Author: admin

African Land Reform: the need for courage, clarity and inclusivity

Land. It is quite possibly the most emotive and explosive political issue on the continent. Today in South Africa, where approximately 67% of commercial arable land is owned by white farmers politics is consumed by the question of land expropriation without compensation to resolve the historical land injustices which have left the majority of the population landless. In Kenya the spectre of historical land injustice and contemporary land grabbing constantly haunts politics. In Nigeria, Benue state has seen conflict between pastoralists and farmers over resources and land. And these are only examples of a continent wide problem, which will only be exacerbated as foreign governments and corporations buy up huge tracts of land on the continent.

The land issue is a difficult and painful one, but from a policy perspective it is not an impossible one. The rise of the East Asian Tigers (namely Japan, South Korea and Taiwan) was built on the foundation of land reform, which sparked agricultural and industrial transformation. With smart policy Africa can untie the gordian knot of land, but to do so policy makers will have to have courage in confronting vested interests, clarity of purpose and be committed to constructing an inclusive settlement.

The East Asian example

African leaders are fond of stating their desire to replicate the rapid industrialisation and development of the East Asian Tigers and have sought to initiate industrialisation and export policies with that goal in mind. However, often glossed over are the policies upon which rapid industrialisation was based, namely land reform. Japan, Taiwan and South Korea all pursued pro-poor land reforms, aimed at giving peasant farmers legal title to smallholder family farms. In South Korea after the Korean war the government redistributed land held by the former Japanese colonial government and obliged large landholders to divest most of their land which was then given to smallholder families. Similarly, in Taiwan in the 1950s the nationalist government redistributed land held by large landlords to smallholders. And in Japan land reform had been doing away with old feudal laws since 1873 but in 1947 they carried out their most radical reform called Nōchi-kaihō (emancipation of the land). 38% of the country’s arable land was purchased from landlords and sold at low prices to the 3 million farmers who worked them. The results of these reforms were revolutionary. In Japan in the decade after the land reform agricultural production increased by 50%, in Taiwan rice yields increased by 60% and in South Korea (after they had recovered from the Korean war) rice paddy yields doubled. This set the stage for industrialisation, as well as providing food security, rising incomes among farmers were spent on domestically manufactured goods which provided crucial demand for emerging industries that later became exporters, increased savings from farmers were used by banks to fund the growing industrial sector, and the increased tax revenue allowed the government to invest in public goods such as education and infrastructure. Land reform was a critical foundational pillar of the East Asian miracle and if Africa is going to try and conjure its own economic miracle it cannot ignore that.

What’s Past is Prologue – inclusive, historically sensitive process

“What’s past is prologue’ is a phrase that Shakespeare invented, over time it has come to mean that the past is a preface to the future, in other words we can’t forget the lessons of history. When it comes to land in Africa, we cannot forget the past, in fact we must actively address it. Any policy that intends to solve the land problem must have as its first action, a process that listens and learns. Listens, to the voices of those who have been dispossessed by colonialism, development, conservation, profit, corruption conflict or any other of the myriad of reasons that African’s have been chased off their land. And learn from that painful past, where possible making recommendations that could provide restitution and at the very least making those voices heard, these stories and the pain of them part of our common history and experience and recommending concrete policy measures to prevent them happening again. Starting a comprehensive land policy with an inclusive process that engages with its painful history is the only way to ensure that the policy does not become just another chapter in the all to often tragic history of land policy in Africa.

Clarity

What are we looking to achieve? That is the question that must be at the centre of land policy and must be answered plainly. In the case of the East Asian Tigers land reform had two clear goals. First to break the power and wealth of the old feudal structures, by doing away with large feudal land holdings. Second to boost agricultural production by giving farmers ownership of the land and the incentives and where necessary help to make their land more productive. What is the goal of land reform in Africa? As with most things on the continent it will differ from country to country, but will most likely be one or a mix of the following:

  • Addressing historical land injustices,
  • Addressing socio-economic inequalities,
  • Relieving social tensions over land,
  • Increasing agricultural productivity.

With an issue like land, ambiguous goals will create outcomes that are both dissatisfactory and ineffective. Whatever it happens to be, the goals of land policy must be well defined. From clear goals, clear policy actions can be extracted. For instance, if the primary goal is increasing productivity, then policies similar to those pursued in Japan where land was redistributed to existing farmers (those with existing knowledge, experience and skills in farming) and they were supported through investment and subsidy programs, would be at the centre of land reform. If relieving social tension is the core goal then alternative modes of land ownership, access and use such communally owned land, trusts etc, would be the focus of your policy actions.

Courage

Courage is not a word you hear often in policy circles, but when it comes to land reform policy in Africa it is a requirement. This is because there are multiple groups who have a stake in land reform and the policy process requires confronting all of these interests, in full recognition that you may not be able to make all of them happy. In most cases there are large land owners who are economically powerful and automatically dislike the idea of land reform as it carries the prospect of reducing their own land holdings. There are the landless and land hungry who by their sheer numbers are the gallery that politicians play to in their hunt for votes, making wild promises or statements that often fuel tensions. In many countries there are pastoralists or nomadic communities for whom access to large tracts of land are vital to their survival. Inclusivity requires listening to all these interests and having the courage to confront the pain of generations. Clarity requires having the courage to set goals and make a clear case for them. Finally, policy formulation and implementation require the courage to actually confront all the interests and politics around land. Most of all land reform requires the courage to acknowledge that we have ignored this vital element of socio-economic policy for too long. Land is the foundation of an economy and society, how you use it and who has it has a massive impact on economic development and social cohesion, and since independence most African states have let rapacious private business and political interests decide those crucial questions rather than come up with a coherent policy.

Land reform will not look the same in every African country, that is why I have not tried to suggest specific policies. We can learn from each other’s experiences and contexts but on our diverse continent, the land question stems from a variety of issues that are not the same across the continent. What is clear, is that across the continent for there to be comprehensive, coherent, beneficial land reform we must be willing to confront the injustices of the past and include everyone in the land reform conversation, we must be clear about what it is we are seeking to achieve, and we must have the courage to confront the vested interests. Doing so would yield some novel approaches to land reform, but they would be effective and set the foundation for fairer societies and economic growth.

 

Seizing Africa’s Climate change opportunity

Saving our planet, lifting people out of poverty, advancing economic growth… these are one and the same fight – Ban Ki-moon former UN Secretary-General

On the 8th October the UN Intergovernmental Panel on Climate Change released a report and  its frightening. The report warns that there are only 12 years for global warming to be kept to a maximum of a 1.5C rise set by the Paris accords. Anything beyond that will radically increase the risks of flooding, droughts, and extreme heat. Keeping warming to 1.5C is possible but will require concerted global action, something that has been elusive thus far.

For Africa the situation is dire, the continent will bear the brunt of climate change. As CarbonBrief  points out the heat waves will get hotter, the rainy seasons will become more erratic and droughts more likely. For a continent largely reliant on rain fed agriculture it means yet more cycles of drought and famine. The implications of climate change for Africa, if we do nothing, will further entrench poverty for another generation, and displace millions creating climate refugees.

However, this does not need to happen. Climate change is not a good thing, but as the saying goes ‘you should never let a good crisis go to waste’. Climate change is a crisis for Africa, but it is also an opportunity. Rather, than hold out our proverbial begging bowl for money and technical assistance to foster resilience, which is the strategy of most African governments at climate change summits. We can use climate change as the spark for transformation, as we actively seek to mitigate its effects and minimise the continents contribution to climate change. It can be an opportunity to harness science and technology and equip our farmers with tools to feed the continent in an era of shifting weather patterns. To leapfrog fossil fuel energy and lay the foundation of Africa’s economic and social development on green sustainable energy. And to take up the mantle of leadership where the worlds advanced nations have failed to do so. In previous posts (here and here) I have advocated for a conception of development in Africa with the dignity of all Africans as its core goal. Anybody thinking about development in Africa in the 21st century has to account for climate change, as climate change not only endangers our environment but our development and dignity as well. However, with smart, forward-looking policy it need not be a disaster.

Harnessing science to transform agriculture

Agriculture is the employer and source of livelihood for about 60% of the continent. The impact of climate change on agriculture in Africa will be significant and we are already seeing it. This is only the beginning, as pointed out earlier, the bigger the increase in warming the more pronounced these effects will be. This poses a challenge to African states, farmers and consumers; how can we ensure that we can grow enough to feed a growing continent. A large part of that answer lies in investing in science and technology to empower African farmers. To give them the tools (such as GM crops which I have written about previously) that can handle the changing climatic conditions and boost yields. Using technology to give farmers better knowledge about weather, soil and water conditions so they can improve yields, access to markets so they can get the best prices, and access to storage facilities so that we can cut post-harvest losses.

Investing in science and technology would not only help farmers and feed the continent it could provide the push we need to grow our scientific and technological capabilities on the continent. Industrialisation, development, science and technology are intimately linked and if Africa is to succeed in the 21st century digital and knowledge economy it must develop its STEM capabilities. Confronting the challenges of climate change, such as the ones it poses to agriculture could be the African moonshot, that spurs innovation and industry throughout the economy.

Leapfrogging dirty energy

Leapfrogging is the idea that less developed regions, countries or companies can advance rapidly through the adoption of modern systems without going through intermediary steps. The classic case of this in Africa is mobile phones. Mobile phones allowed most of the continent to skip expensive copper land lines, and the embrace of the technology has revolutionised many aspects of life and the economy. Like phone lines we have the ability to leapfrog fossil fuels. Renewable energy is now getting to a stage where they are almost as cheap and will soon be cheaper than fossil fuels. There are some who would argue that fossil fuels like coal are cheap and readily available, however that is increasingly untrue and African countries have free and broad access to the sun and wind. There are others who argue that developed nations used fossil fuels to industrialise and thus why should Africa be disadvantaged by not using them. But that sounds like a petulant child arguing that they too should be allowed to misbehave because everyone else did, frankly Africa has to be better than that. By investing in green ways of generating energy and innovative (e.g. mini-grids) of getting it to the people who need it, Africa can lay a sustainable foundation for its development. We can leapfrog the dirty fossil fuel generating plants and possibly even the expensive centralised electricity grid systems, most importantly we can develop our economies not at the expense of future generations but with their welfare in mind.

Leading the world

We may be a poor continent but that does not mean that Africa cannot lead on key issues. From the 1960’s onwards African nations led the international and diplomatic fight against apartheid South Africa. Boycotting international events, helping South African exiles and the ANC, getting the apartheid government banned from international fora and sports, sanctioning and boycotting their economy, it took a while eventually the rest of the world caught up and the apartheid system fell. The developed world has displayed a remarkable lack of leadership on the issue of climate change. Australia and the USA have leaders in charge who, despite the mass of evidence, deny climate change. Canada and the EU talk a good game but are yet to make those hard choices that would have a real impact on carbon emissions (like taxing carbon). There is a gap which Africa could fill. With policies, like putting a tax on the carbon emissions content of imports. with actions and putting our money where our mouth is, such as investing in green energy instead of fossil fuels. And smart diplomacy – combining our voice on the global stage to help build consensus, shame others into action and forge constructive engagement with the issue of climate change. Not all global leadership issues require a big wallet, or a big gun, determination and concerted effort can make a difference. This is not just wishful thinking on my part, as the continent in line to bear the biggest impacts of climate change, utilising whatever influence we may have to get global action is effort well spent.

Climate opportunity

The 2018 winners of the Nobel prize for economics were Paul Romer and William Nordhaus. Both won for their work on economic growth over the long term and though they did not work together, the work they did does dovetail. Romer’s work looked at how innovation and new technologies come about, and he found that by investing in innovation (like funding research and development initiatives) you can boost economic growth in the wider economy. Nordhaus’ work looked at the connection between the economy and the environment and the impact of climate change on the economy and wider society. Their work comes together in a rather simple way, to combat climate change, to shift our societies and economies to low-carbon ones, will require innovation, new technologies and new policies. We need to invest in the knowledge and ideas that will combat and mitigate the effects of climate change.  Most importantly what Nordhaus and Romer’s work suggests is that by investing in knowledge and ideas and implementing them you can generate long-term growth. Thus, by combating climate change we could actually stimulate economic growth.

For Africa this is an opportunity to do the right thing for current and future generations, and to lay the foundation for the development that we have been chasing for the last half century. Climate change could be a disaster for Africa, or it could be the thing that forces us to pursue a path that leads to long-term, sustainable growth. It will require us to be innovative with our policies, to rethink our ideas of development and industrialisation and to invest in the ingenuity, knowledge and innovation of African’s from all walks of life. Climate change will be one of the defining issues of the 21st century and Africa faces a choice, we can be a victim, or we can take the initiative, take responsibility and make it the springboard to a sustainable successful future.

Genetically modified crops can work for Africa, but only if Africa owns it.

“Sixty per cent of the world’s arable land available today is in Africa. All efforts to feed the world — not just to feed Africa, but to feed the world — in the next decade or more are going to focus on Africa. Which means Africa has to do it right and have the scientific basis not to mess it up.” – Calestous Juma

Genetically Modified Organisms (GMO) are a topic that provokes spirited debate between its detractors and proponents. One side insists that GM crops offer a second green revolution to a continent with persistent food security problems, and governments and people should just get over their reservations and embrace them. The other side warns of dire ecological, economic, health and neo-colonial consequences if Africa allows its crops to come under the control of the corporate mono-culturalists for whom profit is their sole goal with the apparent concern around the health and well-being of Africans and their environment being PR at best.

This is not a black and white issue. Both sides have valid viewpoints. GM crops do have the potential to be highly beneficial to African farmers and enhance the food security and health of millions around the continent. However, the practices of the corporations that make, distribute and are lobbying for GM crops are disturbing. Furthermore, the concerns for people’s health and ecological sustainability should not be dismissed but addressed with data and testing.

Like the debate around GM crops, Africa does not face a black and white choice of refusal or submission GM crops and the companies that make them. Africa can chart a different path, with a policy that puts African farmers, food security and innovation at its heart. Africa can tap into the potential benefits of GM crops, driven by the needs of its farmers and innovations of scientists without having to give our agricultural future to the profit motives of foreign multinational Agri-corps. For that to happen, GM policy in Africa would have to be based around the ideals of public ownership, accountability and collaboration.

 

Potential and pitfalls

When dealing with the topic it is crucial that a proper definition of GMO’s be used. With that in mind I will use the WHO definition of “Organisms (i.e. plants, animals or microorganisms) in which the genetic material (DNA) has been altered in a way that does not occur naturally by mating and/or natural recombination… It allows selected individual genes to be transferred from one organism into another, also between nonrelated species.” [1]. People have been altering crops and animals for millennia, through techniques such as selective breeding. What makes GM different is that we are altering the blueprints of the organism, its DNA, to add or remove characteristics that we may like or dislike. This is a potentially powerful technology and it is unsurprising that it provokes such strong feelings.

The Potential – Higher, healthier yields with less inputs

By inserting desirable traits into the genes of plants, there are a number of advantageous properties that could be given to plants.

First are the yields farmers get, which genetic modification can significantly increase through several avenues. Plants can be modified to be resistant to bacterial, viral or fungal diseases as well as pests, reducing the number of crops farmers loose to these scourges. In addition, plants can be given genes that allow them to withstand environmental stresses. For instance, as rains become less consistent it would be a great benefit to have crops that can withstand periods of drought or heavy rains. With climate change causing shifting weather patterns resilient crops will be critical.

The second great benefit is health, and this come about in two forms. GM crops that can be made naturally resistant to pests and infections require less pesticide, herbicide, fungicide etc. This is healthy for the farmers who would handle less chemicals, healthier for consumers as less chemical use means less of these substances being ingested, and its better for the environment as there are fewer of these chemicals getting into the wider environment and having adverse effects (e.g. water run off into rivers and lakes that causes fish deaths and algal blooms). The second possible health benefit of GM is nutritional. Through genetic modification the nutritional value of the plant can be enhanced. An example of this is yellow rice which has been modified to produce Vitamin A in order to prevent Vitamin A deficiency in children which can cause blindness.

The third broad benefit is an offshoot of the other two. By modifying plants to require less pesticide, herbicide, fungicides and fertiliser, you reduce the inputs necessary for farming. In a continent where, expensive farm inputs such as fertiliser and pesticides are a constant burden for farmers, reducing the amount of inputs required while sustaining or improving yields would give farmers a leg up without having to resort to expensive subsidies or government programs as we do now.

The Pitfalls

However, GMO’s are not all rosy. First, is the reality that “life finds a way”. Try as we may eventually GM crops will mix with and reproduce with indigenous crops. What effect will this have on the farmers who have chosen not to grow GM crops, what characteristics will these crops have, and if the GM crops are patented will they be forced to pay royalties.

Which brings us to the second issue, and in my mind the most crucial. Corporate control. Currently GM crops are largely a corporate creation, patented and controlled by large agricultural biotech corporations whose prime motivation is profit and not the interests of African farmers and consumers. Companies like Monsanto develop crops to be compatible with their own herbicide so that you only get good yields when used in conjunction with their other products. In addition, such crops tend to have terminator seeds. The seeds produced by the plants are sterile and thus farmers must purchase new seeds every year guaranteeing the company a revenue stream. Furthermore, the patents that these corporations have on these crops blocks innovation, evolution and adaption forcing farmers into farming in a specific way.

The third question is one of safety. Do we know enough about GM crops and their impacts on the environment and human health to be confident enough to allow them into the market? Do we have the systems regulations and facilities to test these crops to ensure their safety?

GMO’s with an African (policy) flavour

The answer to the issues presented by GMO’s both their potential and pitfalls, is not to completely ban them or allow agro-chemical industry free reign in the continent. What is needed is good policy. Good policy on GMO’s in Africa would consist of three elements. The first is public ownership and accountability. A major problem with GM crops is their corporate nature. The only way to ensure that GMO’s would be beneficial to Africa is to strip the profit motive from their research, design, testing and regulation. And the only way to do that is public ownership. This brings us to the second element, accountability. There is a lot of mistrust around GMO’s, the motives behind them, their ecological and health impacts and their use. The only way to assuage these concerns is transparency. No for-profit corporation will be transparent about commercially sensitive information such as its own GMO’s, but public institutions can be transparent and can be designed to be so, by incorporating stakeholders and their concerns into their design and decision-making structures to ensure that those concerns are met. The third element is collaboration. If GMO’s are truly going to be beneficial to Africa it will require collaboration on two levels. First between stakeholders within the agricultural industry, research scientists, farmers, environmentalists, doctors, consumers will all need to come together to guide the development of GM crops for the African context. A context in which small farmers are the vast majority of farmers, where climate change and changing weather patterns are making farming harder and where growing populations require more agricultural productivity to feed them. The second level is internationally. No single African country has the ability to set up and sustainably fund institutions that can design, develop, test and disseminate GM crops over the long term. However, together they could do so. The ability to pool funding, expertise, and facilities only makes sense, especially as many African countries face similar agricultural challenges and most staple and commercial crops are grown across multiple countries.

African GMO’s

GMO’s need not be a threat to Africa, they could be an opportunity. However, in their current corporate dominated form they do pose a threat. They threaten to yoke African agriculture to the profit motives of multinational Agri-biotech companies, who are not accountable to the African public or governments.

As Calestous Juma urged, Africa must do agriculture right, and to do that we have to embrace and own the science. Since Fritz Haber and Carl Bosch invented the Haber-Bosch Process in the early 20th century that allowed the production of fertiliser on an industrial scale, to Norman Borlaug and short stalk wheat in the 60s and 70s that saved millions from famine, science in agriculture is how we have fed the world. If we are to feed and develop Africa we must embrace science as part of the solution, and GMO’s as part of that. Smart policy, that is public, transparent, accountable and collaborative, would help ensure that Africa owns its GMO’s and its own agricultural destiny.

[1] http://www.who.int/foodsafety/areas_work/food-technology/faq-genetically-modified-food/en/

Focus on FOCAC: what was missing.

Last week the triennial Forum On China Africa Cooperation (FOCAC) took place Beijing. The summit came in the midst of growing questions (particularly from the western media, academia and governments) about China’s ‘debt diplomacy’ and pushback from China that the west is simply trying to paint a growing and beneficial relationship in a bad light. Debt diplomacy, simply put is the perception that China is using debt as a strategic tool to get strategic assets or trap developing nations desperate for investment (such as African states) in debt laden subservience to China (you can read this if you are interested in further exploring this line of thought). The summit also showed the growing disparity between the West’s diminishing clout in Africa and the growing influence and importance of China. While Angela Merkel, Theresa May who visited Africa, and Donald Trump (who was visited by President Kenyatta) made optimistic statements about being committed to investing in Africa, China pledged cold hard cash, 60 billion dollars to be exact, as the proof of its commitment.

As you will likely notice about both these narratives (debt diplomacy and China vs the West in Africa) is that they are driven by foreign (Chinese or western) concerns and interests. Africa is (worryingly like in the days of the cold war) a battleground for the interests and ambitions of two increasingly competitive power blocs. There is little concern given to the needs and aspirations of African’s, nor how the actions of China or the West can tie into development policy. I blame this on Africa’s leaders who have failed to properly articulate the concerns of African’s in the broader China-Africa relationship, and to strategically think about how to integrate and utilise Chinese investment and geopolitical policy into our own development policy. Secondly, in response to the renewed optimism at the money pledged by China, the devil is in the detail and we got very little of it, beyond speeches and headlines. Third, FOCAC did nothing about the image problem, of both African’s in China and the Chinese in Africa. While our leaders may talk about each other in glowing terms, how their respective peoples view each other and interact will define the relationship going into the future. Fourth, Africa’s debt is a problem and both Africa and China, if they are indeed sincere, need to come up with viable policies to ensure that Africa does not find itself in a debt trap again.

The recent FOCAC summit was notable just as much for what was missing as for what was said. The China-Africa relationship will be a defining feature of Africa in the 21st century, whether its positive will need African policy makers and political leaders to be more thoughtful about that relationship and the policies that actualise it.

1.  Speak up Mr President

49 African heads of state made their way to Beijing for FOCAC, more than went to the last US-Africa summit or TICAD (Japans equivalent of FOCAC) symbolically this just how important China is to Africa. This is not surprising; China has invested and is committing to invest vast sums of money in Africa. In addition, China is offering cooperation and assistance in several areas such as security and combating poaching. While it is not surprising it is also worrying. Worrying because there is no clear articulation of the African position from individual African nations or from regional or continental bodies. What are African countries looking to get out of China, what are Africa’s nations visions of development, and what do we see China’s role in it being, and what we see as a mutually beneficial relationship. African presidents in various forms gave the usual platitudes about the importance of investment and infrastructure, the value of Chinese partnership and their commitment to economic development. There was no clear articulation of the African perspective and this is a problem, because it means that Chinese interests and concerns are driving the relationship and even if there is no malice involved, a one-sided relationship is still detrimental. Even if Africa is the junior partner, a sufficiently articulate, determined and smart junior partner can play a large role in defining a relationship. That is what was missing at FOCAC from Africa’s leaders, a clear conception of a balanced Africa-China relationship, not just an acceptance of a lopsided China-Africa dynamic. What that looks like is up for debate, (I gave my ideas In a previous post), but without a vision we are lost and ripe for exploitation.

2.  The devil is in the details

60 billion dollars. That, amount slightly larger than the GDP of Kenya, will be the figure that defines FOCAC. That China has pledged 60 billion dollars of aid, concessional loans, credit lines, debt relief and grants to the African continent over the next 3 years, and that there will be no vanity projects paid for by that money. Beyond the, 60 billion there were also commitments around security assistance, climate change resilience, anti-poaching among others. However, as with any great promise the devil is in the details.

On the 60 billion dollars what’s needed is specifics of what China considers a concessional loan, what the conditions are for debt relief, the conditions for access to a credit line and the interest payment terms and periods for that credit and what, in the eyes of Beijing, constitutes a vanity project.

On the issue of security assistance. Is it training? More Chinese bases on the continent? Is it domestic surveillance and tracking technology or internet suppression tools (which should scare any African concerned with human rights).

Such, questions abound on a number of areas announced and committed to at FOCAC, unfortunately there are few policy papers, bi-lateral and multi-lateral agreements available to the public or being debated in parliaments around the continent. The devil is in the details and the devil cannot be seen. We have no idea what African leaders have committed in Beijing, thus there is no way for African’s to fully assess and appreciate the relationship with China.

3.  The image problem – race, rhinos and chopsticks

How do the Chinese (the people not the government) view African’s? Judging by the depictions of African’s and black people in Chinese popular media such as the widely watched lunar new year’s show, or the art show which compared black people to animals. It is clear that race is an issue. It is an issue that doesn’t just manifest itself in China but in Africa as well. Around the continent there are numerous instances of African workers on Chinese projects being treated unfairly and even cruelly (as recently came to light in Kenya), building a perception among many African’s that the Chinese are exploitative and disrespectful, and at times this has boiled over into protest .

Stereotypes, unfortunate interactions and cultural misunderstanding are a rather prominent feature of China – Africa relations when you look beyond the high-level government get-togethers. Rather than avoid the issue, issue hasty apologies or outright deny or rationalise the issue of negative perceptions, racism, cultural misunderstandings etc. between ordinary Chinese and African’s, governments on both sides should be attempting to address it head on. This could involve to building contacts that go beyond high-level summits and infrastructure projects. Create spaces where people can interact (such as university exchange programs), where African’s and the Chinese can learn about each other, their diverse histories, cultures, their common experiences of western imperialism, and the different experiences of life across both Africa and China. FOCAC could be the start of a broader relationship between China and Africa that isn’t just about government to government bi-lateral agreements, but a broader relationship between two peoples which could go a long way to providing the basis for a long term mutually beneficial relationship that can go beyond sovereign debt.

4.  The debt dilemma

Despite the Chinese contention that the debt diplomacy narrative is a western fiction meant to paint a negative picture of China to audiences around the world. The truth is that it is a problem. African countries are finding themselves once again straining under increasing debt pressure, and Chinese debt plays a significant role in that (links/graphics). For African nations there is clearly a need to make Chinese financing more sustainable, and unless China is as utterly cynical as former secretary of state Rex Tillerson suggested, then they too have an interest in coming up with ways to make Chinese financing more sustainable for African nations.

This is not something that must or should come from China. The first realisation that must happen in the finance ministries of Africa, is that China is not a benevolent Santa Claus, handing out wads of cash. Debts must eventually be repaid. Second, is coming up with a viable, mutually acceptable framework for financing going forward. This could include a set a of criteria that projects must meet before getting funding or the Chinese Foreign Ministry and EXIM bank working with the African Development Bank, Afriexim bank or the regional development banks to help African governments assess and structure loans to ensure their sustainability. These are just two ideas, fundamentally the point is that China and Africa are not locked into a debt trap path, and with some innovative policy the debt problem could be defused.

Rebalancing China-Africa

I have recently taken my own advice and been reading up Chinese history to gain a greater understanding of a truly extraordinary people. In doing so it is hard not to draw parallels between the past and the present. Around 2,100 years ago Emperor Wu of the Han dynasty established many of the routes and relationships that would come to known as the silk road. He did so with a mixture of diplomacy and conquest. At its height, China under the Han dynasty was trading with the Rome and Parthia to the west and numerous vassal states paid homage to the emperor. Today its President Xi (emperor in all but name) is, through a canny mix of diplomacy, ‘conquest by debt’ and the almighty dollar building a new silk road (it is no coincidence that the Chinese government itself drew explicit comparisons between the ancient silk road and the belt and road initiative). And it was not hard to see the (number) of African presidents in Beijing for FOCAC there to pay homage to the emperor of the rejuvenated 21st century middle kingdom.

China’s ambitions may not be as imperial as its history, however by looking at what was missing from FOCAC, it is clear that not only is the narrative of China in Africa skewed, the reality of the relationship is lopsided as well. This is not due to evil machinations from China. Rather it is due to a failure from African leaders to try and define that relationship beyond the headline figure of how much money Beijing is pledging to invest in the continent. Rebalancing that relationship will require African leaders to develop a vision of what a mutually beneficial relationship between their countries and China looks like. Doing that will require African leaders to develop a coherent vision of what their development goals and aspirations are based on those of their people (something I have talked about at greater length in this post). Once there is a vision it can be articulated, negotiated and integrated into a mutual and more equal relationship between the Peoples Republic of China and the many republics of Africa.

I do not subscribe to the western view that what we are seeing is a cynical 21st century imperialism from China. Neither do I ascribe to the view that China is a completely benign partner for Africa and is not pursuing its own strategic interests. What I am is an African, who wants to see our continent develop a mutually beneficial relationship with a remarkable nation, that is a world power and will likely be a superpower. Doing so requires being realistic about Africa’s relatively weak bargaining position, but it also demands vision and strategic thinking, which will form the basis of policies that will ensure that Africa does not find itself holding the short end of the stick again. I sincerely hope that African leaders and policymakers are not thinking about what happened in Beijing last week, but rather are thinking about what could happen at the next FOCAC in 2021.

 

Kickstarting Intra-African trade for SME’s and Entrepreneurs

This is the moment for the African continent. A free trade area for Africa is going to be like a flood. A flood that is going to lift all the boats. It is not about South Africa. It is more about all of us. All countries of Africa participating – big and small. Cyril Ramaphosa, President of South Africa

On March 21st, 2018, 44 African heads of state gathered in Kigali signed an agreement called the African Continental Free Trade Area (CFTA). The CFTA is big and ambitious. It seeks to create a single continental market for goods and services, as well as free movement of capital and people. Its primary goal is to boost intra-African trade and spur industrialisation by fostering a more competitive industrial sector, increased economic activity between African states and giving African companies a large market in which they can scale and become globally competitive (see figure 1 below).

Figure 1: Source UNCTAD http://unctad.org/en/PublicationsLibrary/presspb2018d4_en.pdf

In global trade Africa is a commodities exporter, selling raw materials and agricultural goods, while importing finished manufactured goods. Making the continent susceptible to swings in global commodity prices and perennially large trade deficits. Meanwhile intra-African trade is frustratingly small in comparison to Africa’s international trade (see Figure 2). The CFTA is potentially a first step towards rectifying that.

Figure 2: Source https://www.brookings.edu/blog/africa-in-focus/2018/03/29/figures-of-the-week-africas-intra-and-extra-regional-trade/

My goal in this post is not to talk about the big policy actions needed to make the CFTA a reality. Such as comprehensive ratification, regulatory alignment and the need for connecting infrastructure. That is well covered by the AU itself and numerous other commentators, institutions and policy documents. Instead I want to talk about policies actions that governments can to take to enable African SME’s and entrepreneurs to take advantage of a pan-African free trade area. SME’s are the lifeblood of the African economy, they are one of the continents biggest employers and sources of wealth. And entrepreneurs and investors willing to take risks are critically important to the continents future growth. If SME’s and entrepreneurs can succeed then Africa will succeed, and if the CFTA is to be a success it must serve not only big business but SME’s and entrepreneurs as well.

1-   Creating awareness and links

Trade does not happen in a vacuum. People and businesses must be aware of the opportunities and how to take advantage of them. The first policy initiative that the AU and African governments should take is an awareness and education campaign targeting SME’s and entrepreneurs across the continent. Explaining what the CFTA is, which countries are a part of it and the key steps they need to take to be able to take advantage of it.

Secondly it is not enough to know there are opportunities in other markets. You must be in a position to take advantage of them, you need to have knowledge of and develop relationships in those markets. African governments are in a unique position to facilitate this. With embassies around the continent they can be clearing houses for information and networking hubs. Doing research on local regulations, market conditions building a database of local businesses which can be made available to businesses and entrepreneurs in their home countries. They can organise networking opportunities allowing businesses and entrepreneurs to connect both in the real world and virtually online for those unable to travel. Crucially this can work both ways not just to the benefit of the home country of the embassy but for those who are looking for opportunities in the other direction. European countries such as Germany and Holland provide similar services globally to businesses, African governments can start by doing so on the continent.

Creating awareness and links within and between African business communities is crucial to improving intra-African trade. The CFTA is of little good if people are not aware of it and if they have no entry points, networking opportunities and access to information in other African markets. African governments can fill this gap.

2-   Allow tech to move the money

Anyone who has travelled across Africa or done any cross-border business on the continent knows how much of a pain it can be to move money between countries. The laws vary, some countries have foreign exchange controls, others have currencies that can be difficult to convert, and the relative value of these currencies is always changing. All of these are significant barriers to intra-African trade especially for SME’s who unlike their larger corporate counterparts do not have legal and finance departments to navigate through the mess.

What’s needed is a simple way for business to acquire foreign currencies as and when needed. Thankfully the Fintech (financial technology) sector is already growing across the continent and can fill this gap. African governments should allow Fintech services to enter the currency market and allow SME’s and traders to buy and sell other African currencies and transfer payments to their suppliers and customers in whatever country they may be in. Many African countries now have mobile payments, mobile banking and mobile lending, there is no reason why these services should not be allowed to operate across countries.

The second area where Fintech can make a difference is in trade finance. Much of global trade is done on credit. Companies will borrow or access lines of credit, usually from banks, to buy goods and transport them to another market and repay the loan when the goods are delivered and paid for. Few SME’s or traders will have access to lines of credit with banks, but many do use mobile banking and lending for exactly this purpose. To fund the purchase of goods and pay it back when they are sold. If fintech firms were allowed to play this role on a continental level it could give SME’s and traders, the ability to fund cross-border business where traditional banks would regard the amounts of money being lent as too small and SME’s and traders too risky.

Fintech could play valuable role in intra-African trade. Providing SME’s and traders the means to fund their activities and the ability to conduct business in foreign currencies with reliable platforms with which to pay people. Trade needs money and a reliable means of payment. Fintech could play that role for the businesses and traders who are not on the radar of banks. What is needed is for African governments to come up with the right regulatory framework giving Fintech services the ability to operate across borders and mobile networks and the protect their customers from unscrupulous lenders.

Trade for all

Intra-African trade has the potential to be a game changer on the continent. Giving African investors, entrepreneurs, businesses and the wider economy access to new markets and new growth. More importantly it could change lives, not just through new jobs and opportunities, but through simple trade. In 2017 Nigeria experienced a tomato shortage, Kenya experienced a maize shortage both countries resorted to importing these foodstuffs from markets like Mexico and Europe. However, around the continent there were tomatoes and maize in plentiful supply in other countries. With a continental free trade area, these all to frequent shortages and price spikes need not happen. Retailers in Kenya or Nigeria noticing that their local suppliers are unable to meet demand and prices are going up could buy from other suppliers around the continent with little difference in price and consumers wouldn’t have to deal with the shock to their wallets.

There has been a lot hype and hope around the CFTA. However, it still has some way to go, only 3 countries having fully ratified the treaty, 22 are needed for it to come into effect. In the meantime, African governments need to ensure that it is not just a treaty for big business but is one that SME’s and entrepreneurs can also take advantage of. If that is done, it will help provide a shot in the arm to intra-African trade and make it so that all African’s can have a stake in and benefit from a new pan-African economy.

 

Africanising Development

Development is about more than money, or machines or good policies – it is about real people and the lives they lead – Paul Kagame, President of Rwanda

Development in Africa is largely determined outside the continent. The ideas of modernisation and socialism that dominated post-independence thinking and policy were western in origin and backed by the ideological agendas of the cold war superpowers. The triumph of neoliberalism in the 1980s and 1990s in the west pushed developmental liberalism upon the continent, embodied in the policies of free markets and Structural Adjustment programs. Recently the millennium development goals (MDG’s) and sustainable development goals (SDG’s) did not originate on the continent but rather in the meeting rooms of think-tank’s and multilateral institutions such as the UN, World Bank and OECD.

When Asia embarked on its extraordinary development journey it did so not only by adopting the ideas of others but also by localising them. Focusing on what they saw as the appropriate goals and focus of development. As the world moves into an ever more uncertain 21st century Africa remains in thrall to foreign ideas of development. If the continent is to move forward, if Africa’s development story is to be successful, then we must develop African centred ideas of development and the policies to pursue them. To do that we have go back to the start, ask ourselves what and who development is for and what our priorities are, on that we can build development policies that are for Africa, and made by Africans.

A brief history of development

In the 1960’s as most African nations were gaining independence, one key aim was socio-economic development. With the aim of bringing African economies and standards of living up to 20th century standards. At this time the primary thinking in the development world (aid donors and development institution) and in governments was modernisation theory. The theory holds that modernisation is a prerequisite for development, and that developing countries must evolve from traditional to modernised societies in order to develop. This entails the transmission of capital (aid and FDI) and the replication of economic, social, political and legal values and institutions from the developed world to the developing world. Thus policy makers attempted to copy the modern institutions of the west and rapidly industrialise. This was not very successful as the failed development policies and strategies of the 1960’s and 1970’s show. Merely copying modernity did not replicate it, as it fails to account for the conditions that led to that modernity and the fact that the same conditions that existed in the developed world did not exist in Africa.

In the 1980’s and 1990’s in line with the rise of free market neoliberalism, and the end of the Cold War, liberalisation democratic political reform because the focus of development, driven by the nations of the West. The idea was that African economies had failed to grow because they did not have free markets and the liberal democrat institutions to ensure that those markets functioned fairly. Thus Africa was subjected to a series of market liberalisation structural adjustment programs where aid and debt assistance was made conditional on downsizing the governments role in the economy, privatising services and state companies and opening up countries to international trade. This again obviously did not work, many would argue that it took away the little government protection and safety nets that African’s had and subjected them to whims of international markets and allowed a rich few to get even richer by buying up cheap state owned companies under the guise of privatisation.

Thus in the 2000s recognising the failure of market liberalisation and modernisation before it the MDG’s emerged. The UN, OECD and World Bank had been working on a set of ideas and goals to reduce global poverty, and they combined their efforts to come up with 8 key development goals with which to pursue this goal. While there has been some progress under the MDG’s and later the SDG’s they still bear the hallmarks of the two previous development initiatives. They are driven by donors and international development institutions and have little local ownership by the countries they are intended for.

Thus the story of development theory and policy in Africa over the last 50 odd years has been essentially foreign, with abrupt shifts in thinking and focus when political and ideological views shift in western capitals and development institutions. What this has meant is that as African’s we have had little ownership of our own development. It has been something defined elsewhere and either thrust upon us or unthinkingly adopted without taking into account the views, history, culture and aspirations of the people it is intended for. Thus to Africanise development we must break this pattern, we must start thinking of development as something that comes from within rather than, an act of copying those who have gone before or accepting ideas without question.

Who is development for?

In all the talk one hears about industrialisation, jobs, infrastructure and even development, what one rarely hears is the voice of the people for whom it is all supposedly intended. At the core of development must be the people and their needs and wants. Africa’s development policies should not start in think tanks, ministry meeting rooms or development bank boardrooms, but with Africans. We must start with broad conversations both within and across nations by asking ourselves, what is it that we as Africans want? What future do we imagine for our children, what are the key challenges facing Africans as individuals and as communities. There are a number of ways of doing this (which I suggested in previous post) from town halls, to online comments and hangouts, to kgotlas and barazzas. These questions would serve to ground Africa’s development in the aspirations and needs of its people. If development is meant to better the lives of citizens then their concerns must be at it its centre, and then only way to ensure that is by asking them.

What is development for?

Development is about numbers. Or at least one could be forgiven for thinking so. The MDG’s and SDG’s are replete with goals and targets. Politicians and policy makers are always quoting GDP growth numbers, job numbers, kilometres of roads or railways built. You could be forgiven for thinking that development is a statistical exercise. This misses the fundamental point of development. It is, or at least should be, about the people, their quality of life and their dignity. If development continues to be about the numbers or the shiny new roads and railways rather than how they positively impact the lives of the people, then those numbers will continue to be largely meaningless. Those numbers must be rooted in what they mean for people. Are the jobs that have been providing a viable income, are the roads and railways built opening opportunities for ordinary citizens, is increased food production putting more food on tables and is GDP growth being felt at all levels of society.

Numbers are great, they can help measure progress and expose problem areas. But they are not what development is for, and when using those numbers, we must be careful to ensure that they are rooted in reality, the reality that development is about improving people’s lives.

What are the priorities?

At the core of economics is a simple concept, scarcity. How best are goods, services, labour and resources used and distributed within society when it is not possible to provide for everyone’s needs and wants. Development policy is similar, it is impossible to do everything at the same time and this necessitates choices. Do you invest more money in education or healthcare, which region do you build roads in first, which industries do you choose to promote etc. The East Asian tigers chose to prioritise traditional industrialisation, while a country like Costa Rica has chosen to prioritise environmental sustainability, healthcare and education alongside economic growth. The question is what are Africa’s priorities, what is our development focus. Over the last decade the priority has been the SDG’s, closing the infrastructure gap, industrialisation, jobs, intra-African trade, agriculture and energy provision. The problem is when everything is the priority nothing gets properly done, it is simply an impossible task to do everything well at once. Thus, policy makers have to prioritise, pick a development focus and do it well. That focus should be informed by the previous questions of what people actually want out of development.

Africanising development

Africanising development is not about discarding all ideas and theories of development if they do not come from an African source. Rather it is about grounding the continent’s development policy in the aspirations of its people, taking ownership of it. The three questions of who is development for, what is development for, and what are our development priorities would help better define development in African terms, ground it in the aspirations and needs of its people and better focus the efforts of governments and policymakers. For too long development in Africa has been about what other nations, institutions and experts think is best for Africa, rather than what African’s think is the best path for themselves. Africanising development means taking responsibility and ownership of the future of our continent and to do that we need to approach it from the bottom up, give all African’s a stake in it by making them active participants and owners of their continents future.

Give the People Money: Ending African Poverty with a Basic Minimum Income

“In this new century, millions of people in the world’s poorest countries remain imprisoned, enslaved and in chains. They are trapped in the prison of poverty. It is time to set them free… Overcoming poverty is not a gesture of charity. It is the protection of a fundamental human right, the right to dignity and a decent life” – Nelson Mandela

In my first post I outlined what I see as the goal of development. Which is to give everyone ability to live their lives with dignity. Which means an adequate and improving quality of life, economic opportunity and security, physical security and good governance. The antithesis of this is poverty, and ending poverty is Africa’s core developmental challenge.

Poverty, as defined by Professors Lilian Chenwi and Danwood Chirwa is ‘a state in which a person is unable to live a long, healthy and creative life, nor to enjoy a decent life worthy of self-respect and respect of others’ [1]. The simpler definition is having to live on less than US$ 1.9 a day. According to the World Bank approximately 43% or 330 million African are living in poverty.

Poverty is hard, grinding and often degrading. It manifests its itself in hunger and malnutrition, poor health, lack of education, and social and political discrimination. Poverty is often self-perpetuating, with those born into it often remaining in it because of the lack of opportunities and resources. Poverty is insecure as those living in it are most likely to be victims of violence and conflict. Poverty is the worst and most degrading form of underdevelopment, consigning its victims to unnecessarily harsh lives and wasting their potential. If nothing else, then Africa’s development must be defined by how it pulls its people out of poverty and allows them lead fulfilling lives and reach and exceed their potential.

To end poverty, we have to empower the people living in it. Those living in poverty are not there by choice, it is an accident of birth and circumstance. They lack the resources and the opportunity to climb out of poverty. The solution is thus simple, to provide Africa’s most underserved citizens with these resources and opportunity and we can do that by giving them money. By ensuring that every person living in poverty has a Basic Minimum Income (BMI), which they can use as they see fit to improve their lives. There is growing evidence from Africa that this works. That a BMI not only enables people to improve their circumstances but also to invest in their futures and it has positive impacts on health, education and security. If Africa is serious about ending poverty, then we have to seriously consider the option of a BMI.

Basic Minimum Income – the concept and evidence

The concept

A BMI is a relatively simple idea. It is a cash transfer that gives everyone in society who needs it enough money to live on. A BMI aimed specifically at relieving poverty would have 4 key characteristics that separate it from traditional welfare programs:

  • all members of society living below the poverty line are eligible to receive it,
  • the BMI is unconditional, you do not have to work, or go for any training to receive it,
  • it is enough to cover the basic needs of those who receive it,
  • It is guaranteed for as long as they are under the poverty line.

At its core the BMI is about guaranteeing a minimum standard of living throughout society through cash transfers to all those who for whatever reason are below the poverty. By its nature it is not discriminatory as it is available to all, neither does it subject the poor to the humiliations and bureaucratic nightmares of means testing, forced job hunts or training that are the hallmarks of modern day welfare systems.

The evidence

A BMI or some variant has or is being tried in various places across Africa, most notably South Africa, Namibia and Kenya, and the results show that not only does a BMI reduce poverty it also has significant impacts on the health, education, security and quality of life of those who receive it.

In South Africa the Social Security Agency (SASSA) distributes what are called social grants. Which are cash payments given to the most vulnerable groups in society and there are seven types of grant that the agency gives out.

Research done on the impacts of the social grant system has shown a number of significant impacts. First that social grant system has been sufficient to lift many households out of poverty (page 37 of this study). Second, the research shows that the grants in particular the child support grants have been crucial in reducing poverty in women headed households and empowering them in their homes and communities. Furthermore, the child support grant has enabled parents to be more positively involved in their children’s education, such as reading to them and helping with school work and ensure that their children were properly nourished and received healthcare. UNICEF studies has further shown that the child support grant has had a positive impact on school attendance and healthcare as well as reducing risky adolescent behaviour such as unprotected sex, drug and alcohol abuse and criminal activity.

In Namibia, in 2008 they piloted one of the worlds first basic income projects called the Basic Income Grant (BIG) in the Otjivero settlement and Omitara town. Both of which were noted for high rates of poverty, insecurity and poor health. The grant was simple, each person would get a monthly unconditional cash grant of 100 Namibian dollars (about US$7). With the grants for those under 21 going to their primary care giver, which was usually their mother. The report on the impacts of BIG shows details its positive impacts which are notable not only for being positive but also for how many areas of people’s lives it impacted.

  • Severe poverty was reduced by 54% and food poverty was reduced by 56% in one year.
  • There was a 36.5% drop in crime in crime in the areas where BIG was trialled.
  • Just six months after BIG was introduced child malnutrition dropped by 52%.
  • Drop-out and non-attendance rates at schools went from 30-40% to 5% after the introduction of BIG as parents were now able to pay school fees.
  • In contradiction to the arguments that a basic income would discourage work employment actually rose by 9% after the introduction of BIG.
  • BIG also helped people start and grow their own small businesses, as the extra income was used by people to start and/or invest in their own businesses as well increasing demand in the area as people now had some money to spend.
  • BIG also allowed people to save and invest in their futures. 40% of those who received the grant saved it. 31% used some of the money to fix their homes, 9% invested in livestock and 11% paid back debts.

Unfortunately, in 2010 due to politics the program was ended and essentially forgotten. What stands out is that it was able to achieve so much in reducing poverty and improving living standards over such a short period of time.

In Kenya a U.S. based charity called Give Directly which champions unconditional universal income cash transfers, trialled them in a village in Western Kenya between 2011 and 2012. With recipients receiving around US$ 274 over the course of the year, and the results are very similar to those in Namibia:

  • The transfers significantly reduced hunger, 30% overall and 42% for children.
  • The transfers enabled the recipients to invest in livestock and their own small businesses. With income from livestock increasing by 48% and income from self-employment increasing by 38%.
  • The transfers increased consumption and thus economic activity in the village.
  • The transfers led to increases in the psychological well-being of the recipients and their families.
  • Notably (again), despite the assertions of many critics the transfers did not increase spending on alcohol, tobacco or gambling.

The examples in South Africa, Namibia and Kenya show remarkably positive impacts not just in poverty reduction but in improving healthcare, education, the well-being of children, women’s empowerment, employment, security, small business start-ups and growth, and long-term savings and investment. Furthermore, the predictions that “they would just spend it on booze and gambling and entrench laziness” were also shown to wrong. These results show two things first that poverty is not a result of being lazy or bad, rather it is a result of being stuck in a poverty trap, where the lack of resources (namely money) prevents people from being able to live with dignity and plan for the future. Secondly, the impoverished are not stupid, given the resources and the opportunity they can and will make the right choices for them, their families and their communities.

How can we do this in Africa?

If the evidence shows that a BMI is an effective and empowering tool for poverty reduction in Africa the question then becomes, how can we do it? The usual response is that we can’t. That African nations do not have resources to fund such a program given the high levels of poverty on the continent and that governments have to invest in a number of areas such as infrastructure, education, healthcare, security etc. which over the medium to long-term will reduce poverty. My response to this is threefold, first, that poverty is an issue now and every single day for hundreds of millions of Africans. Secondly that short-term significant decreases in poverty will not increase economic growth but make it more sustainable over the long-term and third if we get creative we can find the money for BMI.

Finding the money

One idea for funding a BMI is called a negative income tax. The idea is that a progressive income tax system be implemented where people earning below a certain income threshold receive a payment from the government rather than paying tax to the government. This is offset by those who earn above the threshold who pay progressively higher taxes depending on their income. However, this requires a broad and deep income tax system which due to the lack of formal employment on the continent many African countries do not possess.

My personal preference is not to tax the income of Africans, but to tax the profits of those making money off of Africa, through more efficient and increased resource and foreign profit taxes. In a previous post I discussed how through reforming its tax systems, African countries could get more tax revenues from the extraction of natural resources and the profits made by foreign corporations in Africa. For too long Africans have not benefited from the wealth of their land that helps fuel the global economy and the profits made in Africa by global corporations are spirited away to the benefit of shareholders in New York or London. If African nations taxed those profits and resource extraction properly, much if not all of the money needed to fund a BMI could be found, governments would be able to continue to fund all the other things they use ordinary tax revenue for and the people of Africa would finally see the benefits of the fruit of their land. Furthermore, as the examples show a BMI would itself increase the tax revenue of governments. With disposable incomes people would be able to buy goods and services, save, invest and start businesses all of which are taxed by governments around the continent. And as people rise out of poverty, and their incomes grow and become more secure they can be gradually taken off the BMI, which would over time reduce the size of the payments that governments would have to make.

Africa will rise when we end poverty

The English writer Eli Khamarov once said that “poverty is like punishment for a crime you didn’t commit”. The hundreds of millions of Africans living in poverty are the victims of this cruelty, and through no fault of their own they have, as Nelson Mandela put it, been deprived of “a fundamental human right, the right to dignity and a decent life”. Since independence African leaders and policy makers have unfortunately made choices and implemented policies which have failed to break and, in some cases, caused and entrenched the cycle of poverty on the continent. However, Africa need not be defined by its poverty, Africa does not have to be the basket case of the world. There are still options and policies, like BMI, that our leaders and policy makers could make that could end poverty in Africa.

Some may ask, why this policy? East Asia and the West pursued the traditional poverty eradication path of industrialisation and this is what Africa is trying. However, there are two key issues of pursuing poverty eradication through economic growth and industrialisation. First, industrialisation takes time, even the quick industrialisation of East Asia took at least 3 decades. Secondly industrialisation is a painful and unequal process. In both East Asia and the West industrialisation has been accompanied by highly unequal distribution of wealth, terrible labour conditions and it hasn’t pulled everyone out of poverty, hence the need for social safety nets. And to this day there remains pockets of citizens in the worlds most industrialised economy who live in relative poverty. In addition, a BMI does not mean you must abandon a nations aspiration for industrialisation or socio-economic growth, rather I believe it would speed it up. It would help push people out of poverty now rather than in 30 years. It would ensure that no one is left behind by a changing economy. And importantly to the process of industrialisation would create a significant number of people with disposable income who will be able to buy locally produced goods and services.

The evidence shows that when empowered, when given the resources and the opportunity Africans living in poverty can and will rise. The solutions to the unfulfilled potential of our continent lies not in SDG’s, or debt fuelled infrastructure or the benevolence of the developed world, but in giving our people the tools to fulfil and surpass their own potential. To do that we must invest in them, we must address our central developmental challenge of poverty by ending it. To do so we have to be creative and brave. Exploring and implementing policies like a basic minimum income is a way to do so. Ending poverty in Africa will turbocharge economic and social growth, and it will also allow hundreds of millions of Africans to live lives of dignity, and if nothing else, that is development.

[1] The Protection of Economic, Social and Cultural Rights in Africa (2016), edited by Danwood Mzikenge Chirwa, Lilian Chenwi, p.12-13

Losing Our Mind: Reversing Africa’s Brain Drain

Africa has a migration problem. Not only are thousands of the continents young men and women risking life and limb to try and make it to Europe, we are also losing some of our best minds. A 2013 report from the United Nations and the Organization for Economic Co-operation and Development found one in nine Africans with a tertiary education (2.9 million people from the continent) were living and working in developed nations in North America, Europe and elsewhere. Over the last 10 years this number has grown by 50% more than any other part of the world. Since 1990, Africa lost 20,000 academic professionals who left their countries and 10 percent of the continents highly skilled information technology professionals. The loss of Africa’s best and brightest is most keenly felt in the health sector, a study by Canadian scientists found that Sub-Saharan African countries that train doctors have lost $2 billion as the expert clinicians leave home to find work in the developed world.

The beneficiaries of this migration are the developed world. The findings of the study suggested that Britain was around $2.7 billion better off, the USA $846 million, Australia $621 million and Canada was $384 million better off. Yet in the developed world, particularly in the West a nativist, anti-immigration sentiment has taken hold. The places that have benefitted most from migration are becoming more hostile to it. This presents a perfect opportunity for Africa to tempt its doctors, engineers, artists, academics and other skilled professionals home. These people offer an unparalleled opportunity to boost our economies and enrich our societies, with the skills, capital, knowledge, networks and experience they could bring back home.

What is needed are the right pull factors to entice the diaspora to move back home. We need policies that make moving back to the continent more attractive.

 

Why the diaspora?

Development needs a skills and knowledge base. Healthcare systems need doctors and nurses to staff them. Infrastructure needs engineers to build them. The IT sector needs talented software and hardware engineers. And the private sector needs people with experience and global business networks if African business are to grow in a global economy. Africa could and should grow these capabilities, but that will take time, valuable time that we can ill afford to lose.

The diaspora offers the perfect way to jumpstart development with human capital. They could bring these much-needed skills, knowledge and networks into the economy while we continue to train more people. In addition, if they came home the diaspora would not only bring back the soft assets of skills and knowledge, they would bring back hard assets, money (in the form of savings and investment funds) that they would use to settle back at home, as well start and invest in businesses. In South Africa it is estimated for every skilled person who returns home to South Africa, nine new jobs are created in the formal and informal sectors. In China, educated skilled professionals, who left China to study and work, are returning. These “sea turtles” have come back with desirable skills, a network of international business contacts and new ideas to boost the economy. Elsevier (the publisher of scientific journals) has used its data to show that India is enjoying a brain gain of scientists returning to and moving to India (the study also shows a similar effect in China).

Thus, the question becomes, how does Africa turn its brain drain into a brain gain. What policies and measures are needed to make African professionals living in other countries want to move back home.

Making moving back easier

If the African diaspora are to be enticed to move back, then we must make it easer for them to do so. This means a smart mix of incentives that make it easier and attractive to move back to Africa.

Moving countries can be a complicated affair, not only do you have to move your stuff, but you also have to register with tax authorities, set up bank accounts and move assets, get all your documentation, insurance, get your children into school etc. Governments can do a lot to make this easier. First by making all of this tax free, the amount of money that governments would make from African migrants coming home and paying taxes on their fridge or money transfers is tiny in comparison to the value they would produce over years. Furthermore, these tax incentives should be extended to those who start new companies within a year of returning and to investments such as buying stocks, bonds and real estate. Second, allow for dual citizenship, this would allow diaspora migrants to become fully fledged citizens without facing the prospect of having to completely leave behind the lives they have built abroad. Coupled with this should be a fast track to citizenship, no one will migrate if they will be in an uncertain situation subject to the whims of an immigration officer, full citizenship will give them security. Third, making reintegration painless. Which means aiding migrants and their families settle in as painlessly as possible, such as helping parents find schools for their children, purchase health insurance and a one stop shop for getting all their official paperwork and documents. Ideally these are services governments should provide to all citizens, and trialling with diaspora migrants may be a way to pilot such a scheme before rolling it out for all. Finally, we must make it clear that we want our diaspora to come back home, that we value them beyond their jobs and financial assets. That our people are our greatest resource and the contributions they could make to our societies would help make economic, social and cultural development a reality. This can only be done by clear unequivocal statements from political leaders backed by policies which make the rhetoric reality.

Reversing Migration

Incentivising high skilled migration is something done by developed countries around the world such as the UK, Canada and Australia, now China is getting in on the game as well. All of them are seeking to attract high skilled migrants to fill gaps in their own labour markets and ensure they remain globally competitive. They all have policies aimed at attracting highly skilled, high earning migrants which fast track their migration and ease their integration into society.

Africa is not only not attracting highly skilled migrants, we are our losing our own highly skilled people, it is a situation that we should be actively looking to stop and reverse. Our hospitals lack the doctors and nurses they need to provide adequate care, our universities lack the professors and researchers they need to produce the next generation of leading minds and research, our governments lack expertise in any number of areas and our private sectors could desperately use people with high level skills, experience and networks. It will not be easy we are in a global competition for the worlds best and brightest, but we must start somewhere, and having the right policies to attract our diaspora brothers and sisters home is a good place to start.

Avoiding Demographic Doomsday: Redefining Employment in Africa

One of the central challenges facing much of Africa is unemployment, in particular youth unemployment. The African Development Bank estimates (see figure 1) that of Africa’s approximately 420 million young people (aged between 15-35) only one-sixth (16.6% or 70 million) are in formal employment. One-third are partially or vulnerably employed, and half are not employed at all. That means 140 million young African’s are at risk of losing their job at a moment’s notice and 240 million have no job and little prospect of one.

(fig.1. source African Development Bank)

This is a disaster. Half of Africa’s youth, their potential contributions to society and personal dignity and well being, is wasting away. Is it any wonder that these young men and women are risking life and limb on horrific journeys to try and get Europe for the prospect of a better life?

This though, is only half of the story. Africa’s youth population is expected to double to over 850 million by 2050. If the continent cannot find a way to harness the potential of its youth, then the continents demographic dividend could turn into a demographic doomsday. As young unemployed Africans with no stake in the economy and no prospect of a better life turn to dangerous radicalism, extremism or crime as a way out; migration will be the least of our worries.

Thus, the question becomes how do we avoid this demographic doomsday scenario? One answer is to rapidly grow the formal economy and employment via industrialisation. This is the path that much of the continent is trying to pursue. Investing in infrastructure, ease of business reforms, business incentives and trade expansion, all aimed at spurring economic growth and employment. Frankly, it has not been enough. While growth has been positive it has not been at the rate we need, and not nearly enough jobs have been created.

What is needed is a policy for the biggest non-agricultural employer on the continent, the informal sector. The majority of those in informal business (and many with jobs who have a side hustle) depend on the informal sector for their livelihoods.

Alongside agriculture, the informal sector is the foundation of the African economy and its time our policies and laws caught up to that reality. Doing so would help solidify fragile livelihoods as well help drive growth and opportunity in the economy. We can start by changing our laws to redefine employment to include the informal sector and investing in the skills, knowledge and capabilities  of those in the sector.

The Informal Sector in Africa

The informal sector can be broadly defined as activities or enterprises that produces and sells good or services but are not formally registered and do not pay taxes.

The International Labour Organisation (ILO) estimates that the informal sector represents 41% of GDP on the continent and 66% of total employment in Sub-Saharan Africa and 52% in North Africa, and that eight in ten (80%) of young workers end up in the informal sector. These figures tell us an important fact about the reality of employment in Africa, that most people earn their livelihoods through their own ingenuity and drive, hustling, and either working for or running small enterprises, they don’t have an employment contract or get a pay check. Thus, the laws, regulations, and protections of labour and employment laws are irrelevant to them. The second key thing that stands out about Africa’s informal sector is its resilience and adaptability. It has survived the ravages of one party States and dictators, near collapse of the economy in the 1990s, endemic rent-seeking and corruption, changes in weather patterns and the cycles of economic booms and busts.

It is time that government policy focused on enabling, harnessing the sector by integrating it into the wider economy, not at the exclusion of wider policy goals such as industrialisation but as part of it.

Redefining Labour and Employment

The first step to integrating the informal sector and the people in it to the wider economy is through legal definition and recognition. Just as labour and employment legislation across the continent recognises, regulates, and protects people in formal employment; similar legislation for informal sector could provide the people and businesses in it with legal protection and a foundation upon which they can build and grow.

Informal sector legislation and policy would not simply be applying the rules of the formal sector to the informal sector (which would be ignored anyway); rather it should be crafted for the needs of the informal sector and would include the following:

  • A valid legal definition of an informal sector business and job with a simple way of registering it. Registering an informal business should be as easy as getting a SIM card or a mobile money account. The goals are not to tax or regulate the sector but for registration to be a gateway to the enabling and protective elements of the laws and policy.
  • Simplified contracts and small claims courts. A constant risk in the informal sector is that you do not have the protection of the law, if you make an agreement with someone to buy or sell something it is based on their word alone. Providing a simple contract template that all can use gives buyers’ and sellers’ basic rights (such as refunds on non-delivery of goods or services). A small claims court to enforce disputes under these specific contracts quickly (rather than the expensive, laborious and slow normal court system) would engender trust and facilitate business.
  • Banking and credit access. Make it possible for informal enterprises to use their registration to open bank accounts, access credit and use their assets (e.g. a motorbike) as security for loans.
  • Provide access to national health, pension and welfare schemes. Most national health, insurance, pension and welfare schemes are based on a (formal) employee contribution model, where a portion of your salary is contributed to various schemes. On a continent where most people are not in formal employment it means that these schemes are underfunded, and many do not include everyone. Providing a way into these schemes for the informal sector like a simple subscription or yearly fee would be a way to both expand them to the wider population as well as boost their funding
  • Allow informal employees and businesses to organise. Allowing the informal sector to form co-operative societies, unions and associations would open new avenues to credit (through the pooling of savings in co-operatives), better working conditions and more powerful voice to advocate for their interests.

Legal definition and recognition opens the door to the protection and progress of the livelihoods that depend on the informal sector. Laws may be boring, but they are crucial.

Capacity Building

Legal recognition is only half the equation, for the informal sector to move from being a source of subsistence for individuals to a source of growth for the economy. Africa needs to give the people in it the tools, skills and knowledge to create, recognise and take advantage of opportunity.

The first aspect of capacity building is coupled with legal recognition. Changing laws is ineffective if the people they are aimed at are not aware of the changes and how to take advantage of them. Thus, the capacity building exercise would be a public education exercise, focused on making people within the sector aware of the changes and how to take advantage of them.

The second is around skills and knowledge training. Putting together programs that train people on key aspects of business administration, opportunity identification and marketing, crucial skills needed if they are to successfully invest and expand beyond subsistence.

The Informal Economy as an Opportunity

Most policies that African governments have come up with around the informal sector are focused on formalisation and extracting taxes and most policy around employment growth is focused on expanding formal employment. While these goals make sense, they ignore the reality of the crucial role that the informal economy plays in livelihoods and the economy of Africa.

Employment in the informal sector is not wrong or inconvenient, it is normal for Africa. And, for Africa’s development to be truly African it must not only be led by Africans but work for the majority of Africans, many of whom are employed in the informal sector.

Few if any of the development initiatives pursued by governments and institutions across the continent are aimed at furthering this sector. This approach ignores and underserves a sector which has been the foundation of the African economy, which has, since independence proven to be resilient, innovative and frankly, African.

Redefining employment in Africa to recognise and support the informal sector will not hamper or stop industrialisation or the growth of formal employment. Rather it is about understanding that the giving the hundreds of millions of Africans whose lives depend on the informal sector a stake in the economy and the opportunity to grow, is not only good for the economy it is good for people, and if that is not what development policy is about it is what it should be about.

 

Let’s go to the Moon: Africa’s Industrialisation needs African science

We choose to go to the moon. We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone. – President John F Kennedy

In a previous post I urged a rethinking of Africa’s industrialisation path, that through a failure of imagination we have tried to industrialise Africa with policies that do not fit its own context. Part of that lack of imagination has been the lack of emphasis put on science in the pursuit of development in Africa. Industrialisation has always been accompanied by and often led by the growth and advance of science and technology. When Britain became the first industrial powerhouse it was on the back of scientific, engineering and technological advances in the steam engine, mechanisation and metallurgy. The industrial revolutions of the 20th century was driven by scientific discovery and advances in electricity, transportation, communications and computing, and it is no accident that many of them came out of the nation that invested the most in science, the USA. The East Asian tigers and China have all placed heavy emphasis and invested significantly in building and advancing their own scientific and technological capacities, because they know it is a key driver of industrialisation.

If Africa is to develop, industrialise and competently face the challenges of the 21st century then we need African science to flourish. This will require African policy makers to recognise the importance of science, invest in it, and to set and chase ambitious goals.

Science and Industrialisation – inseparable bedfellows

Science, technology and industrialisation are intimately linked. In fact, one could go so far as to say that without scientific advances and new technologies, industrialisation around the world may have been very different or not happened at all. Any study of the first industrial revolution (roughly 1760-1840) cannot ignore the impacts of the technological advances in iron and chemical manufacturing, the harnessing of steam and mechanisation. The second industrial revolution (1870-1914) was characterised by advances in steel, rail transport, telecommunications, electricity and the advent of applied science (the application of existing scientific knowledge to practical applications). The third industrial revolution (1960- today), or digital revolution is based on the advancement of technology from analogue electronic to digital devices, this was enabled by advances in materials science, quantum mechanics and mathematics. Now, according to some[1], the fourth industrial revolution is upon us and it will be marked by emerging science technologies such as AI, biotechnology and 3D printing.

If Africa is to develop and industrialise it must be a participant not just a recipient of the scientific revolutions taking place elsewhere. The rising powers of East Asia did this in the 1950s and 60s and invested heavily (and continue to do so) in building scientific and technological capacity just as their western counterparts had done over the preceding century. A great example of this is China. In 1977 China recognised Science and Technology as one of the four modernisations alongside agriculture, industry and national defence. And in the 1990’s deployed a series of policies such as increased funding, setting up an innovation infrastructure, increasing the societal importance of science and forcing technology transfer from foreign investors to achieve its goal of making China a global science and technology leader. China today is a world leader in areas such as hi-tech manufacturing, renewable energy and infrastructure.  Like China, African governments and policymakers must also recognise the importance of science and technology in development, that industrialisation is not just about factories, railways and trade. If Africa places as much emphasis on building scientific capacity as it does on infrastructure, trade or attracting FDI the continent would take the first step to building the sustainable growth that it seeks.

Walking the talk – investing in African science

Not only must science and technology be recognised as being as important as infrastructure it must get a comparable level of funding. There are three key ways of doing so. Investing in people, investing in scientific infrastructure and technology transfer. China has a target of investing 2.5% of GDP in scientific and technological research and development, and there is no reason why Africa cannot have a similar science and technology investment goal.

Investing in people

Investing in people is simple, it means funding STEM education at all levels (primary, secondary, university and post-graduate) to the level that is necessary to have the scientifically and technologically literate population able to work in a digitally driven economy and produce the scientists, engineers and mathematicians the continent needs at the foundation of its economy. In addition, there are a number of African scientists, mathematicians, and engineers who reside, teach and work outside the continent, kickstarting Africa’s scientific revolution would be easier if they were tempted back to Africa’s scientific agencies, research institutes and universities. This won’t be cheap, syllabuses will need to be updated, teachers trained, scholarships and bursaries funded, and the scientific diaspora given comparable salaries to what they can get elsewhere. However, in my view it is well worth the investment. Africa desperately lacks scientific capacity and that threatens its long term development, investing in human capital will provide a viable foundation for Africa’s future.

Invest in the infrastructure of science

Its one thing to have scientists, but that’s useless if the infrastructure doesn’t exist for them to thrive. By scientific infrastructure I don’t just mean giving greater funding to science departments at universities but also funding the myriad of research institutes, laboratories and agencies and technology parks that have been set up over the years. This also includes the sharing of science, scientific journals and conferences, which are crucial to the dissemination and progression of research and Africa has far too few of them, limiting the visibility and impact of African science. Putting money behind initiatives such as the Scientific African will help remedy this.

Technology transfer

Technology transfer is the idea that foreign investors should as part of their investments transfer some of the technical knowledge and skills which they have to the country in which they are investing. For Africa this would involve giving foreign companies incentives for technology transfer and moving R&D to the continent (such as tax breaks or subsidies), requiring the employment and training of locals in their operations and encouraging investors to enter into joint ventures with African companies when they invest in the continent. This will help insure that FDI into the continent doesn’t just build roads, power stations and factories, but also builds the people and skills that will develop the capacity for Africans to do these things themselves.

Let’s go to the moon

In 1961 President Kennedy asked the US congress to commit to a program to landing a man on the moon by the end of the decade. At that point in time, the USA had barely been able to put a man in space, going to the moon was barely conceivable, the technology and expertise didn’t exist, yet in July 1969 Neil Armstrong took the first steps on the moon. As the economist Mariana Mazzucato outlines in her new book ‘The Value of Everything’, going to the moon required the collaboration and coordination of a variety of different actors, from the aerospace sector to design and build the spacecraft, to the computer industry to invent computers that could run it, to the textiles sector to come up with suits that could walk on the moon. This not only resulted in the achievement of the mission of landing a man on the moon, it led to scientific and technological advances that have changed the world, such as modern computers with integrated silicon chips and multitasking software which are descended from the Apollo Guidance Computer where they were first developed and utilised.

The lesson Africa can learn from this, was that all these achievements came from having a singular focus on a specific challenge (going to the moon) and solving the problems it presented collaboratively between the private and public sectors. Today Africa faces a myriad of challenges, many of which such as climate change, or eradicating aids, or ending hunger contain multiple problems and require collaboration and problem solving between and within multiple sectors and significant funding, which only government can provide. What if we took a leaf from the moon-shot and African Governments funded a challenge. A challenge around which society can coalesce and benefit from as whole such building a green economy or ending hunger. Which like the moon mission could be broken down into various smaller problem-solving projects which would require investment in Science and Technology, would be coordinated by scientists, businesses, civil society, government departments and whole sectors from around the continent and help foster a sense of social cohesion through a goal that the majority of people believed in. I firmly believe if we are to confront and solve the challenges Africa faces in the 21st century we need to be ambitious, we need to think outside the box, focusing on and working collaboratively towards solving the big issues is a perfect way to do this, Africa should go to the moon.

[1] https://www.weforum.org/agenda/2016/01/what-is-the-fourth-industrial-revolution/