Blog

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/

African Foreign Policy: looking East with a strategy.

Africa should not just wait to be exploited or influenced. No. We should be part of the conversation. We should raise ourselves to a level where there are certain terms we dictate in the conversation because we have a lot to offer – Paul Kagame, President of Rwanda

Over the past couple of decades, the world has been changing. The extraordinary economic development of nations in Asia has seen the emergence of new powers, most notably China, who are now challenging the global hegemony of the West. Crucially, for Africa this has meant the emergence of new partners in trade, and development aid, which the African countries has been keen to take advantage of. However, the headlong rush for loans projects and deals is putting the continent in the awkward position of ever-deepening debt and obligations, without significant regard for the implications of this for the future of the continent or the motivations of the Asian powers. Making Africa’s relationships with China and India more advantageous for itself will require African countries to adopt a much more strategic and thoughtful approach towards its relationship with these powers building a partnership that can not only further the continent’s development but also help carve out a greater role for Africa on the world stage.

Understanding the East

To construct a coherent and beneficial foreign policy, you first have to understand the motivations and history of the nations that you will be dealing with, and there are two key things that can help African policy makers understand the intentions and motivations of the rising Eastern powers to Africa.

The first is their history. Asia has its own history of colonialism (such as the British Raj in India) and western domination (e.g. the century of humiliation in China), this gives them a far better understanding of Africa’s own history as well as a much healthier respect for sovereignty and an aversion to neo-colonial interference in the domestic affairs of others. This has led to much more cooperative relationship with Africa so far. Unlike Western states China does not impose programs or projects in the name of development, rather African states go to them with requests and they consider them. This gives African states agency, a voice in development partnerships and this is vitally important as it gives Africa the ability to determine its fate.

The second key issue is their needs. China, India, and the other rising economies of the east need resources to fuel their economies, markets to sell their products to, transport routes to move their products along and diplomatic partners who will help them shift the global balance of power. Thus, they need Africa. And Africa needs the development funding, markets and the diplomatic support of the rising powers. Mutual needs that could form the basis of a mutually beneficial partnership.

Because understanding East is at the core of developing a coherent foreign policy, Africa will need policy makers, specifically foreign policy experts who understand the East. To that end African governments need to make the effort to educate and train a new cohort of Asia specialists. People who will learn the languages, history, politics, culture and customs of the rising powers in the East and provide the continents leaders and decision makers with the expertise to craft policy and negotiators who will understand their counterparts.

What should African countries be looking for?

The second aspect of constructing an effective foreign policy is defining your own strategic interests, which begs the question what are Africa’s strategic interests? I would put them in two broad categories. Development and gaining a greater voice for Africa on the global stage.

In terms of development, Africa’s needs are pretty clear-cut. The first is funding for expensive items such as infrastructure, which luckily China and others have proven willing to fund. In this regard, the onus is on African states to use the funding prudently, picking the right projects that will have a beneficial developmental return rather than vanity projects such as presidential palaces or Parliament buildings. In other words, African states must strategically choose the projects that will have the biggest bang for the borrowed buck.

The second need under Africa’s development interest is investment in its economies, where African states must think beyond resource extraction and seek to attract investment in areas of the economy that will further industrialisation and development such as industrial, and generic drug manufacturing. In short investment in areas that will create jobs and provide a base for future economic growth.

The third developmental need that Africa must fulfill is market access. Asian markets offer an unparalleled opportunity for African products, which we already export such as agricultural produce. Opening agricultural markets in Asia, would provide a significant boost for the agricultural sector which employs the most people on the continent.

The fianl area of strategic interest for Africa is gaining a greater role on the world stage. A globalised world faces global challenges, such as climate change, economic crises, insecurity and trade issues. All these affect Africa, sometimes disproportionately so, yet the continent has little diplomatic clout with which to help shape global responses to these issues. In a previous post I outlined how, by working together African states could take advantage of the West’s current state to change the status quo to become a more consequential player on the global stage. The rising powers of the East are also challenging Western hegemony, and they need international partners to do so. African states acting as a collective could be those partners, providing vital votes in the UN and other international fora and enacting policies that help further this agenda. In return for their support African states would require that key areas of interest to them such as changing the international trade and tax regime and mitigating against the consequences of climate change be placed on the global agenda with the backing of the Eastern powers.

Strategic partners and benefits from the east

The emergence of new powers from the East is changing the global landscape. Unlike much of the current commentary I do not see a new set of powers involved in a new scramble for Africa, I see opportunity. The opportunity to partner with them to the benefit of the continent. However, this will require strategic thinking from African policymakers rather than the opportunism we have seen when African presidents troop to Beijing or New Delhi to get funding for their pet projects.

Strategic thinking requires that African leaders and policy makers understand the interests of the emerging powers as well as their own, and use those to craft a foreign policy that would help create a mutually beneficial relationship between Africa and the rising East. A relationship that would help fund and drive development on the continent and finally give it a meaningful voice on the world stage, while providing the eastern powers with the resources, markets and diplomatic allies they need. With strategic thinking behind a smart foreign policy Africa need not be pawns of the West or the East.

Time to Give African Judges Some Teeth

“A court is the guardian of justice, the cornerstone of a democratic system based on the rule of law. If the state does not abide by court orders, the democratic edifice will crumble stone-by-stone until it collapses, and chaos ensues”- Dunstan Mlambo – Judge President of the Gauteng Division of the High Court of South Africa.

African governments have a bad habit, when it is not in their interest they ignore the law, specifically they ignore the courts. Governance and the rule of law is well recognised as a crucial component of development, the African Union even has the African Charter on Democracy, Elections and Governance. One of its core objectives is to ‘Promote and enhance adherence to the principle of the rule of law premised upon the respect for, and the supremacy of, the Constitution and constitutional order in the political arrangements of the State Parties’. Although tellingly only 10 African states have actually ratified this particular charter, symbolising African governments commitment, or lack of, to the rule of law.

The rule of law is crucial, it is the foundation upon which stable societies are based. When it works it is how criminals are punished and injustice is rectified. It provides for trust in contracts so that people can do business with each other and it keeps power in check, restraining government from abusing its citizens. The primary arbiter of law and order is the judicial process, the courts not only need to be independent, but their orders and rulings need to be adhered to, if not they may as well not make them.

When governments ignore court orders, they send a signal, that the law is not for them that the law is tool to be used to benefit of those with power rather than to protect all.

Development on the continent will require the rule of law that applies equally to all including the government, the problem is the police that courts rely on to enforce their orders are controlled by the government. To enforce the rule of law, courts in Africa will require more than the hope that government will respect the independence of the judiciary. Rather Africa should give its judges some teeth, the ability to enforce its orders whether the government likes it or not.

The Rule of Law – Except for the Rulers

‘Rule of law’ is a statement that gets used a great deal, African presidents, civil society, global institutions and development economists are all fond of using it and outlining its importance, but what does it mean?

The Secretary General of the UN has defined rule of law as “a principle of governance in which all persons, institutions and entities, public and private, including the State itself, are accountable to laws that are publicly promulgated, equally enforced and independently adjudicated, and which are consistent with international human rights norms and standards”[1]

Its importance to development is crucial because it covers several areas. Preventing and mitigating crime and insecurity, protecting the environment, labour, property, creating a trustworthy commercial environment with security of contracts and protection from fraud, protecting human rights, reducing corruption and holding power accountable all rely on the rule of law. Without a system where everyone is treated equally by fair and independent adjudicators, they become arbitrary, those in power exercise impunity, doing business becomes an exercise in avoiding getting screwed (or screwing over the other guy first) and people’s rights, property and persons are under constant threat. Unfortunately, across much of Africa the rule of law does not hold as it should, and often it is the government at the forefront.

When governments ignore the law, they send a dangerous signal to the whole country. That the law is a tool of domination for those in power to get what they want and that the law is a mere suggestion rather than a restraint. This creates the flagrant disregard for the law and impunity that enables corruption, criminals and the everyday behaviour (such as disregard for traffic laws) that has become the norm. And it is why often people resort to mob justice rather than trusting the police and courts.

Development is hard under conditions where the powerful exercise impunity and basic security cannot be ensured. Thus, the question becomes where do we begin with restoring law and order? It is not likely that those in power will conform to the rule of law without significant pressure or incentive, it is also not likely that the general populace will suddenly conform to law and order when the police cannot be fully trusted, and those with power and wealth continue to display impunity. Thus, it is to the courts that we must turn and give them the ability to enforce the rule of law, particularly for those with power and wealth.

Enhancing Judicial Power

The courts are the adjudicators of the legal system and when sufficiently independent from the rest of the government they can make fair and reasoned judgements. The last couple of years has seen African judges show that they can hold power to account, and two momentous decisions showcase this.

In 2016 the Constitutional Court of South Africa told the president to ‘pay back the money’[2] for the upgrades to his home in Nkandla, on a continent where presidents have regularly used taxpayer money as their own it was refreshing to see a court put a stop to impunity. In 2017 the Supreme Court of Kenya[3] stunned the continent when it nullified a presidential election because of anomalies and irregularities in the results. Africans are no strangers to rigged and disputed elections to see a court find against a sitting president, say that it would not accept a tainted election and force the holding of a new election was novel and inspiring.

African courts can step up to the challenge if constituted properly as independent and fair. However, they rely on the government for their decisions to be enforced. Presidents and Ministers must respect and obey court orders and then the police must enforce them, unfortunately this is where the system tends to fall apart.

This was graphically shown earlier this year in Kenya when the government flagrantly ignored court orders and shut down TV stations and deported an opposition politician making a mockery of the rule of law.

This sort of thing happens around the continent such as in Nigeria, Uganda and South Africa, and to put a stop it we should give judges the power to enforce their orders and decisions, to do that they will need their own enforcement agency, a judicial police force. This force should be placed under the control of the judiciary alone, with a guaranteed budget, and a narrow but important mandate to serve and enforce court warrants and orders where the police prove incapable or unwilling to do so. Creating this independent judicial force would have three goals.

First, it will be a tangible force behind the authority of an independent judiciary giving it the ability to challenge impunity. Secondly, it bypasses the political control and rationale behind the police which in Africa are usually centralised and controlled by politically appointed ministers, meaning that the police answer to their political masters first rather than the law. Thirdly, it will help restore confidence in the courts and the law, if people see the law being enforced it is a powerful incentive to place their trust in the law and not to break it. It is not a replacement for the police, nor is it a power grab for the courts rather it is a way of strengthening rule of law by enhancing the ability of the adjudicators of the law to make sure that its legal orders are carried out.

Giving Judges Teeth

It may seem like a bit of crazy idea, police that answer to the courts. However, that is a function the police are supposed to serve but typically do not in Africa. The courts have shown that when judges are chosen in an independent, public and multi-stakeholder process they can make fair and independent decisions, but when those decisions are ignored or not enforced it enables impunity and criminality.

If African leaders and policy makers are truly in favour of law and order as they are fond of declaring, then they must take steps to ensure that the decisions of the courts are enforced. A potentially effective solution is to give the courts their own police to enforce those orders, bypassing politically compromised police and giving them the ability to tackle impunity. The laws governing society are the foundation of stability and good governance. Ending impunity and enforcing the rule of law will provide a firm foundation for development, when people trust the law and power is limited by the law it ensures that all can be treated equally in a secure society. The courts are at the core of this, if Africa is serious about law and order it is time to give our judges some teeth with which to enforce it.

[1] https://www.un.org/ruleoflaw/what-is-the-rule-of-law/

[2] http://www.saflii.org/za/cases/ZACC/2016/11.html

[3] http://kenyalaw.org/caselaw/cases/view/140478/

The African leadership problem

The trouble with Nigeria is simply and squarely a failure of leadership. There is nothing basically wrong with Nigerian character. There is nothing wrong with the land, climate, water, air, or anything else. The Nigerian problem is the unwillingness or inability of its leaders to rise to the responsibility, to the challenge of personal example which are the hallmarks of true leadership… We have lost the twentieth century; are bent on seeing that or children also lose the 21st? God forbid – Chinua Achebe

Afriwonk is a policy blog, my broad aim is to stimulate conversation and thinking about new approaches to development policy from an African perspective. I try to stay away from the politics as it can turn readers off or introduce bias, rather I try to approach development policy as a people centred issue. However, the fact remains, no matter how good your policies are, if you have bad or ineffective leadership those policies are useless, and Africa has a leadership problem.

If you look around the continent democracy seems to be receding as more leaders seek to extend their time in office, corruption and poverty seem to be as stubborn as ever, and the challenges of development such as healthcare, education, joblessness continue to grow. These issues are not intractable, I firmly believe there are solutions. However, those solutions require effective leadership, leadership that has a clear vision and agenda and that leadership will only come about if Africans themselves demand it and provide it.

A clear vision and agenda or lack thereof

In my first blog I tried to outline what development means, that for me development is people centred ,aimed at improving the lives and livelihoods of the African people. Yet we rarely hear a clear articulation of what development means from leaders on the continent. African leaders constantly promise development, but what does that mean, when they campaign they have manifesto’s hundreds of pages long but without a clear agenda or sense of priorities they are just empty promises. In South Africa the ANC is struggling to find its voice, due to the fact that while the politics of South Africa may have been transformed its economy has not, and far too many people still live in poverty. Yet, other than empty sloganeering and symbolic votes in parliament the ANC is yet to present a clear articulation of what economic transformation means to them and the agenda they will pursue to achieve it. In Kenya the Jubilee administration campaigned on a manifesto full of goodies in 2013 and just last year after his re-election the president announced a new development agenda the “big four”, but the fact remains that both the original manifesto and new agenda came from consultants who were formulating an agenda to please crowds and win votes. In Ethiopia, the governments idea of state led development has come into conflict with the desires of its people who want more than just impressive GDP growth. Vision is an essential part of good leadership. Not only have we had leaders without principle or a sense of responsibility, they lack vision. There is no clear idea of the country/continent we want, and this is how we plan to get there. Franz Fanon whose work has inspired liberation movements for decades warned that the “gravest threat to Africa’s future is not colonialism but the ‘great appetites’ of post-colonial elites, and their ‘absence of ideology’”. The lack of vision with a clear agenda has and continues to hobble the continent. It means that we have haphazard badly thought out policy that is aimed not at improving the lives of people but rather at enriching a select few at the top or winning an election. It has been part of the problem that has led to the tragic cast of thieves, despots and psychopaths that have undone the hope that independence brought. If Africa is to develop clarity of vision and well-defined agendas are needed from its leaders.

L’etat est tout de nous – the state is all of us

King Louis XIV of France was known to say ‘L’etat c’est Moi’ or ‘I am the State’, it was his way of saying that he was the absolute ruler of France. It is easy to criticise African leaders, the lack of vision, the non-existent agendas, the corruption, ethnic politics etc. but leaders are nothing without the people who follow them. If Africa is to get better leadership, it will not magically appear it must be demanded by the people. Professor Bimpe Aboyade the first woman in sub-Saharan Africa to gain a PhD in English Literature once wrote “Our problem [in Nigeria] is not just that we are unlucky to be saddled with leaders without vision most of the time, but that majority of the citizens have no idea as to what they really want out of governance except the basic necessities like food, drinkable water, shelter and good roads. You therefore have people praising to high heavens corrupt and incompetent leaders for merely patching few kilometers of road”

In many countries we spend the years between elections complaining about our leaders, decrying the corruption and poor service delivery, and yet when it comes to elections we continue to vote for them. Whether it be for ethnic reasons, or religious reasons or some form of as yet undiagnosed electoral masochism among African voters we continue to return these same leaders to office. Africa’s leadership problem starts with its people, if we as a continent want better leadership we must vote for it, to encourage the genuinely gifted and valuable leaders across all walks of African life to run for higher office and back them when they do. Fundamentally we must realise that the state is all of us, we as Africans must have a better idea of what we want as Africans and demand it from our leaders.

 The curse can be lifted

There is an Angolan anecdote, that at creation God blessed Angola with abundant mineral wealth, other nations of the world complained at the favourable disposition towards the  country, in response God told them: wait till you see their leaders. Maybe God should have also added that we should see the people who will follow these leaders.

I do not think Africa is cursed with bad leadership, there are extraordinary leaders around the continent who lead families, churches and mosques, neighbourhoods, villages, businesses, schools etc. and yes even some politicians. If Africa is to find solutions to its problems it will take leaders willing to implement them, there is no government policy that can do that. Africa’s leadership problem will require its people to take responsibility, though that is easier said than done, it is not impossible.

 

Africa’s Development Begins with Agriculture

 

“It is time to change the way we think. Farmers are not the cause of Africa’s poverty; they are a potential solution. They are key to creating the future envisioned by the SDGs.” — Kofi Annan, former UN Secretary General

The development narrative in Africa is dominated by two key strategies. The first is massive infrastructure investment and development and the second is big top down policies broadly seeking to achieve the Sustainable Development Goal’s (SDG’s). Neither of these two strategies are inherently wrong, Africa needs infrastructure to ease and stimulate commerce, trade, industry and to make people’s lives easier. In addition, the SDG’s are laudable and the goals they seek to achieve would undoubtedly make millions of lives better. However, this approach has reinforced a problematic issue in Africa’s economic story, the failure to put agriculture first. Agriculture, in particular small holder farming was and remains the largest economic sector on the continent, thus its development or lack of has a significant impact on the development trajectory of the continent. The policies and strategies adopted by many African governments at independence (and that many governments still profess today) saw smallholder agriculture as secondary to industry and were in many cases hostile to small farmers. In doing so, the core of the African economy and its engine of development was undermined. In Asia the opposite approach was taken came agricultural transformation took place before industrialisation providing the foundation of the Asian miracle. In a previous post on reimagining industrialisation I urged that we start seeing agriculture as industry, which would not only need African countries to step back from the policies that have failed the continent for the last 50 years but enact a set of policies that would empower farmers, improve livelihoods and drive growth and development.

Why agriculture

The primary reason for focusing on agriculture is its importance on the continent. Today much as at independence, agriculture remains central to the African economy accounting for over 60 percent of jobs and a meagre quarter of the continent’s GDP. The poor performance of the sector is illustrated by the fact that 90 per cent of those living in poverty are engaged in farming,[1]. If nothing else agricultural transformation in Africa would not only benefit the most people but also those who most need help.

Agricultural transformation, which we can define as the process by which the sector evolves from being subsistence and farm focused to one that is more productive, commercialised and linked to the non-farm sectors of the economy at the core of economic development. First off increases in productivity also means GDP growth (remember that GDP is the measure of the value of everything produced within an economy). Secondly, as productivity increases so does farmer income, when most of the population is involved in agricultural production these income increases have multiple positive impacts on the wider economy. Increased income means rural populations have more cash to spend and they will most likely spend that income on more local goods and services. Increased demand for local goods and services, as Africa tries to kickstart manufacturing and other industries a local market to sustain those industries is crucial and farmers with increased incomes could provide that mass market. In addition increased agricultural income generates savings, savings are the basis of investment in an economy as it what banks use when they lend money to businesses. Third higher agricultural productivity has benefits for urban populations as well, increased productivity increases the supply of and brings down the price of food, thus bringing down the cost of living. Crucially, this pro-poor developmental stimulus performance of agriculture requires the participation of small farmers, small farmers dominate agriculture in many developing economies and it is their transformation from subsistence to market participation, productivity and income gains that are the precursor to development. This process was what happened in East Asia where the technology of the green revolution combined with supportive government policies and land reform kickstarted rural economic growth, stimulating demand for local non-farm goods and services and providing the basis for industrialisation

What happened to African agriculture?

The lack of transformation in the agricultural sector since independence has had significant impacts on development on the continent. Between 1960 and 2000 agricultural productivity grew at a paltry 0.6 per cent in sub-Saharan Africa compared to 3 percent in developing countries as a whole, this can be seen clearly in the graph below comparing African and Asian agricultural productivity.

So, what happened to African agriculture, in short bad policy. At the core of the African economy at independence and today is agriculture in particular the small-scale farmer. However rather than enacting policies that would have supported farmers, increasing productivity and its associated increases in spending and saving African governments sought to rapidly modernise their economies. In this vision of modernisation, the focus of the economy is industrial, manufacturing and urban. The policies that this view entailed placed a significant burden on the agricultural economy of African countries, where governments not only underpaid farmers for their produce, but sought to extract revenue to fund industrialisation as well as keep the cost of living down for people in urban areas who worked in those industries. The creation of state corporations whose mission was to industrialise African agriculture into large-scale commercial farming not only failed but became avenues for rent seeking and corruption. It was not long until farmers retreated from markets to subsistence farming and parallel markets. As African agriculture was pushed into crisis by bad policy, African economies lost their primary source of growth. Africa’s development failure is rooted in the failure of its agricultural sector whose origins are to be found in the agricultural policies pursued by African governments, thus overturning these policies should be the first step towards reversing that failure.

New policies for agricultural transformation

If past agricultural policy in Africa provides a handbook on what not to do, then what policies should African countries be looking at to make agriculture an engine of growth. These policies must be aimed at assisting farmers in increasing productivity and connecting them to markets so that the wider populace and economy can benefit.

  • Assisting farmers

At the core of agricultural transformation is the farmers who work the land and the first policy should be providing them with the assistance they need. Rather than telling them what to do or grow (as has been done in the past) farmer assistance should be aimed at providing farmers with the skills and tools. At the core of this would be extension services which consists of farmer support through education, support and advisory and these would include:

  • Education and advisory services on the science and technology of farming such as water and irrigation, soil types, what to consider when choosing a crop to plant, what to consider when acquiring fertiliser, certified seed and where to get it.
  • Sustainability strategies on how to maintain your soil, prevent erosion and depletion.
  • Making farmers aware of market opportunities and government programs and services which they can take advantage of.
  • Facilitating the organisation and cooperation of farmers so that they can share knowledge and skills with each other and possibly enable farmers to form cooperatives or commercial groups to gain more favourable trading terms.
  • Deploying agricultural extension officers to rural areas employed by the government who can provide ongoing advice and support to farmers.

Farmer assistance policy would be aimed building the capacities of farmers to take initiative and improve their farms how they see fit, building on the expertise provided through the training and education and the experiences of their fellow farmers. In short it is about enabling farmers to be better farmers rather than old policies which tried to dictate to farmers the right way to farm.

  • rural infrastructure

As mentioned earlier much of the continent is on an infrastructure building binge, however most of that infrastructure is big infrastructure such as powerplants, railways and highways meant to facilitate international trade and industry. However, the rural and agricultural economies also need infrastructure, namely roads and storage facilities. Rural roads will help connect farmers to a higher number of potential markets and cut transport costs for agricultural goods, which will help reduce the cost of food.

Storage is crucial, post-harvest losses (agricultural produce lost between the farm and its final destination) in Africa are significant. The Food and Agriculture Organisation of the UN estimates that “sub-Saharan Africa food losses of about 20 % for cereals, 40%-50% for tubers, fruits and vegetables, 27% for oilseeds, meat and milk, and 33% for fish, that has an expenditure evaluated at US$4 billion per year – enough to feed at least 48 million people, equivalent to the population of Angola, Zimbabwe, Swaziland, Namibia and Malawi all together.”[2] Proper, affordable and widely available storage is key to ending losses and preventing produce from rotting due to a lack of refrigeration or unsuitable storage conditions. Preventing post-harvest loss through the provision of adequate storage facilities is the simplest way to increase productivity and improve farmer incomes. Governments have multiple options available to do this such as building public storage facilities, or incentivising the private sector to invest in storage solutions

  • Embrace science and technology

In the early sixties India was on the brink of famine and in search of a solution. The ministry of agriculture invited a scientist Norman Borlaug who had been working on new high yielding strains of wheat and rice and they soon adopted new 2 “miracle” rice variety. By the 1990s rice yields per hectare had risen threefold and India had gone from near famine to one of the worlds major rice producers and exporters. This is the story of the green revolution, where new technologies and research in agricultural science were successfully transferred to practice boosting productivity particularly in Asia where like India, many countries faced the spectre of mass famine. In 1970 Norman Borlaug was awarded the Nobel Peace Prize for his work in helping to feed the world. Much like Asia in the 1960’s Africa must pursue and embrace agricultural science, with climate change and shifting weather patterns farmers around the continent are facing significant challenges. If productivity is to be maintained and improved for an ever-growing population farmers will need new tools particularly those that science can provide such as drought resistant higher yielding crops. For this to happen African governments have to put more money and effort behind the agricultural research institutes and agricultural departments in African universities to come up with the tools that African farmers can use. If African governments don’t do this someone else will and they will own the rights to those innovations, making African farmers more dependent on foreign companies. New seed varieties, and technologies funded by African governments can be sold to farmers and licensed to African companies at much lower financial cost and without the strings attached to global multinational corporations.

Agriculture as the foundation for development

If Africa’s growth failure lies in policy that marginalised agriculture, the implications of this should be clear to policy makers on a continent whose economies are still agriculturally based. If, as the World Bank puts it, Africa is to claim the 21st century[3] then African governments must realise that industrialisation is not achieved without agriculture but rather with agriculture at its centre. As East Asia’s did, Africa’s agriculture sector holds immense potential not just for growing produce but for value addition (processing and marketing of agricultural products) and stimulating the wider economy. Boosting productivity would boost incomes, savings and quality of life for most of the population and the multiplier effects could spark the very industrialisation that African leaders sought at independence and still seek today. Agriculture can drive Africa’s development, but only with the right policies, policies that place the Africa’s farmers at its centre.

[1] Africa Development Bank Group – p.11-12 https://www.afdb.org/fileadmin/uploads/afdb/Documents/Policy-Documents/Feed_Africa-Strategy-En.pdf

[2] http://www.fao.org/africa/news/detail-news/en/c/445333/

[3] http://siteresources.worldbank.org/INTAFRICA/Resources/complete.pdf

Africa needs taxes not aid

Revenue collection is the one which can emancipate us from begging, from disturbing friends… if we can get about 22 percent of GDP we should not need to disturb anybody by asking for aid….instead of coming here to bother you, give me this, give me this, I shall come here to greet you, to trade with you. – Yoweri Museveni, President of Uganda

In 2014 Zambia exported 59% of its copper to Switzerland, yet a look at Switzerland’s import and export statistics shows that they barely imported any copper and barely anything from Zambia[1], it is likely that most of this copper ends up going to China or other markets. What’s happening is that mining companies operating in Zambia are taking advantage of transfer pricing. Transfer pricing is where a subsidiary of a multinational company from one jurisdiction sells goods or services to a subsidiary of the same multinational company in another jurisdiction. Multinationals will most often use transfer pricing to shift profits into tax havens and low tax countries such as Switzerland. In the case of Zambia’s copper, mining companies such as Glencore sells copper mined in Zambia by its Zambia based subsidiary to the company’s trading arm incorporated in Switzerland at lower than market prices. The Swiss based trading arm then sells on the copper to the world market at market prices. The results of the transaction will mean that Glencore’s Zambia subsidiary will generate lower profits, minimising the tax payable to the Zambian authorities, while Glencore’s Swiss trading arm will generate the majority of the profits from the sale of copper, making these profits taxable in Switzerland, which as stated earlier is a low tax country. This strategy isn’t illegal, but what it does is minimise the taxes that are paid to the Zambian government and maximise the profits that these companies can make.

What happens to copper profits and taxes in Zambia is neither new nor unique. The UN economic commission for Africa High Level Panel on Illicit Financial Flows[2] estimates that “over the last 50 years, Africa is estimated to have lost over 1 trillion dollars in illicit financial flows, this is roughly equivalent to all of the official development assistance received by Africa over the same timeframe.”  Currently, they estimate Africa is losing more than $50 billion annually which is double the aid that Africa receives per year.

Across the continent African governments are once again getting caught in a debt trap (you can read a previous post on that here)  and are struggling to raise revenue and are having to increase taxes on the poor and working classes. In South Africa the latest budget included a 1% rise in VAT among others, Niger is currently experiencing mass protests against new tax raises on common goods, Kenya , Zambia and other nations across the continent are considering or implementing similar tax hikes. These measures will hit the poor hardest as they will raise the prices of the goods such as fuel, food and clothing that they need the most.

Not only is Africa getting bilked of its taxes, African governments are trying to make up the difference on the backs of the poor. This needs to change, multinational corporations and international investors will be a part of Africa’s growth story and they will (or already are) make fantastic profits from it, it is only fair that Africans get their fair share. And now is the perfect time to enact policies that would give Africa a fair share. Across the world tax evasion is key issue, Europe is cracking down on tech companies that use tax avoidance strategies, and three years ago the G20 vowed to fight tax avoidance[3]. Rather than swimming against the tide, Africa would likely have allies in a quest to implement fair taxes.

Tax revenues and profits where they are made

Recently the EU proposed a new technology tax. For several years EU countries have been trying to deal with a tax avoidance problem, like Zambian copper, big multinationals would base their intellectual property in tax havens and have their European subsidiaries pay “royalties” for use the of it, essentially transferring profits made in Europe to tax havens. The most prolific users of this strategy have been the technology companies and thus the EU has decided to propose a 3% tax on the revenue generated made by these companies in the EU as opposed to profits. The main idea behind this tax is that companies should be taxed in the country’s where revenues and profits are made and not in tax havens, providing a simple solution that African countries should adopt.

Make taxes simpler; the Norwegian example

In the 1970s Norway started exporting oil and gas, in the 40 years since this industry has added over 1.1 trillion dollars to the Norwegian economy, which is almost the size of the combined economies of Sub-Saharan Africa. In 1990 Norway established a sovereign wealth fund to invest its oil revenues today it is now worth over 1 trillion dollars. One of the key tools they have used to benefit from their natural resources is tax, in Norway, companies drilling for North Sea oil pay a 78% tax rate on income, though it includes deductions for losses and investment they are simple and easily implemented and assessed by the government. In addition, Norway taxes entities not specific assets, once again this simplifies the system considerably (you can read more about Norwegian petroleum taxes here).

By contrast if you looked at laws or production sharing contracts around Africa on mining or oil and gas, they are complex, and contain different types of taxes levied on the companies, the mineral, the license etc. This complexity allows these tax systems to be gamed and avoided. African policy makers would do well to look at how Norway taxes the companies that extract its oil and gas and consider a similar system. A system that is simple, easily enforced and taxes the extractives industry on our terms. If we did this Africa could finally be in a position to get significant taxes from the extractives industry and like Norway plough those profits back into the continent.

Expand expertise

This policy is simple, but its subject matter is not. The global tax system and strategies used by multinational corporations are incredibly complex. Companies employ armies of lawyers and accountants to look for loopholes and provisions that will allow them to lower their tax bill, and African countries cannot match up. Thus, on this issue African nations need to come together and the AU or Africa Development Bank (AfDB) provides the perfect venue for doing so, to create an African Tax Centre. This is not a new notion, the AfDB already has the African Natural Resources Center, which was created to help African countries build capacity in natural resource management.   The African Tax Centre could have a similar mission consisting of two goals, first to pool African expertise on taxes and assist national governments in identifying and stopping tax avoidance and second to help train and build the capacity of African revenue collection authorities. Over time as the capacity of African countries to administer and collect taxes increases they will be able to close off the avenues used by multinational corporations to avoid African taxes.

More Taxes less dependency

Taxes are a decidedly unsexy topic and bore most of us senseless. However, they are crucially important, the roads, schools, hospitals and police services that Africa needs must be funded somehow. For too long Africa has relied on aid and debt to provide a substantial portion of this funding, but aid comes with conditionalities set by foreign powers and can only be spent on things they deem important, and debt if not wisely used or with a bit of bad luck can be more burdensome than helpful. The only other option is taxes, but African governments must change their tax focus, today most African countries collect their revenues from those fortunate enough to have formal employment and Value Added Taxes, these taxes place their burden on those who can least afford it, meanwhile global corporations and investors are spiriting away over 50 billion dollars of prospective revenue. It is time for Africa to adopt policies that would end these practices, by taxing profits where they are made, reforming extractives taxes to be simpler and more effective and building the expertise needed to close the loopholes.

Africa is the final frontier of the commercial world. Over the last two decades big multinationals have sought to tap into the African market in technology, telecoms, mining, agriculture, healthcare (the list goes on), which are all very profitable now and will only get more so. The world both needs the resources under Africa’s soil and wants to take advantage of one of the world’s last untapped markets, thus the business case for doing business on the continent will not disappear as some people ominously warn whenever the prospect of higher and more efficient taxes are raised.

If Africa is ever to choose its own development path, if it is to decide its own destiny, it will not be done through depending on the generosity of others, it will be through its own money. If there is one policy Africa should be able to get behind it is that Africa needs taxes not aid.

[1]https://wits.worldbank.org/CountryProfile/en/Country/CHE/Year/2016/TradeFlow/EXPIMP/Partner/all/Product/72-83_Metals

[2] https://www.uneca.org/iff

[3] http://www.oecd.org/tax/g20-finance-ministers-endorse-reforms-to-the-international-tax-system-for-curbing-avoidance-by-multinational-enterprises.htm