democracy, Development, and the Rule of Law. JACK MOSBACHER is a Research Associate at the Freeman Spogli Institute for International Studies
Nigeria’s Dangote signs deal to build oil refinery
September 6, 2013 | 0 Comments
Africa’s wealthiest man, Aliko Dangote, has signed a multi-billion dollar deal with banks to finance the building of an oil refinery in Nigeria.
The refinery would be the largest in Africa, turning Nigeria into a petroleum exporter, he told the BBC.
Nigeria is Africa’s biggest oil producer but lacks refining capacity and has to import most of its fuel.
The West African state is often hit by fuel shortages, and conflict over control of its oil wealth.
People in Nigeria’s oil-producing southern Niger Delta region are among the country’s poorest and accuse the government and oil companies of failing to develop the area.
Mr Dangote, a Nigerian who made his fortune in cement, flour and sugar, is worth an estimated $16bn (£10bn) and has topped the Forbes list of Africa’s richest men for the past three years.
Mr Dangote told the BBC’s Focus on Africa programme the refinery would create “thousands” of jobs.
It would be built in the south-west and would become operational in 2016, he said.
Mr Dangote signed a $3.3bn loan deal with local and foreign banks to build the refinery, as well as fertiliser and petrochemical plants.
The entire venture would cost $9bn, with $3bn in equity from Dangote Industries and $6bn to be raised in loan capital.
The initial loan facility was co-ordinated globally by Standard Chartered and in Nigeria by Guaranty Trust Bank, London’s Financial Times newspaper reports.
“At least for the first time in our lifetime, we’ll see Nigeria exporting petroleum products,” Mr Dangote told Focus on Africa on the BBC World Service.
“We’ll also see Nigeria for the first time exporting fertiliser rather than using hard-earned foreign exchange to import fertiliser,” he added.
Nigeria currently imports more than three-quarters of its fuel despite being the continent’s biggest producer.
Although it has two refineries in the Port Harcourt area, neither runs at full capacity.
Previous efforts to repair Nigeria’s dilapidated refineries and build new ones have been scuppered to protect the interests of powerful fuel importers, some of whom have been linked to a subsidy scam costing the country billions of dollars a year, correspondents say.
Fuel in Nigeria is sold at a subsidised price. A government attempt to remove the subsidy in 2012 led to nationwide protests. The plan was subsequently dropped.
Last year an investigation revealed that in two years, more than $6bn was lost in a fuel subsidy scam.
Africa is the next big thing, and the place to invest says young Billionaire Ashish J Thakkar
August 29, 2013 | 12 Comments
By Ajong Mbapndah L
Young, intelligent,dashingly handsome, unassuming, media friendly, visionary, fiercely ambitious, and proudly African are some of the attributes that describe Ashish J Thakkar who has emerged as a leading image of the genius in the African youth. In his early thirties, Ashish J Thakkar is one of the youngest billionaires in the continent with the Mara Group he founded and heads operating in 26 countries, 19 of them in Sub Sahara Africa. Ashish’s fortune comes from solid business insight, hard work and a strong confidence in his potentials. His confidence and daring attitude pushed him to take a loan of $5,500 at the age of 15 to set a small shop in 1996 and today he controls a business empire. In between running his business and answering to multiple solicitations around the world, Ashish J Thakkar remains very open in sharing his experiences and giving back to the community. Interviewed by Ajong Mbapndah L, Ashish J Thakkar shares his business experiences, the Mara Group, the Mara Foundation and more. “Africa really is the next big thing, and the place to invest,” says Ashish and his advice to aspiring entrepreneurs in Africa “dream big, but start small! And never ever give up.”
Mr. Ashish J Thakkar, thanks so much for accepting this interview, correct us if we are wrong but it is said that you started business at the age of 15, what drove you into business at that early age, how did you get the capital and at what point did you realize this was your calling?
I was always passionate about entrepreneurship and doing business. Basically it all started when my parents bought me a computer. My father’s friend came home for dinner that night. He saw it and he said, “How much did you get it for?” I told him the price but added a hundred dollars more than what we actually bought it for. And he said, “How many do you have?” I said, “I’ve got two.” So I sold it to him and while they were having dinner, I deleting all the files and packing it up. Obviously I didn’t have a second one. I delivered the computer the next day and I made a hundred dollars. And I said to myself, “Wow, this is doable.”
That was when I decided to drop out of school and become a full time entrepreneur. So at the age of 15, in 1996, I took a 5,500 dollar loan to set up a small shop.
Today you have operations in close to what-20 countries, from the early interest in business, how did you achieve the feat of building such a powerful business empire?
Back then I never thought I would today run a Group with operations in 26 countries (19 of them being in Sub Saharan Africa). But I was never afraid to follow my dreams and I worked very hard to get to where I am today.
If you do not mind can you tell us a little more about the Mara Group and what motivates you or what criteria you use in picking your areas of investment?
Mara’s current businesses operate in a broad range of sectors including information technology (IT) services, business process outsourcing (BPO), a multi-faceted mobile-enabled online platform, agriculture, real estate, hospitality, packaging and asset management. We believe in creating value and making a difference by proposing differentiated products and solutions to individuals and companies across the sectors within which we operate.
To achieve these goals and continue building a solid diversified platform for expansion, Mara’s business philosophy consists of creating innovative partnerships with international industry leaders. Our partnership approach allows us to combine skills, knowledge, and operational expertise to support the creation and growth of new and existing companies.
Ultimately, our strategy has four key elements: whatever we do should be Pan- African, game changing, “Mara” branded and have a positive social impact.
In your early thirties, your name is virtually a global brand and you are regularly cited as an example of the potentials that Africa has, do you feel any extra pressure been used as one of the poster figures on the potentials and genius of the African youth?
It’s an honor to be seen as an example of Africa’s potential! But I can’t say I feel any pressure. I am only trying my best to give back to the community though our social enterprise, Mara Foundation. Naturally, I am hoping to give young African entrepreneurs the same opportunities I had. Being truly African, I want to show these aspiring entrepreneurs that anything is possible!
Based on the experience working your way to success, may we know the ingredients it takes to become a successful business man, what role do factors like education or capital play considering the limited availability of both to most people especially from poor backgrounds interested in business?
Education is indeed important, but what is even more important for a young entrepreneur is mentorship and advice from seasoned business owners. Finding the right mentor will help these aspiring entrepreneurs to avoid many mistakes along the journey. Within Mara Foundation, we have launched a mentorship platform called Mara Mentor. It’s an online platform where anyone can sign up as a mentee and it’s completely free of charge. On the platform, the mentees can connect with our mentors (we have a few hundred active mentors today from different nationalities), ask their questions and participate in the debate rooms. Mara Mentor will also be available as a mobile application in a few weeks, making it much easier for the users to stay connected. We are hoping to reach millions of entrepreneurs via Mara Mentor, not only in Africa but also beyond its borders.
Capital is also a very important factor and it’s often hard to for young entrepreneurs to get bank loans. That is why Mara Foundation is launching a new venture capital fund, called Mara Ad-Venture Capital Fund, to offer early stage seed and growth capital to high potential African entrepreneurs across Africa. The entrepreneurs that receive funding will also benefit from coaching from our teams, in order to help them take their companies to the next level.
Your Group also runs the Mara Foundation with a focus on emerging entrepreneurs, may we know how the Foundation functions and the kind of projects it is interested in?
Mara Foundation was established in 2009 and is currently active in Uganda, Tanzania, Kenya, Nigeria and South Africa. The Foundation works to create sustainable economic and business development opportunities for young business owners via our Mara Launchpad incubation centres and Mara Launch Fund. Our mission is to provide comprehensive support services including mentorship, funding, incubation centre workspace and business training to African entrepreneurs
In 2013, the Foundation has continued its strategic growth in Sub-Saharan Africa while simultaneously expanding to other global markets worldwide. Within the continent, on 12 August this year, we announced our partnership with the President of Nigeria to launch Mara Mentor as the official mentoring tool in Nigeria. And beyond the African continent, through our different partnerships, we will shortly launch our Mara Mentor in India, China, Mexico and Ireland.
What does it take for potential entrepreneurs to benefit from the support offered by the Foundation?
To benefit from capital, entrepreneurs are welcomed to apply on the Foundation’s website: http://www.mara-foundation.org/
Our mentorship programme is free of charge, and anyone can sign up on: mentor.mara.com
If there is one thing that more and more people agree upon it is the potential that Africa has, a huge and growing market, abundant resources etc based on your experience, what does the continent need to do to build a more conduisive business environment that could see the emergence of more successful stories like that of Ashish Thakkar?
The answer for Africa lays in its small- and medium-sized businesses, rather than large domestic businesses, multi-nationals, or government organizations. These SMEs are the ones driving the economies, contributing to national GDPs and creating employment for millions of people. Therefore, the key solution for creating jobs and generating renewed economic growth on the continent is to empower African youth and entrepreneurs.
But most new start-ups struggle to grow and their failure rate is very high. To address this problem, entrepreneur mentorship and comprehensive support services are crucial to bridge the gap between business start-up and continual growth, providing productive and sustainable employment.
Talking about Africa you directed a tweet with a dose of cynicism at Donald Trump for saying that the 7 billion pledged by President Obama to fund power projects in Africa will stolen, with business interests in several countries, what is the image of Africa you want the world to know , despite the corruption we know is still rife in some countries?
I want people to understand that we are a continent and not a country, so you just cannot generalize. But beyond that, I truly believe that Africa has a bright future ahead and that the continent is currently going through an amazing transformation. Africa really is the next big thing, and the place to invest!
With the kind of success you have enjoyed and accumulated what next for Ashish Thakkar and any last word to other young Africans who would love to follow in your footsteps?
The best advice I can give is to dream big, but start small! And never ever give up….
For me and Mara, it’s just the beginning!
Zimbabwe outlines plans for ‘Disneyland in Africa’
August 28, 2013 | 0 Comments
Zimbabwe plans to build a “Disneyland in Africa” at the world famous Victoria Falls to boost tourism, a government minister has told the BBC.
The government would spend more than $300m (£193m) on the theme park, said Tourist Minister Walter Mzembi.
Zimbabwe is trying to rebuild its tourism industry after a decade of conflict and hyperinflation.
President Robert Mugabe was elected for a seventh term in peaceful but disputed elections last month.
Zimbabwe is not leveraging the Victoria Falls enough, Mr Mzembi told the BBC on Tuesday, describing it as a “sleeping giant”.
“It’s a wake-up call for us…we must build a new tourism facility with an impact,” he said.
“We think it should be modelled along the size and the kind of vision that is on Disneyland, including hotels, entertainment parks, restaurants, conferencing facilities. This is the vision and we need people who can run with it.”
Mr Mzembi earlier told Zimbabwe’s official news agency New Ziana that the government wanted to create a free zone with a banking centre “where even people who do not necessarily live in Zimbabwe can open bank accounts” .
He announced the plans at the UN World Tourism Organisation general assembly, which Zimbabwe is co-hosting with Zambia.
The decision to award the conference to Zimbabwe was condemned by UN Watch, an independent human rights group based in Geneva, citing reports of human rights abuses and election rigging.
“The notion that the UN should spin this country as a lovely tourist destination is, frankly, sickening,” UN Watch head Hillel Neuer said.
The government already has plans to expand the Victoria Falls airport, saying it will invest about $150m in the project.
In the first quarter of this year, Zimbabwe’s tourism authority said the country registered a 17% increase in visitors.
If the country remains stable, it says, tourism is set to contribute 15% to the country’s GDP.
Over the past decade, Zimbabwe recorded the world’s highest inflation with its economy in virtual collapse. However, a power-sharing deal reached after an acrimonious election in 2008 helped to stabilise the economy.
MTN:Delivering a bold new Digital World to over 200m subscribers in 22 countries
August 19, 2013 | 0 Comments
MTN Group today marked its 200 million subscriber milestone by announcing a bold R200 million initiative to improve the quality of education across its markets in Africa and the Middle East over the next two years.
News of MTN reaching the 200 million subscriber mark comes a year before it celebrates 20 years of connecting people and economies, from South Africa – the launch pad – to South Sudan, its most recent market.
As a multinational telecommunications company operating in emerging markets, says MTN Group President and CEO Sifiso Dabengwa, MTN has a particular opportunity to make a meaningful contribution to social development.
“Due to the lack of access to quality education and infrastructure, and low literacy rates in most of these countries, MTN has chosen to direct a significant amount of its corporate social (CSI) spend towards education over the next two year. This will provide people with the skills, knowledge and confidence they need to make positive decisions about their lives,” says Dabengwa.
MTN runs a comprehensive multi-country CSI programme through MTN Foundations spanning education, health and other national priorities. A grand total of R193 million was spent in these three areas during 2012. Going forward, the company will scale up its contribution towards building knowledge economies in its markets by investing in more education initiatives aimed at empowering learners and teachers using ICTs and mobile learning.
As seen in MTN’s 2013 interim results released today, MTN is a growth company with a solid performance record and an aspirational vision to lead the delivery of a bold new digital world to its customers.
It will continue to share the fruits of its success with customers and communities through, among others, offering affordable and innovative services, as well as investing in social upliftment and network infrastructure to improve the quality of its services.
“We are grateful to our customers for their loyalty and contribution to the growth of the MTN brand over the years. Using that feedback, MTN is making significant investments towards improving the quality of our service, while also providing solutions designed to make a real difference in the lives of our customers,” adds Dabengwa.
The MTN brand has achieved great prominence over the years. For two consecutive years, MTN emerged as the highest ranked African brand in the prestigious Millward-Brown Brandz Top 100 Most Valuable Global Brands 2013 survey. Most recently, MTN emerged as South Africa’s most valuable brand in this year’s BrandFinance Most Valuable Brands Survey, for a second consecutive year.
“The award is further acknowledgement of our on-going efforts to enhance customer experience in the various touch-points in the markets,” says Dabengwa.
To achieve this ambition, which will allow MTN to provide a seamless service experience to customers across its markets, the company has launched a project aptly called ‘Perfect 10’. Already launched in Ghana, Nigeria, Cote d’Ivoire, Zambia and South Africa, the initiative aims to give customers a 10 out of 10 experience of the MTN network, products and services. Benefits of the programme are already filtering through to customers. In Ghana, for example, where the programme was first launched, feedback received in the early stages of implementation has been very positive.
Looking ahead, Dabengwa says the company’s new vision, to lead the delivery of a bold new Digital World, and mission to make our customers’ lives a whole lot brighter, has positioned MTN well for further growth into the future.
“MTN’s previous vision ‘to be the leader in telecommunications in emerging markets’ has largely been achieved. The need for a broader digital offering led MTN to refresh its vision and mission and refine its strategic objectives. We believe MTN is now ready for the next frontier of growth – digital services. And we are humbled that over 200 million of our subscribers are embarking on this journey with us, to lead the delivery of a bold new digital world.”
Selling Mandela: From t-shirts to TV shows, how Madiba became a brand
August 19, 2013 | 0 Comments
From Robyn Curnow*
He has not formally appeared in public for years, and recently he’s been battling illness inside a Pretoria hospital. But former South African president Nelson Mandela is still a beloved icon across the world, an international symbol of courage, strength and hope.
The 95-year-old Nobel laureate is also one of the world’s most recognizable figures. More than just a man, he has become a global brand — one that’s estimated to be worth millions of dollars. Ever since Mandela was released from prison, where he had endured 27 years for fighting apartheid, many South Africans have felt like they’d like to “own” a little piece of him.
As a result, the smiling image of Madiba, as Mandela is affectionately referred to by South Africans, has been emblazoned on all sorts of memorabilia, items that are usually not associated with his legacy — everything from t-shirts and place mats to banknotes and even salt and pepper shakers.
Some members of Mandela’s own family have also been accused of cashing in on the anti-apartheid icon’s legacy, using the world-renowned name for business ventures such as a collection of wines, called the “House of Mandela,” or a clothing range branded with his prison number or an image of his hand.
More recently, two of his granddaughters — Zaziwe Dlamini-Manaway and Swati Dlamini –starred in their own reality TV series, “Being Mandela,” in which the family showed some of the Mandela-branded products. In answer to critics accusing them of tarnishing the Mandela name, his granddaughters say it’s their name too, and that they are treating it with respect and integrity.
“You can’t tell people how not to celebrate their father, or grandfather, or great grandfather, because they are using their own name,” says Sello Hatang, head of the Nelson Mandela Center of Memory, which Mandela founded to continue his work after he retired.
“It would be arrogant … to say you can’t use your name so it’s ensuring that we stick to what we believe is the legacy,” he continues.
Speaking to CNN earlier this year, Mandela’s daughter Maki, who is behind the wine brand, said that using the family name is important because it promotes South Africa, as well as a good product. She added that her father had told her: “If you use the name either for commercial or charitable or political (purposes), use it with a lot of integrity and responsibility.”
But how can Mandela’s legacy and values be balanced with the commercial potential of his image? Hatang says that when Mandela’s name was used by Viagra without permission, there was a public backlash.
“When Madiba was turning 90, they put up their own ad saying, ‘Madiba turns 90, Viagra turns 10,'” explains Hatang. “And it was members of the public who objected, so it tells you that the legacy of Mandela is not just being preserved by us but it’s being preserved and protected by many others.”
While it’s still unclear exactly who will control the “Mandela Brand” in the years to come, the way Madiba’s legacy and image endures seems to depend on all those who have a stake in it — from his family and his party, the African National Congress, to the people of South Africa.
Those who know him say he is comfortable with that, never prescribing how he should be honored.
“We tend to not want to recognize Madiba as a brand,” says Hatang. “He represents something in humanity that we should all have. It’s that thing that’s special in each one of us, where we need to reach deep to find it,” he adds.
We are watching you! Tech helps Africans hold governments to account
August 15, 2013 | 0 Comments
By Loren Treisman*
With hundreds of millions of Africans owning mobile phones, citizens are becoming increasingly well connected. This is providing a powerful opportunity for citizens to access critical information about their parliaments and to report on human rights violations, corruption and poor service delivery.
These interventions are amplifying the voices of marginalized communities and helping citizens to hold governments to account.
For citizens to actively participate in democracy, it is critical that they are able to access information on parliamentary proceedings and elected representatives. MySociety is contributing to this process. It has partnered with local organizations across Africa to build sites like Mzalendo in Kenya and Odekro in Ghana, which enable citizens to access information about parliamentary proceedings and their elected representatives, rate their MPs and gain a better understanding about government’s inner workings.
They’ve taken this process one step further in South Africa. TheOpen Democracy Advice Centre has created a platform where citizens can submit Freedom of Information Requests. A data repository has been created online, enabling journalists, analysts and campaigners to utilize this information to hold government to account and campaign for improved service delivery.
There’s a real thirst for this information in Africa. In Nigeria, a simple application created by developer Pledge 51 enables citizens to access their constitution by mobile phone and has been downloaded more than 750,000 times. During protests sparked by last year’s fuel crisis, where an increase in the price of fuel resulted in soaring commodity prices, this enabled citizens to exercise their rights against police forces.
Misinformation fueled this crisis, with few citizens understanding the new fuel subsidy payment or oil revenue share in their country. A local organization called BudgIT aimed to address this by generating simple infographics which took citizens through these complex processes in a visual format.
Utilizing the power of social media, this sparked more informed debates and dialogue that contributed to restoring order. The team has since produced a whole series of images that breakdown the Nigerian budget by state and sector, enabling citizens to better understand the country’s budget and to utilize this information to ensure that allocated funds are translated into improved services.
Across the continent, platforms are being developed that enable citizens to use SMS from basic phones to report challenges in service delivery. In the impoverished Khayelitsha township in Cape Town, residents have submitted around 3,000 reports on issues like poor sanitation, electricity and transport to the Lungisaplatform from their mobile phones, Facebook and the web. Remarkably, most of the issues have been resolved by the city council.
In Northern Uganda, the brutal Lord’s Resistance Army conflict has displaced hundreds of thousands of people, leaving infrastructure and service delivery in dire straits. A Peace, Recovery and Development Plan has been put in place but progress is limited. Only a few health centers have been established, there’s a severe shortage of drugs, medical workers and equipment and corruption is commonplace. of the issues have been resolved by the city council.
CIPESA has created a platform populated with information on health programs being implemented in the region and citizen journalists are able to submit reports, photographs and audio footage describing the real situation on the ground, whilst Voluntary Sector Accountability Committees established by WOUGNET are utilizing a similar platform to report on corrupt practices and poor governance. The data collected is being used by the NGOs to hold government to account and advocate for improved services.
In many African countries, youth often feel excluded from the political process. As young people are the biggest consumers of technology, platforms are being developed that enable them to become more actively engaged. In Kenya, Youth Agenda is utilizing an SMS platform to encourage youth to vet their leaders according to policies and attributes instead of along tribal lines. The platform is also used to gauge political opinion. The feedback is collated into reports which are fed into government, giving youth a voice and allowing them to contribute to the development of policy.
Until 2009, Kibera — one of the world’s largest slums and home to more than 250,000 people — appeared only as a blank on online maps. This made it easy for government to ignore the needs of its citizens. Map Kibera has equipped young activists with GPS-enabled phones and has supported them in creating a map of the region, part of a wider program that empowers youth to raise awareness of the challenges faced by their communities and advocate for change.
Plan Cameroon has taken this process a step further in three districts. Once youth have mapped their area, they populate the map with data on service delivery such as access to water points, clean water and hygiene facilities. Local councilors and activists are utilizing this data to mobilize the involved communities to demand better services and advocate for change.
Technology applications can be developed anywhere and what’s exciting about many of these initiatives is that they’re being devised locally. Technology innovation hubs are springing up across the continent. These state-of-the-art facilities enable technologists and social activists to access high-speed internet, events and mentoring, as well as creating a collaborative environment that galvanizes the tech community. This is beginning to have a significant effect on the number and quality of projects being developed locally.
Homegrown solutions are often most effective, as local communities are best able to understand the complex local needs, behaviors and nuances. Some of these hubs such as Jozi Hub in Johannesburg and Co-Creation Hubin Lagos, Nigeria, have targeted programs to support transparency initiatives, thus catalyzing this process.
Undoubtedly, technology isn’t a panacea for all social problems. And at times, such as when the technology utilized isn’t locally available or where governments lack capacity to respond to issues being reported it can be entirely inappropriate. However, when combined with well devised programs, their power to reach the previously unreachable and to bring the voices of citizens closer to government makes them a significant contributor to the process of ensuring that government’s best serve the interests of their citizens.
*Source CNN Loren Treisman is Executive of Indigo Trust, a grant-making foundation that supports technology-driven projects in Africa. She holds a PhD from Cambridge University and has expertise in international development, health and the use of new technologies to stimulate social change.
Ibrahim Boubacar Keita wins Mali presidential election
August 15, 2013 | 0 Comments
Mali’s presidential election has been won by Ibrahim Boubacar Keita after his rival admitted defeat in the second round.
Mr Keita, 68, served as prime minister from 1994 to 2000.
Mali has suffered a year of unrest including a military coup and a French-led military intervention to oust Islamist rebels from the north.
A 12,600-strong United Nations Stabilisation Mission in Mali (Minusma) is currently deploying to the West African nation, as France begins to withdraw its 3,000 troops.
No official results have yet been released following Sunday’s run-off, however, reports had put Mr Keita well ahead.
In the first round Mr Cisse, who pledged to improve education, create jobs and reform the army, polled just 19% against Mr Keita’s 40% and most of the other candidates then gave Mr Keita their endorsements.
Late on Monday, Mr Cisse tweeted that he and his family had just left the home of Mr Keita “future president of Mali, to congratulate him for his victory. May God bless Mali”.
He later told private Malian television Africable that he wished Mr Keita success “so that you can have the strength to take up the enormous challenges that await you”, the Associated Press news agency reports.
The BBC’s Alex Duval Smith in the capital, Bamako, said Mr Keita – known as IBK – had the support of influential moderate Islamic leaders; he was also considered the favourite of the military, including last year’s coup leaders.
The 68-year-old will now oversee more than $4bn (£2.6bn) in foreign aid promised to rebuild the country after a turbulent 18 months.
His new government will also be obliged to open peace talks with the separatist Tuareg rebels within two months following a ceasefire that allowed voting to take place in the north.
Military officers staged a coup in March 2012 – a month ahead of scheduled elections – accusing the government of failing to end a Tuareg rebellion in the north.
The Tuareg rebels were allied with al-Qaeda-aligned groups, but the alliance quickly crumbled with the Islamists occupying major cities such as Gao, Kidal and Timbuktu where they imposed a strict form of Islamic law.
In January, France sent more than 4,000 troops in January and together with West African troops regained control of northern towns and cities.
Tuareg rebels then captured Kidal, the only town in Mali where the Tuaregs form a majority, and agreed a deal in June to allow nationwide elections to go ahead.
During campaigning, Mr Keita vowed to unify Mali if elected.
“For Mali’s honour, I will bring peace and security. I will revive dialogue between all the sons of our nation and I will gather our people around the values that have built our history: dignity, integrity, courage and hard work,” the AFP news agency quoted him as saying.
After the first round Mr Cisse, who has been more openly critical of the coup leaders than Mr Keita, had complained of widespread fraud, with more than 400,000 ballots declared spoiled.
However, Mali’s Constitutional Court rejected the allegations and the head of the EU election observer mission, Louis Michel, hailed the electoral process for its transparency.
On Monday, observers from the EU and the African Union again praised the way the second round was carried out.
“Malians should be congratulated because it seems to me they are regaining control of their democratic destiny, which is in fact nevertheless a tradition that exists in Mali,” said Mr Michel.
“It is an election that allows Mali now to start finishing the process that it has begun: The return to a normal democracy,” Reuters news agency quotes him as saying.
AfDB Approves US$45 Million Grant for Creation of Pan African University for Science, Technology and Innovation
August 1, 2013 | 0 Comments
The African Development Bank’s (AfDB) Board of Executive Directors approved on Wednesday, July 24 an African Development Fund (ADF) grant of US$ 45 million to support the creation of a Pan African University (PAU). The new university consisting of fivePan African Institutes will focus mainly on science, technology and innovation.
The new universitywould bea groundbreaking step in strengthening higher education and building human capital in Africa. Africa has been slow to develop its science and technology sectors and commercialize its innovations. Currently the best African university ranks just 113th globally. Of the 400 top universities worldwide, only fourare in Africa, all of which are in the Republic of South Africa.Also, while Africa accounts for 13.4 per centof the world’s people, it produces only 1.1 per centof world scientific knowledge
The PAU will establish an academic network of already existing post-graduate and research institutionsintended to serve all African countries. Consistingof fivethematic institutes based in East, West, Central, North and Southern Africa the PAU will deliver programs in:
- Basic sciences, technology and innovation (East Africa)
- Earth and life sciences including health and agriculture (West Africa)
- Governance, humanities and social sciences (Central Africa)
- Water and energy sciences including climate change (North Africa)
- Space sciences (Southern Africa)
“Thousands of students all over Africa will benefit from this project. This is truly an amazing regional effort to help African universities achieve world-class status. It will increase the pool of African scientists and researchers not only to serve the needs of the continent but to help youth become competitive in international labour markets,” said Agnes Soucat, Director of the Human Development Department, AfDB.
The project will contribute to the skills needed by African countries to add value to their natural resources and enhance competitivenessand youth employment contributing to the AfDB’s overall objectives of inclusive and green growth.The PAU is also major step towards establishing the African Higher Education and Research Space by contributing to: (i) Efficient regional higher education governance system; (ii) Improved quality of higher education at the regional level creating strong links with the labour market; (iii) equitable access to quality higher education in science, technology and engineering fields; and (iv) increased number of institutions achieving world-class status.
This project will also help set up the governance structure of the PAU at central and country levels as well as academic and research capacity. The first three threePAU thematic institutes will be based in Kenya, Nigeria and Cameroon:
- PAU Institute for Basic Sciences, Technology and Innovation (Kenya)
- PAU Institute for Life and Earth Sciences (Nigeria)
- PAU Institute for Governance, Humanities and Social Sciences (Cameroon).
This important operation is a response to a request from the African Union for technical assistance and financial resources for the design and operation of a network of hubs of excellence in higher education to help meet the need for education, training and research in five key areas of African development.
Africa has only 35 scientists and engineers per million inhabitants, compared with 168 for Brazil, 2,457 for Europe and 4,103 for the United States. Shortage of skills has been a major constraint to Africa’s progress in science, technology and innovation. Due to low investment in research and development, Africa ranks low in global competitiveness and productivity. African students tend to opt for economics, business, law and social sciences rather than science, engineering and technology, hampering the continent’s competitiveness and growth. The result is a mismatch between skills produced and private sector jobs.
This project is in line with the Bank’s newly approved Ten Year Strategy for 2013-2022and responds to the Regional Integrationand Skills and Technology Core Operational Priorities of the Bank’s 2013-2022 Strategy. It also addresses the strategy’s areas of special emphasis such as Gender and Food Security. It is also fully in line with the Bank’s draft Human Capital Strategy and New Education Model in Africa (NEMA).
Use Africa’s $60bn remittances to power industrialisation
July 19, 2013 | 0 Comments
Remittances from Africans in the diaspora are now estimated at around $60bn annually. While these help millions of Africans in their day-to-day needs, a proper harnessing of this resource could well see the continent on its next development stage – industrialisation.
As the world wakes up to the idea of Africa as a centre for economic growth, it is considered, in many ways, the final frontier for investment opportunities. Industrialisation is widely seen as the next phaseof Africa’s development, an imperative on the path towards sustained wealth creation.Successful industrialisation requires ambitious entrepreneurs that are willing to take up the challenge. It is therefore important not only to have favourable regulatory and business environments, but also a stable po-litical landscape.
The African continent has increased its competitiveness in the global marketplace in recent years, primarily as a result of nation states decreasing country risk.Business and investment is driven by confidence. As investors feel more comfortable with stability across the region it has, and will continue to, increase prospects for sustained investment – as we have already seen with Chinese and Middle Eastern interests.Africa’s diaspora communities sit in a very promising position, having played such a crucial role in the continent’s development, thus far.
The diaspora are not only well informed about the opportunities existing in their communities of origin, they are willing to invest in fragile markets when others will not.Diaspora finance has been one of the main drivers of Africa’s surge over the past 20 years helping sustain not only families but, within many countries, trade and industry as well. A recent report by Send Money Africa, an initiative of the World Bank-partnered African Institute for Remittances (AIR) Project, estimated that Africa received a total of $60bn in remittances last year.
According to the same report, these funds were sent by Africa’s 30m-strong diaspora to around 120m recipients. Remittances to Africa exceed official development aid (ODA) by around 50%, while for most African countries the amount sent home by migrants surpasses foreign direct investment.
With limited official data, such figures are only estimates, but what is certain is that remittance flows to Africa have grown remarkably over the last two decades. Indeed, there is a broad consensus that they have more than quadrupled in that time to account forapproximately 3% of Africa’s overall GDP.
It is no surprise therefore that policy makers are looking at ways to harness the development potential of diaspora remittances. A paper released in March following a conference in Abidjan of the Economic Commission for African (EAC) and the African Union Commission (AUC) highlighted the growing importance of remittances as a source of external financing, and drew special attention to their potential in driving Africa’s industrialisation and helping to fill its persistent infrastructure gap.
Despite significant progress across the continent, many communities within Africa’s 54 states are considered amongst the ‘bottom billion’, a term coined to describe the poorest of the poor. Diasporan remittances play a vital role in boosting household incomes and keeping millions of people above the poverty line.
The average amount of most remittance transfers is between $200-$300, which can support an average family for a month. Once the basic needs of survival are met, recipients with cash to spare often spend it on healthcare and education. Beyond that, a rising trend of investment in land, construction and small enterprise indicates that remittances have become an important tool for sustainable growth. In short, they are a valuable resource for efficient, bottom-up economic development.
Our business, Dahabshiil, is Africa’s largest money transfer company, serving customers across the continent and enabling them to send and receive money to and from locations all over the world. Dahabshiil’s story is closely bound up with that of the Somali diaspora, which grew rapidly during the late 1980s and early 1990s as the state collapsed, and later expanded into the Horn of Africa and beyond. Since then, remittance income has in many ways underpinned the Somali economy, maintaining consumption and providing the necessary capital for private sector growth. This demonstrates the power of remittances in sustaining communities without access to a formal banking system.
Africa’s diversification towards a more industrial economy has already begun, with sectors such as manufacturing and telecoms in particular flourishing in many parts of Africa. In the Somali territories, a deregulated business environment led to a rapid expansion of the mobile industry and the entry into the market of a number of dynamic firms. One of these, Somtel, went on to be acquired by Dahabshiil. The early growth of the Somali telecoms industry was marked by intense competition as private operators vied for market share. Intra-regional trade needed African economies are among the fastest growing in the world, yet intra-regional trade accounts for only 10% of the continent’s commerce – significantly less than in other regions.
Many constraints impede trade expansion in Africa: obsolete infrastructure, fragmented economic space, low production capacities, limited investment financing and high transaction costs. Eliminating these obstacles is a prerequisite to fully realising Africa’s economic potential and helping to address the continent’s socioeconomic and developmental challenges. Healthy intra-African trade can free the continent from its reliance on international aid and improve its resilience to macroeconomic and other external shocks.
Industrialisation can benefit the expansion of intra-African trade by supporting a more diversified export economy. In particular, the development of rural and food processing industries could help to lift significant numbers from poverty. But, to facilitate trade in goods and services, it is essential to reduce distribution costs by improving and expanding road, rail and other communication infrastructure. At present, however, many of Africa’s national economies are still largely agrarian.
Early attempts at urban-based industrialisation collapsed as a result of economic liberalisation programmes. Meanwhile, resource extractive industries have provided little in the way of urban employment. In order to develop more capable indigenous manufacturing capabilities, Africa is reliant on its infrastructure development, which remains its Achilles heel. Furthermore, the continent still faces serious human capital deficiencies. Schools, governments and the private sector need to work together to close skill gaps, particularly the need for more engineers and technicians.
While diaspora finance alone cannot be expected to achieve such a huge undertaking, it can help provide stable economic foundations on which to build. While these latest figures for remittance volumes give reason to be optimistic, more needs to be done at government level for diaspora money to be the kind of catalyst for growth from which the Asian powerhouses such as China and India have benefited.
It goes without saying that comparisons between the two continents must take into account the fact that Africa’s past left it heavily dependent on extractive, commodity industries while Asia was able to industrialise and to emerge as the dominant manufacturing base, but that certainly does not mean diversification is beyond Africa’s grasp.
With millions of African migrants arguably at the peak of their skills and earning potential, now is the time for active engagement to lure human and financial capital back to Africa. Diaspora bonds such as Ethiopia’s make debt available to entrepreneurs who need it.
The recent announcement by the AUC of plans for three new financial institutions – the African Investment Bank, the African Monetary Fund and the African Central Bank – is a hugely encouraging one and sends a strong message of intent to investors: Africa is being readied to complete its industrial revolution.
*Source African Business