Time For An African Valley? — Sub-Saharan Accelerators Start To Emerge
June 13, 2012 | 0 Comments
By Mike Butcher*
The news that i/o Ventures had launched the Savannah Fund in Africa is clearly welcome news for an emerging continent. It’s $10m fund size will be a shot in the arm for the eco-system there. But I was surprised to see that it was being described in some quarters as the “first ever” Sub-Saharan African incubator and accelerator. Because it patently is not.
“I think MEST would actually be the first model in this space,” said African tech watcher Ben White of vc4africa.biz when I asked him about this. MEST has a fund size of $20m, although it’s invested via a non-profit.
So to start getting into this, it may be that we are well over-due for a run-down of accelerators in Africa. Here’s what we’ve found so far.
There’s clearly been a proliferation of coworking spaces and tech incubators around Sub-Saharan Africa over the last 3-5 years. Accelerators linked with funds are a more recent phenomenon:
1. MEST: Meltwater Entrepreneurial School of Technology (MEST) provides training and mentoring in Accra, Ghana. Started in 2008, MEST is a not-for-profit NGO that is funded by the Meltwater Group through its non-profit Meltwater Foundation. Invests in 3-5 startups per annual programme. Fund size: $20m spread over 10 years.
2. HumanIPO (Nairobi, Kenya). Launched 2011. 88mph is their seed fund. Takes a minimum 10-15 investments per year. Has room for 25 startups in its space. Fund size: Uknown.
3. Umbono (Cape Town, South Africa). Launched 2011. This is Google’s accelerator & fund. Puts in $25k to $50k seed capital. Fund size: Unknown.
5. Mara Launchpad (Kampala, Uganda). Launched 2012. Backed by Mara Foundation. Fund size: Unknown.
6. Lastly there is the co-working space iHub (Nairobi, Kenya) launched 2010 and is now the base for the Savannah Fund as mentioned above. Fund Size: $5m, but is aiming to be $10m eventually.
The Savannah Fund is coming out of i/o co-founder Paul Bragiel and i/o entrepreneur-in-residence Mbwana Alliy along with Erik Hersman a cofounder the Ushahidi crowd sourcing platform and a cofounder of Nairobi’s iHub. Five early stage $25,000 for 15% equity and three to six months to prove themselves. Follow-on funding for the successful ones will be in the region of $100,000 to $200,000.
Savannah Fund has backing from Tim Draper, Dave McClure of 500 Startups, Yelp co-founder Russ Simmons, and Dali Kilani and Roger Dickey of Zynga, as well as local Kenyan entrepreneurs, including Karanja Macharia of Mobile Planet.
Savannah will also run an incubator like i/o in San Francisco for ten companies a year, but it appears the companies will be sourced in Nairobi with the ones showing promise being shipped over from East Africa to the US to scale up.
The consensus on the ground amongst seasoned AfricaTech watchers is that while Nigeria has the fastest growing economy it’s also pretty dangerous at the moment. Kenya also has its issues but is widely regarded as a strong hub for tech companies in Africa, and Tansania has potential, but Ghana is quickly gaining a reputation because of its relatively stable business and political environment and the English language is widespread. It’s also becoming a big airline hub because airlines prefer not to drop their staff into potentially dangerous countries.
Expect more Africa coverage from TechCrunch in due course…
*Culled from http://techcrunch.com
Economic growth stirs hope in Africa
June 13, 2012 | 0 Comments
Over the next five years, the continent will expand faster than any other
By Emily Dugan *
While ministers in Europe try to hold together crumbling economies, a success story has been quietly emerging to the south. Africa is experiencing its longest income boom for 30 years, with gross domestic product growth rates averaging about 5 per cent annually over the past decade. Even this year, as markets elsewhere collapse, the continent’s income is projected to increase by around 4.5 per cent.
Africa will have the world’s fastest-growing economy during the next five years of any continent, according to the International Monetary Fund. Its forecasts also show that seven of the world’s 10 fastest-growing economies will be African, with Ethiopia, Mozambique, Tanzania, Congo, Ghana, Zambia and Nigeria expected to expand by more than 6 per cent a year until 2015.
The world is starting to take notice: trade between Africa and the rest of the globe increased by 200 per cent between 2000 and 2011. As well as the usual exports of oil, natural gas and minerals, the sale of African-manufactured goods is also increasing. Over the past ten years, African manufactured output has doubled.
Zambia is one of the continent’s most promising economies, growing at 7.6 per cent in 2010 and 6.6 per cent in 2011. Thanks to the technology boom, its supply of copper, which now accounts for almost half its exports, is highly sought after. Though it is still among the poorest in the world – it is ranked 164 out of the 187 countries on the UN Human Development Index – there are signs that its economic success is starting to translate into better lives for its citizens. By 2009, the country had full primary school enrolment, up from 80 per cent in 1990, and the latest figures show a decline in the infant mortality rate to 86 per 1,000 live births in 2009 from 88 in 2008.
Marcelo Giugale, the director of the World Bank’s poverty reduction programme for Africa, has been watching how the continent’s economic successes impact on its poorest people and is cautiously optimistic. “Sustained growth is necessary but not sufficient on its own to have an impact on poverty”, he said. “You can have growth for a long time and it will help only a few people. We have been lucky that growth has been accompanied by poverty reduction. Not as much as you’d hope, but still. We don’t have continental numbers, but we do have individual countries that show a reduction in poverty, especially extreme poverty.
“In Kenya, Nigeria, Rwanda and Mozambique, infant mortality, health indicators and educational attainment have all improved.”
Mr Giugale believes the mineral-rich continent could see even greater leaps. “If Europe holds together, I think this growth in Africa will continue,” he said. “We are only at the tip of the iceberg in terms of the commodities that Africa has that we know about. I would estimate we still know only about 10 per cent of what’s there. There is so much still to discover.”
Technology has helped speed up growth. In Kenya, for example, mobile phone bank transfers have revolutionised rural access to cash. Just two years after the mobile banking system M-Pesa was introduced in 2007, 40 per cent of Kenya’s adult population had become customers.
There are also early signs of a growth in the continent’s middle class. An African Development Bank report has projected that by 2030 much of the continent will have a middle-class majority and that consumer spending will soar from $680bn in 2008 to $2.2trn.
Joel Kibazo, a consultant working with Oxford’s Centre for the Study of African Economies, says the signs of an emerging middle class are encouraging: “If you look at my country, Uganda: when I was growing up, there was one university, now there are about 30. All these people who are educated are coming out wanting a middle-class lifestyle. They don’t want to go back to villages and mud huts, they want to buy microwaves and laptops.”
But he fears the current European crisis could chip away at the successes. “In 2008, when the rest of the world fell off a cliff, Africa continued moving up”, he said, “but this time, I don’t think it’s going to escape the turmoil in Europe in the same way.”
Emerging economies, such as India and China, do not seem put off, however, and are snatching up opportunities in mineral-rich countries. In 2008, the Democratic Republic of Congo took $6bn of Chinese money for infrastructure – some 2,400 miles of road, 2,000 miles of railway, two universities, 32 hospitals and 145 health stations. In return, China got a slice of the country’s natural resources to feed its own industry – 10 million tons of copper and 400,000 tons of cobalt.
In contrast, Britain has not seized chances on the same scale. Razia Khan, a senior researcher for Standard Chartered Bank, said: “Africa is trading that much more with the emerging powers, so the UK’s share of trade with Africa is not as dominant.”
Over the next 40 years, Africa’s population is set to double, from one billion to two billion, a massive increase in the number of young people of working age. The median age on the continent is currently 20 – half that in Europe, where the economy is faltering.
Yet the continent’s recent swift expansion has largely passed by northern Africa. In Egypt, growth fell by 3.3 percentage points to below 2 per cent in 2011, and in Tunisia a fall of 4.2 percentage points produced contraction of around 1 per cent, according to analysts at the African Economic Outlook. In Libya, the civil war brought oil production to a standstill and GDP shrank by more than 40 per cent. The more mature economy of South Africa also bucked the trend for economic expansion, expanding its output by only 3.1 per cent in 2011.
Despite the economic gains, there are some who find the regimes unpalatable. Tom Cargill, the assistant director of the Africa programme at the foreign policy think tank Chatham House, said: “If you’re interested in states becoming more economically successful, then what is coming out of Africa is good news. But if you are interested in an Africa where human rights are respected and governments take on the attributes of Western democratic countries, including fair elections and freedom of speech, then it isn’t good.
“African states are finding their own ways to economic growth which don’t conform to those liberal human rights criteria. Part of that is because Europe is declining, so European prescriptions of how to behave, in terms of governance, is becoming less attractive to African states.”
Though some may be uncomfortable about how it got there, it seems Africa can no longer be dubbed “the hopeless continent”.
*Culled from http://www.independent.co.uk/news/world/africa/
BBC announces major new focus on Africa*
June 13, 2012 | 0 Comments
The BBC has today announced its first-ever dedicated daily TV news programme in English for African audiences. The new programme, BBC Focus On Africa, brings together the expertise of the BBC World Service’s African Service and BBC World News on television. It is the first in a range of new programming for Africa to be launched by the BBC this summer, including a major expansion of its TV offer.
BBC Focus on Africa will be aired by the BBC’s broadcast partners in Africa and will be shown globally on BBC World News. It forms just one part of an expansion of the BBC’s offer on TV, radio and online.
The BBC today named Komla Dumor and Sophie Ikenye as the main presenters of the daily 30-minute news programme.
BBC Focus On Africa will be launched on prime-time TV across the continent from 18 June 2012 at 17.30 GMT. The programme will draw on the pool of BBC African talent on the continent and in London to report on Africa’s rising economies, entrepreneurs, innovators, culture, entertainment and sport.
Focus on Africa will be covering the major news from the continent and asking: is there a way out of the Sudan crisis? What impact will Europe’s economic problems have on Africa’s booming economies? How does Africa deal with its growth in natural resources?
The programme will also challenge African leaders and politicians on tough issues. Focus On Africa will report on the latest developments in business, technology and science and speak to those driving change. It will also look at how Africa is becoming an information technology hotspot. The programme will report, for example, on Kenyan scientists who are at the forefront in discovering cheaper, locally produced medicines to combat malaria.
Focus On Africa reporters across Africa will be giving us a snapshot of the innovation, lifestyle and culture of the country they live in. The programme will feature Africa Beats, looking at the people behind Africa’s varied music scenes. Every step of the way viewers will have their say through social media.
Focus on Africa presenter Komla Dumor says: “After decades of turmoil and uncertainty, a new Africa is emerging. The old stereotypes are being challenged and a new, compelling narrative is being written. I am incredibly excited to be part of a new BBC programme that will provide solid coverage and analysis of Africa’s challenges and prospects.”
Solomon Mugera, the BBC’s Africa Editor, says: “Africa is now one of the fastest developing news markets in the world – this new investment will expand our services for African audiences.
“While radio remains popular in Africa, TV is growing – and our partnerships with leading African broadcasters play a key part in these future plans. Mobile phone ownership is racing towards a billion, internet connectivity is rising and social media is empowering audiences. It’s essential that the kind of independent journalism the BBC does that isn’t slanted to one political or commercial viewpoint remains central to the new media landscape.
“With correspondents in 48 African countries, production centres in Nairobi, Abuja, Johannesburg and Dakar and a weekly audience of 77 million, the BBC already has deep roots in the continent. Our journalists are from the African countries they report on – in English, Swahili, Hausa, Somali, Kinyarwanda/Kirundi and French – living and breathing the big stories and issues facing Africa.”
The BBC also announced that six special episodes from Africa of current affairs interview programme Rendezvous, hosted by Zeinab Badawi, will be broadcast on BBC World News from mid-June with guests including President Kikwete of Tanzania.
The BBC newsgathering resources in Africa are part of a global network of 70 bureaux. The BBC made its first broadcast to Africa more than 80 years ago. The combined audience on radio and television makes the BBC the largest international broadcaster in Africa.
*Courtesy of http://www.bbc.co.uk/mediacentre/worldnews/
Cuba injects doctor diplomacy into Africa
June 11, 2012 | 0 Comments
By Nick Miroff*
Oil-pumping African nations pay hefty sums to staff their hospitals with thousands of Cuban doctors, with most of the money going to the Cuban government.
HAVANA, Cuba — Africa is a growth market for the world’s best-known Cuban brand after Havana Club rum and Cohiba cigars.
That would be Cuba Rx, also known as Havana’s doctor diplomacy.
A generation ago, Fidel Castro sent Cuban soldiers to intervene in African civil conflicts and fight the Cold War against US proxies. Now, Cuba’s doctors are fanning out across the continent as the island expands its role in administering medical services to some of the world’s most ailing countries.
For Cuba the effort is good philanthropy, good diplomacy and, in some cases, good business. The Cuban missionaries are part of a widening global medical outreach that has boosted Havana’s ties around the world and earned billions in hard currency for the cash-strapped Castro government.
The largest contingent of Cuban doctors working abroad remains in Venezuela, Cuba’s closest ally, where they have helped boost support for Hugo Chavez’s government by staffing clinics in rural areas and rough neighborhoods where health services are scarce.
In turn, the Venezuelan government sends Cuba billions in cash as well as critical supplies of oil. But Chavez is facing re-election in October as well as an uncertain recovery from an aggressive and still-undisclosed form of abdominal cancer.
If a leadership change in Venezuela were to cool relations with Cuba, thousands of Cuban doctors could be reassigned elsewhere — many to Africa, where fast-growing economies and rising commodity prices have left some governments flush with cash yet lacking in health care professionals.
Some 5,500 Cubans are already working in 35 of Africa’s 54 countries, Cuban Foreign Ministry official Marcos Rodriguez told reporters this week at a press conference in Havana.
Of those, 3,000 are health professionals, and 2,000 are doctors, he said.
“We have blood ties with Africa,” the deputy minister said.
Some 1.3 million African slaves were brought to Cuba during the island’s colonial period, Rodriguez said, and 2,289 Cubans died fighting in Angola between 1975 and 1990, where some 300,000 Cuban served.
“Cuba believes that it has a historic debt to Africa that must be repaid,” he said.
Then again, Cuba’s debt repayment is not an entirely one-way affair.
While Cuba sends physicians to Africa’s poorest countries and grants scholarships for their students to study medicine on the island, it does a brisk business with more prosperous countries on the continent — especially those that are rich with oil and poor in health professionals.
Petroleum-pumping Africa nations such as Algeria and Angola are paying hefty sums to staff their hospitals with Cuban doctors, with most of the money going to the Cuban government.
For instance, the Angolan government pays Cuba about $5,000 a month for each doctor the island sends, according to a source with knowledge of the arrangement. The Cuban doctor receives a $500 share.
It’s a tiny cut, but the amount is still about 10 times what Cuban doctors can earn back home. The Castro government also rewards physicians who complete medical “missions” with other perks — like the ability to buy a used car from the state.
The specific details of each arrangement between Cuba and the countries that receive its doctors and other professionals are not public. But the programs seem to work along three basic channels: providing medical help free to poor countries that can’t pay, charging countries that can pay, and training medical professionals at universities back in Cuba.
This sliding-scale policy has won Cuba friends around the world, as students from more than 100 countries have been trained at the island’s medical programs. According to a report this week in the Toronto Star, nearly 20,000 foreign students are currently receiving medical training in Cuba — including 116 Americans on scholarship.
But not all foreign students are studying in Cuba for free. When officials in Ghana announced recently they had reached a deal with the Castro government to train 250 doctors over a six-year period, the arrangement was criticized by Ghanan officials who argued the money would be better spent boosting education doctors back home.
Many African doctors who train abroad opt to work in foreign countries where salaries are higher, and the Cuba’s training urges them to serve their communities back home.
After the 1959 Cuban Revolution, Africa was one of the first places Cuba’s health missionaries went when a small medical brigade arrived in Algeria following the country’s anti-colonial fight against France. Cuban medical personnel also accompanied Cuban soldiers sent to aid leftist allies in Angola, Namibia and elsewhere.
And the ideological battle between the US and Cuba is still playing out on African soil. A program created by the Bush administration in 2006 creates special visas for Cuban medical personnel who wish to defect from their missions abroad.
About 800 doctors have done so to date, drawing fierce criticism from the Castro government, which says the US visa program deprives poor countries of desperately needed medical care.
Culled from GlobalPost
With Kenya election, East Africa enters make or break season
June 11, 2012 | 0 Comments
By CHARLES ONYANGO-OBBO *
As Kenya heads into the first election under its new Constitution, the East African Community too will begin its most dramatic transition.
The transition season will end in 2017 in Rwanda, when President Paul Kagame is scheduled to step down. How the leaders and East African citizens play their hands over this period, could make or break the East African project.
For starters, more East African leaders will be leaving office and handing over to new leaders in this period, than at any other in the region’s history. Kenya’s president steps down next year in March when the country votes, after serving his constitutionally provided two terms in office.
Burundi and Tanzania, both countries with term limits, will go to the polls in 2015 and Presidents Pierre Nkurunzinza and Jakaya Kikwete will leave office.
Only Uganda, where term limits were scrapped, goes to elections in 2016 with uncertainties about whether President Yoweri Museveni — who has been in power since 1986 and is already the longest-serving East African president ever — will bow out or soldier on.
Over the past year, Museveni has had to continually quell his riotous ruling National Resistance Movement, where youthful MPs, sensing that the elder leader’s prestige has been tarnished by years of corrupt government and alleged nepotism, figure that he is no longer the Colossus he was some years back.
At the official age of 68, Museveni is looking wan and is frequently off colour, which has prompted what promises to be a messy internal succession scramble. So far, it is presumed that the abstemious and wily NRM secretary-general, Prime Minister Amama Mbabazi, is the man at the front of the succession queue.
Other claimants to Museveni’s throne have ganged up on him, and have thrown everything that is not nailed down at his head and character.
More than any other in the region, the succession in Uganda is set to be the most unpredictable.
In Rwanda, Kagame has given all indications that he is packing his bags and clearing out of State House. But Rwanda-watching and Kagame-bashing and Kagame-boosting are among the biggest industries in the world as far as Africa goes, so there are many voices who don’t think the former guerrilla leader will leave office.
In any event, there is one thing about Rwanda that is not doubt. The Rwanda Patriotic Front, easily Africa’s most disciplined ruling party and one of its richest, will continue to run the show for a long while. And Kagame, who will still be a relatively youthful 60-year-old in 2017, will continue to exert influence over how business is conducted in Rwanda.
The comings and goings in East African State Houses over the next five years are important, because over this same period, the EAC will be undergoing a radical remake. Last week, EAC Secretary General Dr Richard Sezibera said fragile South Sudan’s application to join the EAC is being studied.
South Sudan’s admission is likely to be quick. Uganda’s Deputy Prime Minister and Minister for East African Community Affairs Eriya Kategaya said earlier this year at the launch of the Society for International Development’s State of East Africa Report 2012 in Nairobi, that there was a strategic need to admit South Sudan into the EAC fold in order to “protect the new nation against aggression by [north] Sudan.”
War-scarred but slowly stabilising Somalia has also applied to join.
Somalia will take critical steps towards restoring functioning government for the first time in over 20 years between now and August, when it will have passed a new constitution, elected a new parliament, and its first democratically appointed president in generations.
The Amisom wand
The modest progress made in stabilising Somalia is thanks to the African Union’s peacekeeping force in Somalia, Amisom. Until this year, two EAC countries — Uganda and Burundi — were the only two countries providing troops for Amisom and it is they who broke the militant Al Shabaab’s back in Mogadishu, and lately took the key city of Afgoye, Somalia’s breadbasket, considerably improving food security, an important factor if the country is to return to normalcy.
Kenya entered the Somalia fray in October 2011, and after a cautious first few months, has been aggressive in recent weeks, taking the town of Afmadow, and setting its sights on the strategic Kismayu port town.
The Kenya Defence Forces, which were “re-hatted” as Amisom troops in February, said last week that they would have Kismayu in the bag by the key date of August.
With Kismayu, Mogadishu, and other important regions of Somalia controlled by Amisom and the Somalia government, the new government elected in August will have a reasonable degree of credibility. In all probability, Burundi, Kenya, Uganda and Djibouti Amisom forces — which will shortly be joined by Sierra Leone — will remain in Somalia for a few more years.
They are unlikely to leave their shining foreign policy prize out of the EAC, when they withdraw. Indeed, because of the mutual EAC defence pact, the regional armies will have a legal basis to remain in Somalia were the Amisom mandate to expire soon, if it were a member of the Community.
How the EAC will cope with, possibly, five new presidents having to deal with new members — South Sudan and Somalia — who are politically unstable and whose government structures will still be primitive, is anyone’s guess.
History is the best guide here. The EAC has survived transitions before — none of the EAC presidents in power today, with the exception of Museveni in Uganda, was in office when the EAC charter was first signed in 1999.
But some of East Africa’s coming challenges are unprecedented.
According to the State of East Africa Report 2012 (SoEAR2012), the region’s population has grown by 24 million since 2005 and was estimated to be 139 million in 2010.
“The most important population characteristic of East Africa are its children and youth”, said SoEAR2012, “who account for an overwhelming majority, 80 per cent, of the region’s population in 2010.”
Most of these are unemployed, with youth joblessness rates in countries like Uganda estimated to be over 80 per cent. Youth discontent and unrest is rising, and over the next five years, new — and possibly inexperienced — EAC leaders will be the ones to deal with the problem before it explodes into revolt.
Kenya’s Independent Electoral Boundaries Commission (IEBC) is aiming to register 18 million voters in total — about four million more than the number in 2007. Not all these voters will be youths, but if we consider that Kenya’s population is currently increasing by one million every year, and that between 1999 and 2006 the working-age population increased from 9.7 million to 13.1 million (approximately 500,000 young people joining the work force every year) then it is likely that most of Kenya’s new voters will be between 18 and 24 years old.
With their vote in 2013, will come expectations of a good deal from the new leaders. This same pattern will be replicated in most of East Africa.
With the recent discoveries of oil and gas in the region, governments will have the money to pay for new job and social programmes and buy off restless voters.
Uganda’s oil is expected to start flowing in 2017, Kenya’s at perhaps around the same time. Tanzania is also likely to find a lot more deposits of gas, as is Rwanda, which is also exploring for oil.
However, most of the secessionist demons in Africa also live in East Africa. The region has seen the most number of successful secessions in Africa —Ethiopia/Eritrea, the Sudans; and there is a high possibility Somaliland will break away — evidence that perhaps East Africans are quite a schizophrenic people, integrationist and parochial at the same time. The Tanzanian Union is also coming under pressure. A fortnight ago in Zanzibar, Uamsho, a group that is demanding a referendum on Zanzibar’s secession from Tanzania, was behind three days of disturbances in which churches were burnt.
In the 2010 election, Zanzibar took some steps to put an end to perennial election violence by instituting a new power-sharing deal so that it’s no longer “winner takes all”: Ali Mohamed Shein from the governing CCM (Chama Cha Mapinduzi) party was voted in as president in elections in November 2010.
He narrowly beat Seif Sharif Hamad of the opposition Civic United Front. Under a power-sharing deal, Mr Sharif serves as one of Shein’s vice-presidents. The power-sharing deal was enshrined in a constitutional amendment adopted in 2010 to end perennial election violence.
While Uamsho’s secessionist demands are a new wrinkle Tanzania doesn’t need, the fact that the country’s new constitution is expected to be inaugurated in April 2014, means it has a chance to offer Zanzibar an additional calming sweetener.
The worry in Tanzania will probably be that Kikwete’s successor will have a bigger political fight on his hand than his predecessor.
The ruling Chama Cha Mapinduzi’s fortunes have been dwindling in recent years, as the party is bogged down by corruption scandals and rising internal struggles. In the 2005 election, for example, CCM won 206 out of 232 seats, and Kikwete was elected with 80 per cent of the vote.
It bled in the 2010 election. CCM won 186 out of 239 seats, and this time Kikwete had to make do with 62 per cent of the vote — even then, there were allegations that the vote was stolen.
CCM should still scrape by, but the fact that it has become comfortable with running the show largely unchallenged since just after Independence, means it could become nasty if faced with the real possibility of losing power. That point, though, is not about to come tomorrow.
In November last year, a rights group reported that more than 300 people had been killed in the preceding five months, including opposition and former rebel FNL members.
The dangerous slide continued in Burundi, with Human Rights Watch reporting last month that there had been a significant increase in political violence: “Reciprocal killings by members of the ruling National Council for the Defence of Democracy-Forces for the Defence of Democracy (CNDD-FDD) and the former rebel group the National Liberation Forces (FNL) increased, particularly in Bujumbura and in Bujumbura Rural Province. Impunity for these crimes remains one of the most serious obstacles to peace. The single largest incident of killings took place in September in Gatumba, near the Congolese border.”
Of the five members of the EAC, Burundi is probably the one over which most sleep should be lost. But if Nkurunziza’s successor is a gentler ruler, it too might still have a prayer.
Long-term, East Africa must worry about a common problem of institutional credibility. It seems that the majority of East African president are able to capture their countries’ imaginations, but the institutions th e state and other leaders don’t.
A Gallup poll published on April 25, for example, showed that in Kenya 62 per cent of respondents approved of President Kibaki, but only 38 per cent approved of the country’s wider leadership.
In Tanzania, 66 per cent approved of President Kikwete, but only 59 per cent approved of the country’s wider leadership. In Uganda, 60 per cent of respondents approved of President Museveni, but only 49 per cent of the country’s wider leadership.
There were no polling numbers for Rwanda, but President Kagame typically turns in high ratings in most opinion polling. Little polling is done in Burundi, but the same pattern might well be repeated there.
These numbers might flatter the leaders, but for as long East Africa is a region ruled by men, not institutions, it is will also more likely continue to report a democratic deficit.
*Courtesy of The East African
Nigeria celebrates first home-made warship
June 8, 2012 | 0 Comments
By Will Ross *
After nearly five years in the making, the Nigerian navy ship or NNS Andoni was launched with a colourful event.
At 31m (100ft) long, this is no giant of the seas, but the fact that it was designed and built in Nigeria, by Nigerian engineers, is a great source of pride.
“We are all happy and elated,” said Commodore SI Alade, one of Nigeria’s senior naval officers.
“This is the first time this kind of thing is happening in Nigeria and even in the sub region.”
Moments after stepping on board NNS Andoni, sailor FL Badmus said: “I feel on top of the world.
“I’m proud to have been picked by the naval authorities to serve on this ship.
“We hope this is the beginning of very good things to come and we thank God for it.”
The warship was named after the Andoni people of south-eastern Nigeria – and several chiefs travelled to Lagos to witness the launch – including his Royal Highness NL Ayuwu Iraron Ede-Obolo II, wearing a top hat, a sequin-adorned velvet gown and a brightly coloured necklace.
The ceremony also featured multi-faith prayers, with an imam asking God to “protect and preserve this ship from the dangers of the day and the violence of the enemy”, and a Christian praying: “May she sail with success like the Ark of Noah.”
The event had an interesting twist of symbolism for the guest of honour, Nigeria’s leader, Goodluck Jonathan.
He is from a family of canoe makers – and that he is now the president launching a warship is a sign of how far he has risen.
“This is the beginning of the transformation… and I believe in another 10 to 15 years, we can be thinking about starting a project to take Nigerians into the air,” President Jonathan said.
The NNS Andoni could be key in the fight against militants operating near Nigeria’s oil fields as well as the growing threat of piracy in the Gulf of Guinea.
Piracy in Nigerian waters is on the increase and incidents are happening over a wider area, according to the International Maritime Bureau.
There were 10 piracy attacks off the 780km (485 miles) of Nigeria’s coastline during the first quarter this year – the same number reported for the whole of 2011.
“While the number of reported incidents in Nigeria is still less than Somalia… the level of violence against crew is dangerously high,” according to a recent IMB report.
The NNS Andoni is equipped with an advanced radar system and firepower.
“With a speed of up to 25 knots (46km/h), this can quickly go to intercept the pirates,” said Commanding Officer Adepegba standing on the bridge pointing out the ship’s three machine guns and the automatic grenade launcher.
The Nigerian navy reportedly wants to acquire 49 more vessels over the next 10 years. But how many will be home built?
Orders are already in – for three from a French shipbuilder, and six from Singapore.
President Jonathan recently approved the acquisition of two large patrol vessels from China Shipbuilding and Offshore International, a mainly state-owned company.
In an effort to boost local industry, one of the Chinese vessels is meant to be 70% built in Nigeria.
NNS Andoni was dwarfed when a 105m-long frigate steamed past during the ceremony – with all the officers cheering on deck.
NNS Thunder, a veteran of the Vietnam War, arrived at the beginning of the year, a gift from the US.
Eyebrows were raised when it was announced that the monthly fuel bill of the 45-year-old ship would be $1m (£650,000).
When this year’s navy’s $450m budget was discussed at the House of Assembly in January, one senator described the donated ships as hand-outs that could become liabilities rather than assets.
There were also calls for corruption to be plugged.
“Corruption has sucked the blood out of our system. So we have to depend on hand-outs,” one senator lamented.
NSS Andoni’s fuel bill will certainly be lower than NNS Thunder.
‘No indigenous touch’
After parading on the deck, the naval officers took photos of each other with mobile phones – clearly delighted with the new ship.
“It’s a great day. It’s taken over five years but it’s worth it,” said a smiling Kelechi, one of the engineers.
“We came up with the design, the expertise and about 60% of the materials were locally sourced. The engines, generators and navigation equipment came from outside.”
Nigeria is one of Africa’s biggest oil producers, but this has not so much helped as hampered the development of local industries because the country has relied so heavily on imported goods. As he launched NNS Andoni, President Jonathan lamented the decline of industries that had been strong not long after independence in 1960.
“We had Nigerian Airways, the Nigerian shipping line and a number of investments that were doing well. But because there was no indigenous touch, all these died,” the president said.
“We are told that some countries that were on par with us are now building aircraft, choppers and other things,” he said, adding that Nigeria had for a long time not embraced technology.
The president suggested sending the brightest students of engineering to the best universities in the world.
“Then let them come back and work in Nigeria because we cannot continue to be importing. We have a very large market and even what we consume alone is enough to support an industry.”
“We have this market, we must use it,” President Jonathan said – before laying the keel to mark the start of work on the second “Made in Nigeria” warship.
*Courtesy of BBC Africa
How some western entrepreneurs are abandoning Silicon Valley for Africa
June 3, 2012 | 0 Comments
By Dinfin Mulupi*
East Africa’s growing opportunities in the technology sector have proved too good to ignore for some entrepreneurs from western countries. While many people in Africa have for a long time viewed the US and Europe as the lands of opportunity, young entrepreneurs from western countries are abandoning Silicon Valley to participate in east Africa’s technology sector.
Jeremy Gordon (27) came to Kenya two years ago to work as a volunteer with a microfinance institution in Nairobi for four months.
“I just wanted to come and see how mobile money was being applied in microfinance. I had read a lot about M-Pesa. I was planning to go back to graduate school, but I decided to stay and explore opportunities here,” says Gordon.
Today Gordon is involved in a number of technology startups. He co-founded Niko Hapa Ventures, a loyalty programme that enables businesses to reward loyal customers, get feedback and generate buzz on social media.
Though he grew up in the San Francisco Bay Area – home of Silicon Valley – Gordon says he finds the ICT opportunities in Kenya more interesting than those in the US.
“It is significantly easier to raise money in Silicon Valley, but both the problems being addressed by ICT and the solutions people are working on [in Silicon Valley] aren’t as exciting to me,” says Gordon.
Michael Benedict moved to Uganda to work for an NGO, but when his contract expired he opted to stay and founded Carbon Keeper, a mobile phone and web based software for collecting customer information on rural energy projects.
“I worked on rural energy for four years in Washington D.C. Moving to east Africa was an opportunity to come out and actually be involved in a project on the ground and work on technology that people in D.C. are promoting. I am able to do it in a better way than I would at my desk in D.C.,” says Benedict.
“East Africa is at the cusp of a technology-driven inflection point. We saw an opportunity to help redefine commerce and be a part of something meaningful,” says Ben Lyon (26), a US expat who co-founded Kopo Kopo, a web based mobile payment gateway that helps businesses process mobile payments in real time.
Having witnessed the internet revolution in Denmark in the early 1990s, Michael Pedersen sees the technology revolution in east Africa as a second chance to grab opportunities missed earlier.
“East Africa is a place I have been following since 2006. I worked with a digital agency in Kenya and later moved back to Denmark. When the fibre optic cables landed I moved back because it presents new and exciting opportunities,” says Pedersen, developer of Uhasibu, a web and mobile cloud based accounting system developed for SMEs.
Sandra Zhao (23) cooked at a restaurant and ran a tech startup on the side in New York. She moved to Kenya and is today working with a technology focused social enterprise; One Degree Solar, a solar energy company that uses a mobile platform for communication with its customers.
“My friend who was here (in Kenya) kept talking about the iHub (a co-working space and business incubator in Nairobi) and all the cool things happening here. The more she talked about it the more I wanted to come. It is a unique place to be,’ says Zhao.
Bas Hoefman (35), a Dutch national, explains that he established Text to Change, an organisation that uses SMS to challenge people on their knowledge of personal health, in Uganda primarily because of the wide penetration of mobile technology in the region.
Hoefman explains that mobile phone technology is the most effective and affordable medium of communication and has and will continue having a huge impact on rural communities in east Africa.
“With the promising growth of cheap Android phones it will also be Africa’s laptop as most people will not need to own one to access communication. The mobile phone landscape in Africa has rapidly evolved over the past decade with 500 million mobile subscribers and 1 million added every week due to liberalisation and increased competition,” says Hoefman.
Being in east Africa comes at heavy price as these entrepreneurs have found out. Pedersen reckons that for every month he is in Kenya he losses Ksh. 1 million (US$12,000) that he would have made elsewhere.
“Before I came here I was making more than what I do now. When I think about opportunity cost it is not just about finances. Considering the chance to build interesting, potentially high-impact products and services here in Kenya, I would say the opportunity cost of being in the US is much higher for me,” says Gordon.
Toni Maraviglia (28), a teacher from the US, moved to Kenya to work for an education focused NGO in rural Nyanza, Kenya. Maraviglia worked with teachers to create MPrep, an assessment-based system that quizzes students on topics learned in class via SMS. Though she was later admitted to the Haas School of Business in Berkley, one of the top business schools in the world, she opted to stay in Kenya and build MPrep.
“I don’t feel I have given up that much to be here. I don’t see this as a loss. I am in love with this place. It is really hard being away from your family. I have to miss four weddings this year. However, besides that, there is a great opportunity to do something good here,” says Maraviglia.
A different market
Even as foreign entrepreneurs flock to the region, concerns have been raised about how effective they will be in a market that is very different from western countries.
“The most effective way to build products is to build them in markets you are familiar with. Foreign entrepreneurs working in east Africa cannot compare themselves with locals. I am aware that there are certain things that will take a while for me to understand. It is very easy to make false assumptions,” says Jeremy Gordon.
Sandra Zhao reckons that how people in the US interact with technology is very different from how people in east Africa do.
“Working with Kenyan staff and partnering with Kenyans is the way to do it. We have to understand how mobile technology works here. Even though smartphones have done so well in the region, most people still don’t have smartphones,” says Zhao.
What does the future hold?
Although most of these young expatriates are uncertain about whether they will be staying in east Africa permanently, they are optimistic about the region’s future.
“By having worked in east Africa for over five years I have learnt that it has enormous potential. The region has shown a vast economic growth and there is a rapid growing middle class. I believe, despite its challenges, east Africa has enormous business potential and not only in the ICT sector, but also in other industries,” says Bas Hoefman.
Ben Lyon adds: “There is a possibility I could stay here permanently. Kenya has an exciting future ahead of it and I feel obliged to contribute to that future. I am also interested to see how the IT space in South Sudan and Somalia develops in the next five to ten years.”
*Culled From How We Made It In Africa http://www.howwemadeitinafrica.com/
Africa: FDI Into Africa Accelerates As Investor Perceptions Begin to Shift By Nelly Nyagah*
May 12, 2012 | 0 Comments
By Nelly Nyagah*
Growing optimism and confidence among international and local investors has led to significant inward investment into the continent over the last decade, according to professional services firm, Ernst & Young’s second African Attractiveness Survey.
The number of new foreign direct investment (FDI) projects in Africa grew in 2011, with project numbers almost up to levels last seen in 2008. In the last decade, Africa has seen an increase in inward investment from 339 new projects in 2003 to 857 in 2011 (an increase of 153%). Investment has come from both developed and emerging markets, as well as intra-African investment.
India has led the way as the fourth largest FDI investor by number of projects since 2003 with annual compound growth of 46% since 2007. China and the UAE remain prominent too, but there is high growth in investment from an increasingly diverse range of other rapid growth markets, with South Korea, Saudi Arabia and Turkey among those at the forefront Says Mark Otty, area managing partner for Europe, Middle East, India and Africa at Ernst & Young: “With rapid-growth markets not only dominating investor attention and capital flows, but also playing an increasingly strategic role in defining the global economic agenda, the competition for global FDI is intensifying. African countries must position themselves appropriately in this shifting landscape to attract a greater proportion of the investment that will accelerate growth and development.”
The African Attractiveness Survey report combines an annual analysis of investment into Africa since 2003, with a survey of 505 global executives on their views about how and where investment will take place in the next decade.
Perception versus reality
The 2012 survey paints a positive picture, reflecting growing confidence in Africa’s prospects. 60% of survey respondents say that their perception of Africa as a place to do business has improved over the past three years. Looking forward, 73% of respondents anticipate that Africa’s attractiveness will improve over the next three years, while only 4% believe it will deteriorate.
Of those who believe that Africa’s growth prospects in the near term are significantly positive, half have a dedicated Africa strategy in place, and 92% have an active business presence on the continent.
However, the survey results also highlight that there is stark difference in perception between those who are already operating in Africa, and those who do not. This is manifested in the low percentage (at 5.5%) of global FDI projects that Africa attracted in 2011. While this is up from 4.5% in 2010 and is, in fact, the highest proportion of global FDI that Africa has ever received, reservations remain amongst those who have not yet invested into the continent.
“Despite high optimism, high growth and high returns, the perception gap still exists and the African continent as a whole still attracts fewer FDI projects than India and far fewer than China. There is still clearly work to be done by Africans – government and private sector alike – to better articulate and “sell” the growth story and investment opportunity for foreign investors,” says Ajen Sita, managing partner for Africa at Ernst & Young.
Intra-African investment leads the way
A key theme highlighted in the report is the growing confidence, self-belief and commitment by Africans to move Africa forward, reflected in the substantial growth of intra-African investment. Between 2003 and 2011, there has been 23% annual compound growth in intra-African investment into new FDI projects. This growth has been accelerating, with the growth rate up by 42% since 2007.
Over a period in which the annual number of FDI projects into Africa has more than doubled – from 339 in 2003 to 857 in 2011 – intra-African investment has grown exponentially with project numbers increasing from 27 in 2003 to 145 in 2011. As a result, in 2011, intra-African investment accounted for 17% of all new FDI projects on the continent.
The growth in intra-African investment is led by Kenya, Nigeria and South Africa. The three countries are ranked among the top 20 investors on the continent between 2003 and 2011. Since 2007, the growth rate in investment from Kenya, Nigeria and South Africa has been 78%, 73% and 65% respectively.
“There has been a radical shift in mindset and positioning over the last decade, with Africans themselves increasingly leading from the front by providing African solutions to Africa’s challenges. Clearly work still remains to be done, but pushing ahead with key initiatives such as regional integration and investment in infrastructure will ensure that Africa remains on a sustainable growth curve,” says Sita.
Moving beyond dependence on commodities
The 2011 African Attractiveness Survey highlighted the growing diversification of FDI as a key trend. This has continued, with even greater levels of investment into less capital-intensive sectors, which has resulted in increased flows into manufacturing, business services and sales, and marketing and support industries. There is a definite shift from the traditional extractive industries.
Africa remains high on the agenda of those looking to invest in foreign markets but despite the growth and progress, a perception gap remains. However, significant improvements in trade agreements, regional integration and an increased investment in infrastructure will push Africa into the top league of investment destinations.
Says Sita: “In the midst of a global economy that is being reshaped, with growth and capital flows shifting from north to south and west to east, Africans have a unique opportunity to break the structural constraints that have marginalised the continent for decades, if not centuries.”
*Courtesy of http://www.tradeinvestafrica.com
A Valuable Development Partner For Africa In the OIC
May 12, 2012 | 0 Comments
By Ajong Mbapndah L
“In a country with an unemployment rate of 30%–and growing—youth like Bate Takang Peter face incredible hardships to become gainfully employed. Bate’s wish and that of his father, however, was for him to build a family home in their village in rural Cameroon. Luckily, Bate’s aunt told him about Cameroon OIC’s vocational training school, and with her support, Bate went back to school and graduated with a diploma in Building Construction and Small Business Management. That was over 18 years ago. Today, Bate is a successful builder who has built many houses for his community, along with his father’s dream house. In his own words: “I did build the house my father talked about…the OIC philosophy, the skills and training from OIC have made me a happy man.”
The above quote is found on the page of Cameroon OIC one of the programmes of the Opportunities Industrializations Center International in Africa. For over forty years the OIC has been one of Africa’s most reliable development partners with a unique model that takes cognizance of local realities and trends to equip its graduates with marketable skills. Present in some 19 countries and counting, what also makes the OIC stand out is the autonomy enjoyed by the various country programmes which rely greatly on local management. Founded in 1967 by Leon Sullivan, the OIC was initially invited to Africa by Nigerian leaders. According to the President and CEO of OIC International Crispian Kirk, Founder Leon Sullivan answered the call of Nigerian leaders to set up vocational training programmes akin to the ones in the USA. With a grant from the USAID, OIC started operations in Nigeria in 1970. In Cameroon, 15,500 youth are assessed to have received vocational training .13, 000 (5,800 women and 7,200 males) are now successfully employed in both the private and public sector. Approximately 2000 graduates have created their own businesses
Our mission is to build self reliance through vocational skills and entrepreneurial development says Crispian Kirk. A highly regarded social entrepreneur, the affable CEO who talks about the continent with great insight and passion says the development approach taken by the OIC is unique. People everywhere want to have education, health, skills and jobs to provide for their families he says. The OIC focuses on two major areas, agriculture and technical and vocational training. With about 75% of Africans involved in one kind of agricultural activity or another, it is important to help them with the kind of skills that can optimize output. Many people thought that telecommunications will be a big drive in the world, but in Africa Mr Kirk believes infrastructure has the potential of been the game changer. Africa benefits when food can be produced in Kano Nigeria and it gets to Accra Ghana on the same day via rail or other means he enthused. It is in this light that people need training in infrastructural development, road development, engineering, electricity, plumbing, computer management et al. Emphasis on the OIC is on marketable skills that go with the available job market and contribute to overall development in specific countries.
The OIC has a bottom up approach to services it renders Kirk goes on. The OIC may be about the only NGO were local leadership plays a critical role in decision making. Even if there is a grant from the USAID; it is the local leadership that signs the checks and handles expenses. It is one of the reasons why the OIC in countries like Nigeria, Cameroon, Ghana, Liberia, Ethiopia, Tanzania etc continues to wax strong. On how OIC measures the success of its programmes, the dynamic CEO said prior to each project consultants draw a baseline monitoring and evaluation module to ensure it captures common indicators of progress. We do not measure success simply by the number of graduates but also by the number of people who graduate from OIC programmes and land a job he says. Africans tend to look outside for solutions where as there have them right there, Kirk pointed out. A frequent visitor to Africa, Kirk says the OIC gives premium to local talent and expertise instead of inundating programmes with foreign experts and consultants as most international NGOs do.
On what he has learned from his frequent visits to Africa that his fellow Americans may not know, Kirk says the image portrayed of Africa as a begging continent is severely flawed. “I see more people going to Africa to beg” than the reverse he chuckles. All the amount of international aid poured into the continent is only a fraction of the huge resources that come out of Africa. Africa is a place of immense wealth and a diverse people striving for a better life. Asked if he would recommend Africa as destination for American business investment, absolutely Kirk answers. The US government must do more to support American businesses working with Africa he challenges.
The Chinese government is doing a lot in providing support for Chinese companies doing business in Africa and the USA may miss the boat if it does not offer similar support to American businesses working towards partnership with Africa he opines.
Although the OIC is open to considering expansion into more countries if invited to set up shop, it is more interested in opening up more OIC facilities and training centers in countries where it already operates. Using the example of Cameroon for instance, Kirk said instead of having one Center in Buea, OIC will love to open up more centers around the country. OIC Ethiopia operates two centers, one in Addis Ababa for unemployed urban youth and the second one in the town of Jimma in the Gambella Region of Ethiopia for Sudanese Refugees in collaboration with the UNHCR and the Ethiopian Administration for Refugee and Returnee Affairs office.
On the ties that exist between governments and the OIC, Kirk affirms that there are very strong. The only way to guarantee sustainability is to work with governments and local communities he says. If aid from USAID dries up tomorrow something that has happened in the past, it is the local governments that will fund the programmes. OIC Ethiopia for instance is nationally recognized by the Ministry of Justice and operates under the umbrella of the Ministry of Labor and Social Affairs of Ethiopia. Its Board of Directors consists of community leaders, private sector representatives (including the Chamber of Commerce of Addis Ababa) and representatives from Ministries such as the Ministry of Labor and Social Affairs, Ministry of Education, and the Addis Ababa City Administration.
As the OIC continues with its salutary development partnership mission in Africa, its success is spurring a number of people around the world to emulate their example. For instance at a recent congressional hearing at the US Capitol before the House Subcommittee on Africa, Global Health and Human Rights Actor Isaiah Washington cited the OIC as an inspiration in his own work in Sierra Leone. “My efforts are part of a growing trend of members of the African Diaspora reconnecting with their homelands or the homelands of their ancestors. I have looked to the example of the late Reverend Leon Sullivan, who spent a great deal of his life connecting African-Americans and others to countries in Africa. Organizations he founded, such as Opportunities Industrialization Centers International and the International Foundation for Education and Self-Help, have helped members of the Diaspora and others to volunteer their skills to teach young people in Africa or take part in training programs for African entrepreneurs and farmers”
The development partnership between the OIC and Africa is built to last ,says Crispian Kirk who has an extensive career in international development. He provided pro bono
legal representation to survivors of apartheid before South Africa’s Truth and Reconciliation Commission. Crispian was formerly the director of the National Medical Association’s (NMA) Global Health Initiative, where he was responsible for launching Global Health projects in a number of Sub-Saharan African countries. He also founded and served as president of Bantu Consulting, LLC, where he provided strategic international business development and finance expertise to small and medium-sized enterprises. He served as a member of the Obama-Biden Africa Policy Team during the 2008 Presidential Election and has participated in the filming of a documentary in Sierra Leone that examines human rights abuses in the diamond industry.
*More on the OIC International and its country programmes in Africa can be found at http://www.oici.org/where-we-work/
Seven trends likely to shape African agriculture in the coming years
February 21, 2012 | 0 Comments
By Femi Adewunmi*
In a recent research report, titled African Agriculture: This other Eden, Renaissance Capital identified a number of factors that are likely to influence African agriculture in the years ahead. A summary below:
1. Increasing demand from China
China’s meat consumption has increased significantly over the past decades. In 2001, the average Chinese consumed around 43 kg of meat every year. Over the following ten years, annual per capita consumption rose to approximately 54 kg, a 22% increase. More meat consumption has led to a rising demand for soya beans – a popular source of feed for livestock.
China, however, cannot supply its own need for soya beans. In 2001, the country produced 15.4 million tonnes of soya beans. This year production is expected to be about 14 million tonnes. Although Chinese soya bean production has decreased, domestic consumption has skyrocketed from 28.3 million tonnes in 2001 to 71.6 million tonnes in 2011. This higher demand has been met through imports.
In addition to soya beans, China’s ability to be self-sufficient in the production of other crops is also likely to be reversed in a dramatic fashion over the next few years. Renaissance says that the same situation as what happened with soya beans could play itself out in other grains, such as maize, wheat and rice. The past two years has seen a minimal increase in the harvested area for wheat and rice, while yields for all three grains have also only seen a marginal improvement. Rising urbanisation is putting increasing pressure on farmland.
It is not only China that will import more grains. Similar dietary changes are underway in a number of other emerging economies. As demand rises, internal constraints in a number of geographies are becoming apparent. Renaissance says this is a good opportunity for Africa, which has significant farming potential, to increase its exports of agricultural commodities such as maize, palm oil and other crops.
2. Food security
The UN Food and Agriculture Organisation (FAO) believes that 70 million hectares of additional farmland is required to feed the world’s 9 billion people by 2050. The Americas could most likely fulfill this need alone with Canada, the US, Brazil and Argentina providing the bulk of additional supply.
However, the issue of food security is not only about basic needs and how to fulfill those needs – it is also about the risks attached to achieving it. In common with the oil & gas industry, there comes a point where an over-reliance on too few suppliers for a country’s energy needs makes it hunt out alternative sources of energy. A similar need to diversify supply will likely arise in agriculture, and this represents a major opportunity for Africa to provide the world with food security.
3. Resource nationalism
Although resource nationalism is often associated with the extractive industries, Renaissance expects the issue to also come to the fore in African agriculture. Resource nationalism is not always entirely driven by anti-foreign sentiment. High prices help, too. The electoral success of Evo Morales in Bolivia, Hugo Chávez in Venezuela and the recently elected Sata government in Zambia might never have materialised had it not been for the prevailing high prices of oil, gas and copper over the past decade.
High prices for agricultural goods, the need to secure alternative food supplies and the sensitivities of access to and ownership of land, all suggest resource nationalism in agriculture is likely to become a more prominent theme in the years ahead.
4. Will urbanisation lead to farm mechanisation?
It estimated that 60% (currently 40%) of the continent’s population will live in cities by 2050. As more and more workers flood into urban environments and readily available pool of cheap workers disappear from the countryside, farmers are forced into a straightforward labour-capital shift. In short, farms must mechanise if they are to maintain their competitive position.
Smallholder farmers, too, must make a decision: if they dedicate their supply of labour to generating urban-derived income, what do they do with their land? Another way to look at this conundrum takes the form of a question: is the rise of the superfarm inevitable?
The rise of the superfarm is a relatively modern phenomenon. There are possibly fewer than 100 industrial groups that own, lease or operate farms of over 100,000 ha.
Do economies of scale exist in agriculture? The purchasing power on inputs or selling power on output that comes with a 100,000 ha farm is likely to be no greater than a 1,000 ha farm. This is accentuated by two factors: first, managing 100,000 ha under a single corporate umbrella is more likely to result in managerial dis-economies of scale; and second: 100 farmers managing 1,000 ha plots each can easily form a co-operative, which will provide them with all the purchasing benefits of the superfarm and none of the dis-economies of scale. However, many superfarms exist because they act as channels for investment capital. In short, while managerial or operating economies of scale might not exist, financial economies do.
Ultimately, the debate over superfarms comes down to money. How does one create a conduit for capital for investment in agriculture? Can smallholders provide that conduit? If so, it would be reasonable to assume they had a future in this most strategic of industries. However, the volatility of food prices, the rapid urbanisation that characterises large parts of our planet, the relative undercapitalisation of the sector and the sheer variability of the agricultural labour force in its current form, all suggest that in creating those conduits for capital, superfarms are likely to play a hugely important role in attracting investment to the sector.
One of the overriding issues for humanity is that every civilisation with an urban heartland has been built upon the availability of food and water. In fact, it is the existence of those food and water resources, which has allowed urban societies to flourish. However, over time, every single one of those civilisations, societies and states has collapsed because its depleted and exhausted hinterlands could not supply its cities with their food and water needs.
The collapse of food-supply systems that support urban societies has been a permanent issue since urban centres were founded. Renaissance anticipates a great deal of new thinking on sustainability in agriculture, and expects Africa to lead much of that new thinking.
7. The future of aid
African food aid will likely be transformed, too. Renaissance says that many aid agencies operating on the continent are setting agendas that hamper commercial development. The idea that some aid agencies are seeking to transform themselves into commercial enterprises highlights the new thinking that abounds in Africa. Traditional methods of delivering aid are likely to become redundant in the decades ahead.
Culled from How We Made It In Africa