Africa has long been considered a continent with growth potential. Although this is the case, the question remains, is the continent developing at a sustainable rate?
According to World Bank statistics, intra-African trade was at just 11% of the continent’s total trade between 2007 and 2011. In 2015, intra-African trade was worth just $170 million, when the potential stands at trillions of dollars .
While intra-African investment is critical to Africa’s future economic growth, it still remains significantly low despite the positive results it can yield. Intra-African trade fails because of volatile political climates and governance challenges in some countries. Potential trading partners cannot collaborate because of jurisdiction red tape.
Intra-African trade is essential so that African countries can do business with each other frequently in order to grow the economies of the continent and raise Africa’s global competitiveness. Recently, I attended the Africa CEO Forum, an event which seeks to find future solutions for the benefit of the continent’s development by bringing together governments and industry captains to engage on what is possible and intra-Africa trade was a topic in which many were interested and dominated the conversations in some of the sessions and hallways.
While Africa is often an overlooked investment target for many global multinationals as a result of infrastructure and policy challenges, it is upon businesses that are Africa born to reinvest in the continent. I have always believed in the opportunity that exists in Africa and that is the reason why we, at Tsebo Solutions Group have implemented a robust plan that has seen us build the business relationships we have on the continent. Although we believe that African economies will continue to grow despite the various market challenges, governments can catalyse easier trading practices to alleviate the burden of governance issues and border control challenges that many countries on the continent still face.
The World Bank forecasts growth of 3.2% for the year, up from 2.4% in 2017. It also predicted slightly higher growth for 2019 of 3.5% . This provides a window of opportunity for businesses to strengthen trade
relationships with counterparts on the continent to build sustainable trade. As an African business, we saw the need to focus on harnessing the power of doing business on the continent, not only to cement our footprint as a facilities management provider that understands Africans, but to support and strengthen the growth of the continent.
Intra-African investments are critical to Africa’s future economic growth as it creates greater opportunities to uplift the people of Africa as it has more of a direct impact on poverty by creating more job opportunities for the poor. Tsebo Solutions Group employs over 39 000 staff and more than 50% of the business’ turnover is fed back to our staff in wages. This has created a unique opportunity to not only grow our service delivery capabilities in Africa, but to uplift people across the continent.
However, it is important to note that expanding into Africa requires a deep understanding of the countries and their unique characteristics.
As a business, we believe that we can only reach our full growth potential by continuing with our Africa journey. With a customer base of nearly 1 billion people in Africa, the continent is set to grow only if African business continue to trade with each other and governments realise the importance of the private sector in opening growth opportunities.
Clive Smith, Chief Executive Officer, Tsebo Solutions Group
South Africa’s Alexander Forbes says it has received regulatory approvals to complete its acquisition of African Actuarial Consultants (AAC), Zimbabwe’s largest independent actuarial firm.
The deal, which was initially announced in June last year, gives the South African firm a foothold into the local market which it had exited in 2015 as the economy tanked but believes has significant upside growth potential.
“While it is early days, we (are) optimistic about the future of the country based on the various initiatives that the government is seeking to undertake to attract both domestic and foreign investment. A sustainable growth path is crucial to the success of any country and the financial well-being and security of its people. There are grounds for optimism in Zimbabwe,” said Alexander Forbes chief executive, Andrew Darfoor in a statement.
AAC falls under Alexander Forbes’ Emerging Markets Division, which already has market leading businesses in Botswana, Namibia, Uganda and Nigeria. It also has business interests in Europe and the Middle East.
Alexander Forbes has previously operated in Zimbabwe, but was rebranded to Willis Faber Dumas and Roland (WFDR) Risk Services in 2015 when ZB Holdings sold off its 40 percent shareholdings in the firm.
AAC is led by chief executive Tinashe Mashoko who said the firm has ambition to become one of the leading actuarial and consulting companies in broader sub-Saharan Africa.
“There are significant benefits from being part of Alexander Forbes with whom we share their ambition to grow a distinctly pan-African financial services group. We have aspirations to grow in the region and their acquisition of a significant stake in AAC aligns our regional ambition with that of Alexander Forbes,” said Mashoko.
AAC, which started operating in 1993 as unit of First Mutual Holdings, was in 2016 sold off to Mashoko’s Frankmash Enterprises. Darfoor said the terms of the acquisition were confidential.
The latest World Bank report on South Africa is not only remarkable for the collaborative method it employed, but also for some of the conclusions it reached on issues like land redistribution.
The report, which includes contributions from a long list of external consultants including myself, the National Planning Commission and Statistics South Africa, is the platform for further engagement between the World Bank and South Africa.
In the 1970s and 1980s, the World Bank earned a justifiably bad reputation for seeking to impose solutions cooked up in Washington DC. Now, the bank takes great care to work in partnership with the country to figure out solutions to economic challenges.
This approach seeks to identify the underlying systemic constraints and not just the symptoms such as unemployment. The bank set out to get to the root causes of what it calls the twin challenges of poverty and inequality which characterise South Africa as an “incomplete transition”.
Interestingly, the bank – hardly known for being radical – identifies the skewed distribution of land and productive assets as one of the five key constraints. The other four are skills, low competition and economic integration, limited or expensive spatial connectivity, and climate shocks. I spoke to Paul Noumba Um, the World Bank’s country director for South Africa, about the report.
Your views about land are interesting in coming when populist movements in South Africa are calling for radical solutions. What informed your view?
We have made a significant effort to understand South Africa’s history. Our report acknowledges that efforts to overcome the legacy of segregation and apartheid was bound to take a long time, even though much progress has been made.
The economic structure that was engineered during the apartheid era remains largely in place even though political power has been democratised. Land reform is part of addressing this legacy and the government has long stated the goal of redistributing 30% of land to the dispossessed communities.
Admittedly, it has been a relatively slow process but this is not surprising given that it can be legally and administratively challenging process, especially when restituting land to South Africans whose families were dispossessed a very long time ago. We do not think that a lack of funds was a major reason for slow progress.
That’s why we argue for strengthening the administrative capacity for land reform, including restitution, redistribution and tenure reform. Our understanding is that tenure reform in the former homelands is particularly important for reducing poverty. Many poor South Africans live in their former homelands where land is still communal.
There are concerns that the noises around the land issue will undermine property rights and investor confidence. What do you think?
Many countries have successfully implemented land reform, in some cases with support from the World Bank.
Whether land reform deters investment depends on the way it is implemented. In our understanding, the South African land reform process has thus far not deterred investment. But policy uncertainty around expropriation without compensation could change this, as it makes it riskier to invest in land.
Our report also draws attention to the property security of poor South Africans. Many poor South Africans are still trapped in informal settlements and there is a huge backlog in issuing title deeds to households who were denied ownership during the apartheid era. Tenure security in the former homelands needs to be addressed. Addressing these tenure issues will unlock economic value for many households as they can make effective use of their assets, be it land for more productive agriculture or their homes for backyard rentals or starting a small business.
The report brings climate shocks back into the mix. Are you concerned that in all the talk about radical economic transformation and rolling back “State Capture” climate change will be neglected?
Not at all. The emphasis on overcoming the legacy of exclusion and rolling back “State Capture” is important. We think that the South African government is strongly committed to tackling climate change and reducing carbon emissions. In fact, the government is a pioneer in the area, of progressing toward introducing a national carbon tax.
Drought in the southern part of the country has also been a stark reminder that South Africa is a highly water insecure country, particularly vulnerable to climate shocks. Strong efforts are underway, in some areas in partnership with the World Bank, to raise water and climate-resilience in South Africa.
Climate change is certainly an area that is not neglected. Recent developments around renewable energy is inspiring. These include the signing of 27 renewable energy independent power producer contracts. And there was the launch of round five of renewable energy independent power producer contracts.
Why is partnership with your host government important to you, and what exactly does that partnership entail?
The World Bank is made up of 189 member states, including South Africa. These member states gave the World Bank Group the mission to eliminate poverty by 2030 and boost shared prosperity. These twin goals cannot be achieved unilaterally. They require a strong partnership between the government, the World Bank and many other stakeholders.
The better we understand the challenges to the twin goals, the more constructive a partner we can be. That’s why we conduct these Systematic Country Diagnostics before preparing any new country strategies.
The five constraints we identified in our diagnostic have come out of broad consultations. What may surprise South Africans is what we consider to be root causes versus symptoms of poverty and inequality in South Africa. This is a discussion we seek with South Africans, but it is not up to us to decide how South Africa decides to accelerate progress on its National Development Plan.
But depending on where our partnership is sought, we stand ready to support South Africa in this progress through a variety of development solutions: evidence based analytical work, convening power around specific themes and financing.
According to the United Nations, it is estimated that by 2050, two thirds of the world’s population will live in urban areas, the result of a mass rural exodus and high population growth, particularly in Africa. The number of people living in cities will double, as will the size of urban areas, generating massive infrastructure needs.
Urbanization can have a positive impact on development, contributing to innovation and job creation. When too rapid or unplanned, however, it can lead to social exclusion and environmental degradation. To avoid this, there is a clear need to design cities that can absorb a growing population while remaining economically, socially, and environmentally sustainable.
With institutional and financial decentralization increasing throughout the world, including South Africa, local authorities now have more responsibility for areas such as basic services delivery and local development planning, making them key players in sustainable development.
Local authorities are also adopting a more holistic approach to urban functions such as living (habitat), travelling, working, producing, consuming and sharing and there is a noticeable decline in traditional, sector-based approaches. An increasing number of Development Finance Institutions are adopting strategies to support municipalities in areas such as sustainable urban planning.
A profound transformation of the financial landscape is underway to address the huge infrastructure gap and capacity needs of cities. The transition to low-carbon, resilient cities requires infrastructure investments evaluated to USD 90 trillion worldwide by 2030. How can we “shift the trillions”?
First, rely on local development banks. They are increasingly active in financing sustainable urban development. Given their sound knowledge of domestic policy and the economic and social environment, these institutions are well placed to mobilize local savings and leverage investment from the private sector to increase the pool of funding available.
AFD and the DBSA have been working together since 1994, focusing on sustainable infrastructure investment through the provision of municipal credit lines (exceeding € 315 million (R 4.8 billion) between 1994 and 2017 to finance investments in infrastructure in South Africa, and the co-financing of municipalities’ investment programs (e.g. eThekwini in 2016, together with the Infrastructure Investment Programme for South Africa (IIPSA)).
Second, development banks can make the difference. They are rooted in their domestic and regional constituency, drawing expertise and financing. At the same time, they are connected to the international agenda and can foster alignment between the local and the global. They can demonstrate to the markets the potential returns of sustainable urban investments, which is key to leveraging public and private investments towards sustainable development action.
For instance, the DBSA was one of the early funders of the City of Johannesburg’s first ever municipal Green Bond, which was issued to fund green initiatives such as low carbon infrastructure and climate change mitigation strategies. In South Africa, AFD provides budget support to metros and promotes sharing of experiences and expertise with peer municipalities on issues such as implementation of spatial transformation or climate change strategy.
Third, seek for innovative partnerships to address sustainable development. AFD and the DBSA are both members of the International Development Finance Club (IDFC), a network of 23 financial development institutions, three quarters of which are from the South.
It has total assets of more than USD 3.5 trillion and devotes more than USD 800 billion in annual funding (four times more than all multilateral development banks combined). It is indeed the third pillar of development finance, alongside the multilateral system (United Nations and Multilateral Development Banks) and private finance. In 2016, IDFC collectively contributed USD 160 billion to the fight against climate change, a significant increase since COP21.
At the One Planet Summit, we have committed, together with 30 DFIs, to align financial flows with the Paris Agreement on climate. The needs far exceed what public finance for development can provide. Development banks must play the role of "catalysts" that reorient global public and private investment, so that the trillions that are needed to transition towards sustainable development pathways start flowing.
Mr. Patrick Dlamini is CEO of the Development Bank of Southern Africa (DBSA)
Mr Rémy Rioux CEO of Agence Française de Développement (AFD).
They are also Vice-Chairs of the International Development Finance Club (IDFC)
With next year’s presidential elections on the horizon, Senegal is gripped by political and economic unrest. The recent killing of a student by a police officer during university protests over unpaid bursaries is just one tragic indicator of the upheaval, discontent and uncertainty which characterises the current climate.
Amid the turmoil, the Senegalese football team’s forthcoming participation at the 2018 FIFA World Cup in Russia presents a beacon of hope. Street vendors have begun to sell replica shirts in the national team’s white and green, and a mood of cautious optimism is unfolding.
In a country where the passion for sport is ubiquitous, a successful performance by the Lions de la Teranga at the world’s most prestigious tournament has the potential to bring momentary joy to a beleaguered population. This is precisely what happened during Senegal’s previous, and to date only, appearance at the World Cup finals in 2002.
Entering the tournament as rank outsiders, a team of relative unknowns proceeded to sensationally beat the reigning champions and overwhelming favourites France in the opening match. They then managed to advance to the quarter finals – as one of only three African teams to do so in the history of the competition.
Many of the stars of the 2002 generation went on to become household names in European club football. The likes of El Hadji Diouf, Salif Diao and Papa Bouba Diop forged successful careers in England. The events of 2002 – and in particular the hugely symbolic victory over their former colonisers – announced Senegal’s arrival as a force to be reckoned with in the global game.
Wrestling has overtaken football
However, over the next decade and a half, Senegalese football stagnated somewhat. The national team failed to qualify for any of the subsequent three World Cups, and their performance at the African Cup of Nations was largely dismal.
Meanwhile, there is widespread agreement that the hugely popular sport of traditional wrestling has overtaken football as the nation’s favoured pastime. Combats between wrestling superstars sell out vast arenas and saturate the media. The Génération 2002, as they would enter into lore, became a mythical emblem of past glories rather than the beginning of a new era of dominance.
It is only now, after several false starts, that the team – coached by the 2002 captain Aliou Cissé – promise to recapture the glory of that famous outing in Japan and Korea. In contrast to the 2002 squad, most of whom played for lesser teams in the French championship, the current crop are far from unknown.
Led by the mercurial talents of Liverpool winger Sadio Mané, the 2018 Lions boast a wealth of elite players from Europe’s leading football clubs. Kalidou Koulibaly of SSC Napoli is one of the game’s most in-demand defenders and Keita Baldé Diao is a star of the future at AS Monaco.
Midfielders Idrissa Gueye, Cheikhou Kouyaté and Badou Ndiaye are all established at English Premier League clubs. There is a genuine sense that this team can achieve something special at the World Cup, perhaps even emulating their illustrious predecessors.
Opiate of the masses
It’s often suggested, misquoting Karl Marx, that sport (and football in particular) has replaced religion as the “opiate of the masses”. It provides illusory moments of happiness while distracting from problems or hardships. Indeed, it is often proposed that sporting success can be translated into political capital, allowing a regime to appear in a positive light, or glossing over its failings.
Following this logic, it is indeed possible that a successful World Cup in Russia might be welcomed by the incumbent president Macky Sall, currently facing much opposition in his bid for reelection. Seen from a different angle, however, sports can also expose a society’s fissures and tensions.
When Cissé announced the 23 players who would form the squad in Russia, he was not only listing the names of the elite athletes who would represent the country – he was revealing much about the relationship between football and Senegalese society.
It is striking to note, for instance, that not one single member of the squad plays his club football in Senegal. Among the 32 nations participating at this year’s tournament, only Sweden are in the same position of having their entire squad playing abroad.
The squads of the other African qualifiers – Egypt, Morocco, Nigeria, and Tunisia – each include at least some players from their respective domestic leagues. Certainly, this points towards the relative weakness of the Senegalese league. It is chronically underfunded, does not usually attract large numbers of supporters and pays low wages.
Football conveyor belts
A flourishing domestic championship does not appear to be the primary aim of professional football in Senegal. It is perhaps no coincidence that two of the more successful teams in recent years have been the 2013 champions Diambars, and Génération Foot, victorious in 2017.
These clubs, set up with external assistance from sportswear giant Adidas and French club, FC Metz respectively, are academies dedicated to producing a conveyor belt of footballing talent for export to European leagues, while also pursuing educational and developmental goals.
Cissé’s selection includes a combined total of seven players who moved to Europe from these two academies, including the superstar Mané. With the increasing globalisation of football, the development and sale of talent has emerged as a lucrative industry – albeit one which has yet to contribute significantly to the development of Senegalese football at a domestic level.
Instead, there has been a proliferation of football schools and academies determined to cash in on the boom. With it, a wave of young men desperate to forge careers in European football.
While conducting a year’s fieldwork on sport aspirations in Dakar, I met countless young men who professed dreams of playing in Europe. In some cases, their families were counting on their success to lift them out of poverty, and enlisted the support of dubious agents to engineer trials and transfers. These often turned out to be scams.
This is a common story in African football – yet it reflects the economic situation within which the sport is embedded. Youth unemployment is at consistently high levels and irregular work in the informal economy often the only realistic prospect. Therefore becoming a well-paid footballer or a wrestler can seem like a worthwhile pursuit to thousands of young Senegalese men.
Many Senegalese migrate to Europe – by acquiring a visa, or by risky Mediterranean crossings. Indeed, Senegal’s long history of migration is reflected in the World Cup squad, with 10 squad members having been born in Europe, mostly in France.
Football, then, can be viewed as a prism through which to understand social phenomena. In the case of Senegal, even the announcement of the World Cup squad allows us to reflect about historical migration patterns, youth unemployment, and risks and inequalities in the global sports industries.
However, football can also bring about cohesion and togetherness. When the Lions de la Teranga face Poland in their first match in Russia, the whole Senegalese nation will be united in roaring them on to victory – and perhaps the beginning of another magical World Cup.
This article is based on research conducted as part of the GLOBALSPORT project based at the University of Amsterdam and funded by the European Research Council.