Uuumm .. that’s a toughie. But we really should know so we can drop it into conversation in a casually cool way – I always find listing the 54 African countries by GDP in 2017 makes me pretty popular – and I want to give you too the chance to gain a reputation for exciting repartee.
What do we know ? Based on the dodgy exchange rates being used in Egypt until November 2016 and in Nigeria/Ethiopia/Angola etc all year – Nigeria was the largest economy in Africa in 2016, followed by Egypt and then SA. All of Africa had a similar GDP to India, but was not as big as California. That goes a long way to explaining relative news coverage.
Source: IMF with a little help from Renaissance Capital
What about 2017 ? “We have a problem here Captain” as Scottie would have said because we just worked out that the IMF is using an average exchange rate for Nigeria of 304/$ for its GDP estimates.
Now I like the IMF resident a lot – but I think this is hard to justify. The I and E fx window rate has averaged 368/$ from 25 April to 11 October. What about Jan-Apr? Do we use the parallel market rate that hit as weak as 520/$ in early 2017, or the Naira rate quoted on Bloomberg which was 313/$ ?
In the graph below, we show both Nigeria using the IMF figure, and Nigeria using a 367/$ average. If you believe the IMF, Nigeria was number 1. If you think 367/$ is more realistic, it was number 2 and SA swept past both Egypt* and Nigeria to take number 1 slot again. Humble South Africans can once again stand tall, arm in arm with President Zuma, a man who has helped ensure per capita GDP in 2017 is not above the lofty heights it achieved in 2007. To be fair to Zuma, Brexit has helped push UK per capita GDP back to below 2006 levels. This must be a deliberate part of the UK charm offensive to rebuild links to the old Empire so that will help make Britain great again. *at least Nigeria has an IMF implied exchange rate, Egypt doesn’t let the IMF publish one, so you are relying on us for that figure
Meanwhile Ethiopia cleverly timed its devaluation until just after the IMF publication so it can lay claim to 8th place .. when the deval probably means it is 9th behind Kenya.
Source: IMF with a lot more interference from RenCap in this one
What about GDP per capita ? Nigeria, Kenya, Ghana, Ivory Coast are all in roughly the same place – just ahead of Bangladesh – with wealth levels double that of Rwanda or Uganda. Of these, Kenya, Ghana and southern Nigeria are best placed to industrialize in the same way that southern Bangladesh has.
I tested this last chart on twitter and the instant response is … “not Equatorial Guinea”. Fair enough, the average per capita GDP may bear no relation at all to GDP per person once the boss has nabbed all the oil wealth. But the point is, India is mid-way between countries like Egypt, Nigeria, Ghana and Kenya, and positive themes should be found in a few of them.
Re the Kenyan elections – what we heard at our East Africa conference is that President Kenyatta would probably win a re-run, especially if Odinga boycotted the second round.
Source: IMF, Renaissance Capital, World Bank (for Somalia population)
CONCLUSION: GDP per capita has probably bottomed now in Egypt, Nigeria and a fair few others. The next move should be up again as we enter 2018. Nigeria may have lost out to SA in terms of being the largest economy in Africa in 2017 (let’s see what happens to the ZAR by year-end) but this SA resurgence won’t last for too long. We continue to see Morocco, Egypt, Tunisia, Ghana and Kenya as among those best placed to industrialize in the coming years.
China has played a significant role in promoting development in Africa, and its Belt and Road Initiative would allow more African countries to better connect to global trade networks, several scholars told Xinhua in recent interviews.
The China-proposed Belt and Road Initiative, which aims to build a trade and infrastructure network connecting Asia with Europe and Africa along and beyond the ancient Silk Road trade routes, is a key project being implemented by the Chinese leadership to the benefit of African countries and beyond, said Kioko Mutua, a lecturer at the Institute of Development Studies at the University of Nairobi.
"For Africa, this is an opportunity to open much more to the world and let the world open to Africa," said Mutua.
In Africa, it is commonly believed that the initiative is worth supporting because it fits in well with plans by African countries to develop mega infrastructure projects, which are seen as critical to trade, especially increasing exports to the rest of the world.
"The Belt and Road Initiative is the biggest achievement amongst China's most impressive achievements in the last five years because it would shape the next phase of global trade for ages to come," said Ken Ogembo, who lectures at Kenyatta University in Kenya.
According to the Kenyan scholar, the Belt and Road Initiative stands to play a key role in balancing global trade and boost China's image in Africa.
"The coming out of China as a development partner in Africa in particular has endeared it to the people and helped to position its global image and influence," Ogembo told Xinhua.
Ogembo noted that a survey by CNN last year found that China was more popular than the United States among African students. In Kenya, a similar study revealed that more people prefer dealing with the Chinese than the Americans.
"China's overseas engagement has first led people to know who the Chinese are rather than being told, and is also portrayed as caring for the interests of Africa," Ogembo said.
While expressing appreciation for China's contribution to Africa's economic growth and social development, there is a general belief that China should play a bigger role in Africa and in global governance.
"The world expects China to do more in enhancing infrastructure overseas, providing aid to assist in combating diseases, peacekeeping and dealing with natural disasters by virtue of its growing role as a major global player," said Mutua.
Kenya’s recently annulled elections will soon be re-run, but the long-term questions they raised about election management are still unanswered. The spotlight is on the work of international observer teams, but there are also much wider questions of electoral capacity – problems that extend to the top of the African Union, and thence across the whole continent.
African democracies are in the process of co-ordinating a generation jump in applied technology. So far, they have actually done a remarkable job by global standards. After all, something like electronic voting is still not used in the UK, where people in raincoats wait patiently while someone with a pencil draws a line through their name on a paper spreadsheet. The rain-sodden voter drips into the polling booth and makes a choice, casts their vote with a pencil on a sheet of paper, and shuffles outside again while putting up an ineffectual umbrella. Nothing has changed for 100 years.
It’s Africa that has led the way – and the West isn’t the place to look for immediate answers for all the problems of running a 21st-century election. One such problem is the use of multiple forms of electronic voting. Voter identification by electronic means is given priority in Nigeria, but even there, it’s not implemented consistently: there are different systems provided by different companies, all submitting tenders on a competitive basis.
The African Union needs to devise a standard set of requirements and attributes for electronic voting across the continent. It’s no longer enough to have a protocol that says paper votes have to be placed into clear plastic ballot boxes. But the African Union has fallen behind. Its previous head, Nkosazana Dlamini-Zuma, was hardly technologically minded; in fact, her successor has apparently stressed the commission urgently needs an email system fit for purpose.
Dlamini-Zuma has now returned to line up for the presidency of her home country, South Africa, whose cabinet is renowned for its technological illiteracy. There are very few images of its current president, Jacob Zuma, working on a laptop or PC, and possibly none of him actually pressing the keys. (His next door neighbour, Zimbabwe’s Robert Mugabe, has seemingly never been pictured with a laptop at all.)
But if the presidents might have trouble sending simple emails, the thousands of local observers at each election will need special training of the sort never attempted before. They need to know not just how the system works, but how it can be made not to work – or at least, to work in ways that do not reflect the electorate’s will. Only after that does the question of international observer capacity come into play.
Mastering the system
It’s fair to say that although EU observers to Kenya were deployed far in advance of the election and had good geographical coverage, the team was not replete with electronic expertise. And it’s not as if there was no advance knowledge that this would be an electronic election.
Well before the elections began and before the EU observer team was deployed, senior members of both the EU team and the Kenyan opposition were given access to a detailed paper I prepared on the problems of electronic observation. And there was ample evidence from the 2015 Nigerian elections that these things could be bumpy rides. To be fair, electoral commissions need to upgrade their capacities as well; whatever happened in Kenya, whether wicked or incompetent, it was clear electoral officials were not on top of their game, unlike their Nigerian counterparts, who managed to resolve their problems in the end.
Electoral commissions need to open up all stages of the electronic process to knowledgeable observers, and especially the verification stage. This is where subtle algorithmic adjustments can be inserted to preserve close parity between voting patterns on the ground and “verified” results that “just” deliver very narrow victories to a ruling party.
At least electronic cheating can only really work persuasively in close elections. The days of 90% victories are almost (if not quite) over, but they will be followed a rash of elections “won” by about 2%. Margins of about 4%, as in the Kenyan elections, will have to be open to expert interrogation. As it turned out, Kenya’s elections were annulled on grounds of non-electronic irregularities, but neither the opposition nor the electoral commission seemed able to make sustained cases for or against electronic abuse.
Still, it is Africa that has come almost of age in electronic and digital voting. The West’s elections look like Sony Walkmans in the age of the smartphone. Even that comparison might be a bit flattering: in the UK, going to vote is like cranking up an LP on a turntable to 78rpm. Let’s hope Africa’s new leaders and technocrats will make the generational jump more smoothly in the future, and keep showing the creaky old West the way.
Dangote Cement ,Africa’s largest cement producer, has announced its unaudited results for the six months ended 30th June 2017, posting a 12.6 percent increase in sales volume across Africa.
In the financials released on the floor of the Nigerian Stock Exchange indicated that the increase in sales volume showed a growing capture of Pan-African market as Dangote Cement continues to gain grounds.
Revenues from operations in Nigeria increased by 34.5 percent to ?291.4 billion while Pan-Africa revenue increased by 63.7 percent to ?124.4B from ?76.0B mainly as a result of increased volumes and foreign exchange gains when converting the sales from country local currency into Naira.
Analysis of the half year result revealed that sales volumes of African operations increased by 12.6 percent to 4.7 million metric tons with Sierra Leone making a 53 kt maiden contribution.
Record of sales from its operations scattered around the African continent revealed that a total of 1.1million ‘metric tons of cement was sold in Ethiopia, almost 0.7 million metric tons sold in Senegal, 0.6 million metric tons sold in Cameroon, and 0.5 million tons in Ghana.
Also, 0.4 million metric tons of cement was sold in Tanzania and 0.3 million tons in Zambia. Sales volumes from Nigerian operations fell from 8.8Mt to 6.9Mt, occasioned by the onset of rains which stalled many construction projects.
Reflecting on the half year results, Dangote Cement’s Chief Executive Officer, Onne van der Weijde expressed satisfaction that the company’s revenues have continued to grow despite low sales from the Nigerian operations noting that the revenues grew on the strength of sales from other African operations
Said he: “Our revenues have continued to grow despite the lower volumes seen in Nigeria, especially because of the recent heavy rains. Our margins have improved significantly, helped by improved efficiencies and a much better fuel mix in Nigeria.
“We are using much more gas and increasing our use of coal mined in Nigeria, thus reducing our need for foreign currency and supporting Nigerian jobs.
”Our Pan-African operations are growing well and increasing market share. We saw our the first sales from Sierra Leone in the first quarter and our new plant in the Republic of Congo will be in production at the end of July, further increasing our footprint across Africa and strengthening our position as its leading manufacturer of cement.”
The Company reports that it estimated that Nigeria’s total market for cement was 10.2 million tonnes (Mt), 23.2% lower than the estimated 13.3Mt sold in Nigeria in the first half of 2016. Of total market sales in the first half of 2017, just 0.1Mt was imported.
“As a result of the slower market, our Nigeria operation sold nearly 6.9Mt of cement, down 21.8% on the 8.8Mt sold in the first half of 2016. We estimate our market share to have been about 64.5% during the first six months of 2017.
Dangote Cement is a high-growth, low-debt, internationally diversified company that has just paid a dividend amounting to nearly 75% of 2016 net profits to shareholders. “The recent publication of our credit ratings highlights the financial strength we have achieved through our unwavering focus on the profitable expansion of the business, underpinned by our belief that we must remain prudent in our financial management.”, Mr. Weijde stated.
Cities in sub-Saharan Africa are growing fast. Nigeria alone is projected to add 212 million urban dwellers by 2050, equivalent to the current population of Germany, France and the UK.
But focusing on population growth leads many to overlook the other unusual features of African cities. Urban economies across the region are markedly different from those of other cities around the world: they are more expensive to live in, more informal and less industrial.
In a recently published paper, we explore how these distinctive traits are increasing vulnerability.
Environmental risks range from everyday hazards such as waterborne diseases (cholera, diarrhoea, dysentery) to larger, less frequent disasters (tropical storms, flooding, fires). Their impact is much greater where people and governments can’t afford to invest in basic infrastructure.
In our research we demonstrate that African cities are too often developing in ways that perpetuate poverty and marginalisation. The amount of money that people have to spend on basic necessities, the precarious nature of their employment and their exclusion from the formal economy mean that they have limited resources to cope with environmental risk.
There are ways around these problems, but they need governments to work much more collaboratively with people living in informal settlements and working in the informal economy.
African cities are expensive
For many, African cities are inextricably linked with poverty. It therefore seems counter-intuitive that the cost of living is higher in urban Africa than in other cities in the global South.
One estimate suggests that food and drink cost 35% more in real terms in sub-Saharan African cities than in other countries, while housing is 55% more expensive.
This means that urban dwellers have to spend more of their income to enjoy the same quality of life. The average urban household in sub-Saharan Africa spends 39% to 59% of its budget on food alone.
Of course, there is considerable variation across the continent. Cities in The Gambia, Mauritania, Madagascar and Tanzania remain relatively affordable. Those in Angola, the Democratic Republic of Congo, Malawi and Mozambique are the most expensive.
The high price of basic goods and services means that people living in African cities have little money to spend on reducing risk, such as upgrading their homes, preventative health care or buying insurance.
African cities are not industrialising
Urbanisation has historically been closely linked to industrialisation. From Detroit to Manchester to Shenzhen, the rise of a vibrant manufacturing sector fuelled rapid population and economic growth in cities.
In sub-Saharan Africa, urbanisation is taking place without industrialisation.
One explanation for this unusual trend is that higher living costs mean that the labour force requires higher wages than competing cities in Asia. This makes it difficult for African cities to attract international capital.
In other cases, the export of commodities such as oil and diamonds have generated high income for a small share of people in countries such as Angola, Nigeria and Libya. The wealthy beneficiaries then create urban employment through demand for non-tradeable services such as retail, transport and construction.
Whatever the driver, urbanisation without industrialisation means that jobs and livelihoods too often remain low-skilled and poorly paid. Without the opportunity to develop skills and organise collectively, workers exert little influence over working conditions.
Instead, urban residents continue to depend on precarious livelihoods in the agricultural and services sectors. This means that they are susceptible to environmental shocks, such as extreme weather that can make it impossible for street vendors, waste pickers and other informal workers to ply their trade.
By comparison, manufacturing jobs have a number of spin offs. They offer income security and skill development. Local employers in the public and private sector benefit from new knowledge and skills, while workers can accumulate capital. This offers a path out of poverty. Few African cities are enjoying these positive spillovers.
The lack of industrialisation also means that there’s little political incentive for governments to invest in risk reducing infrastructure like sewers, drains and all weather roads.
African cities have a large informal economy
In many cities in sub-Saharan Africa, the informal economy is larger and more dynamic than the formal economy. The informal economy responds to demand when commercial banks are not willing to offer loans or when there isn’t enough housing. When formal jobs in industry or services are scarce, the informal economy absorbs much of the labour force. In Cotonou (Benin), Lomé (Togo) and Ouagadougou (Burkina Faso), for example, the informal sector accounts for over 80% of non-agricultural employment.
Yet, in many African cities, government policies discriminate against these workers. For example, street vendors and waste collectors are often banned from using public spaces. They may even suffer harassment from government officials.
Yet they play a central role in increasing the resilience of the city. Waste pickers recycle large amount of material, reducing pollution and maintain city cleanliness. This helps prevent diseases, particularly those spread by bacteria, insects and vermin that might otherwise feed or breed on garbage.
Street vendors play a critical role in providing and producing food, particularly to poor people living in urban areas.
The informal economy is not perfect. Informality creates risks for consumers and workers. A lack of state oversight makes it difficult to enforce regulation, such as water treatment standards or minimum wages. Waste pickers in particular face severe health risks due to their work. Informal housing is often in hazard prone parts of the city.
But there can be little doubt that informal service provision or informal livelihoods are better than none at all.
Successful strategies to reduce risk therefore need to be developed in collaboration with informal workers in sectors such as food, water, housing and solid waste management. Similarly, partnerships with communities living in informal settlements can ensure that the voices of vulnerable urban residents are heard, and their needs are addressed.
Only through a more flexible and inclusive approach will African cities be able to manage the risks associated with their unique economic development path.
At a bare floored restaurant on the edge of the Dja Faunal Reserve in Cameroon, I asked the owner what there was to eat. She gestured to a poster on the wall. It was an illustrated guide of 44 animal species under threat from poaching and over-hunting, but for the restaurant it served as a menu. Each animal she pointed to was available to order.
The Dja, and other forests in Central Africa’s Congo Basin, are a breadbasket for millions of people living in the region. At nearly 2 million square kilometres, the area of tropical forest in the Congo Basin is the second largest in the world after the Amazon. Besides supplying bushmeat, these forests provide building materials, medicine, wild fruits, vegetables and spices. They also regulate the local climate and flow of water, play an important role in soil conservation by retaining soil fertility and preventing erosion and cycling nutrients for crops grown under their shaded canopy. These forests are also home to thousands of endemic plant and animal species, including the okapi.
While these forests have long been threatened by logging, over-hunting, and small-scale subsistence farming, they remain mostly intact relative to other parts of the tropics like the Brazilian Amazon or Indonesia.
But there are rising concerns that trends in rapid deforestation across the Amazon and Southeast Asia could spread to Africa.
In particular, some worry that continued demand for commodity crops will lead to large-scale agricultural expansion in Africa where it’s estimated, that 50%-67% of the land suitable for agriculture is still forest.
To date, agricultural expansion in sub-Saharan Africa has mainly been driven by small-scale subsistence farmers. Yet since 2005, 22.7 million hectares of land in sub-Saharan Africa has been acquired by large-scale landholders.
We examined recent trends in domestic and export-oriented agricultural expansion in sub-Saharan Africa. Our aim was to establish whether patterns are changing and to identify countries at risk of expansion into tropical forests.
Our results indicate that although cropland expansion in sub-Saharan Africa is still dominated by production for domestic markets, there’s evidence of a growing influence of global markets on change in land use across the region. We believe it’s not too late to introduce policies that take this into account, and protect Africa’s rainforests from the same levels of destruction seen in Asia and Latin America.
Globalisation has transformed the way markets operate. Low-cost and more efficient modes of production far from consumers have supported a steady increase in international investments. As part of this trend, the availability of cheaper land and labour in the tropics is attracting investors interested in food, fibre and bio-fuel production. This pattern of land use change has resulted in tropical forests becoming frontiers of conversion for commodity crop agriculture.
By 2004, Brazil’s deforestation rate surged to over 27 thousand square kilometres of forest loss per year as a result of expanding soy fields and cattle pastures driven by global beef demands. That equates to losing a portion of the Amazon every year comparable to the size of Rwanda. As rapid policy responses led to the reduction of deforestation in Brazil, Indonesia became the country with the highest rate of deforestation in 2011. The main culprit was rapid oil palm expansion driven by global vegetable oil demands.
Africa has not yet seen these levels of agricultural expansion associated with foreign demands. But recent trends suggest it could be on the way. For example, cocoa, the fastest expanding export-oriented crop, increased at a rate of 132 thousand hectares per year across the whole continent. This amounted to 57% of the global cocoa expansion in 2000–2013.
Of particular concern is the potential threat to the Congo Basin. We found four Congo Basin countries, as well as Sierra Leone, Liberia, and Côte d’Ivoire to be most at risk in terms of deforestation from agricultural expansion. These countries average 58% forest cover with only 1% of available cropland outside forest areas. Over 80% of foreign investment in these countries was concentrated in oil palm production, with a median investment area of 41 thousand hectares.
But unlike recent trends in South America and Southeast Asia commodity crop expansion in sub-Saharan Africa does not appear to be driven by large-scale, industrial plantations – at the moment. For example, since 2000 oil palm expansion has accelerated in Cameroon, Côte d’Ivoire and the Republic of Congo. Yet our analysis on Cameroon suggests that expansion is largely driven by small- and medium-scale farmers. Over 83% of monoculture commodity crop expansion occurred outside industrial plantations.
Where this leaves the tropical forests of Africa is difficult to say. The landscape is largely intact with relatively low rates of deforestation. There is an opportunity to conserve this vital ecosystem before economic pressures push conservation out of reach.
The use of an endangered species poster as a menu illustrates the complications and trade-offs between conserving a forest for its ecosystem services and prioritising the urgent development needs of nearby communities. Additional agricultural pressures from global food demands could further complicate these trade-offs.
The report, commissioned by ICAEW and produced by partner and forecaster Oxford Economics, provides a snapshot of the region's economic performance. The report focusses specifically on Kenya, Tanzania, Ethiopia, Nigeria, Ghana, Ivory Coast, South Africa and Angola.
According to the report, the African continent accounted for 41% of Kenya's exports in 2016 while Europe and Asia each accounted for approximately a quarter of total exports. Uganda held the position of Kenya's largest
single export destination accounting for 11% of total exports during 2016.
Agricultural products such as tea and flowers made up the bulk of exports. However, whilst the country has an advantage in terms of value-added compared to regional African peers, this story is not replicated beyond Africa. Receipts from these commodities are largely determined by factors such as global commodity prices and domestic weather conditions (affecting production), and not necessarily the state of world trade.
Michael Armstrong, ICAEW Regional Director, Middle East, Africa and South Asia said: "Kenya stands to benefit from stronger growth in the East Africa region as it is well positioned to take advantage of rising demand for manufactured goods. Furthermore, its location and relatively developed transport infrastructure will allow the country to act as the gateway into the East Africa region."
The EAC is considered the most progressive trade bloc in Africa. Collaboration on regional infrastructure has reached a level rarely seen on the continent with construction of the $26bn Lamu Port - Southern Sudan - Ethiopia Transport (LAPSSET) corridor underway. Furthermore, a Single Customs Territory (SCT) system will take effect across the EAC from July 31, facilitating trade between member states by electronically connecting countries' custom clearance systems. A pilot programme involving certain goods and entry points has generated positive results, and if implemented successfully, the SCT could significantly stimulate trade in the region by reducing the cost of doing business.
However, the bloc is not without its challenges as the United Nations Economic Commission for Africa (UNECA) recently cautioned against the signing of the Economic Partnership Agreement (EPA) between the EAC and the European Union (EU) in its current form, which does not bode well for the EPA's implementation. Kenya stands to lose the most without the agreement as it is not classified as a least-developed country, it would not receive duty-free and quota-free access under the EU's Everything-But-Arms initiative.
Non-tariff barriers are another major concern for EAC member states. A monitoring tool identified 19 non-tariff barriers that remain unresolved, ranging from restrictions on Kenyan beef exports to Uganda, to the requirement that companies exporting to Tanzania should register, re-label and retest goods already certified by other partner states.
More than 70% of Africa’s population depends on subsistence agriculture for food, jobs and income. The continent has immense potential to feed itself and the world – it’s home to over 60% of the world’s uncultivated arable land. But this potential isn’t being realised.
Africa is a net food importer. Imports are expected to increase from USD$39 billion in 2016 to over USD$110 billion by 2025.
Food production is desperately low in the region. This is largely because of poorly developed farming technologies which drive rain fed farming practices. On top of this is the fact that there are poorly developed climate and weather alert systems to help farmers plan for crop seasons and adopt better ways of farming.
Farmers can’t access reliable and usable weather data. Information is often unavailable and even if it does exist, the quality is poor or it’s inaccessible to those who need it most. Farmers don’t get efficient information on drought forecasts, rainfall distribution and pest outbreaks.
This is because African governments and development agencies don’t understand and prioritise the value of climate and weather data. This has stifled investment in infrastructure and proper functioning of state institutions charged with collecting and serving climate and weather data.
There are funds that African governments can tap into. One example is the Green Climate Fund adopted in 2011 as the funding arm of the United Nations Framework Convention on Climate Change. It has raised USD$10.2 billion to finance adaptation and mitigation projects and programmes in developing countries.
For the fund to deliver on its potential, it must finance infrastructure on basic meteorological observations, for example, to generate climate and weather data fit for agricultural purposes. This will provide a boost for farmers’ ability to withstand dry and rainy seasons and to adopt the correct farming practice.
Africa needs to acknowledge and welcome the role of the private sector too. Without its investment Africa won’t be able to bridge the massive gap in infrastructure needed to collect reliable data, and to make it easily available. But that would mean sharing what data there is. A major rethink of how this is viewed is long overdue.
A lack of data
In the horn of Africa farmers in Somalia are grappling with droughts and poor rainy seasons. This has affected food production, making more than 5 million people food insecure. These farmers have no knowledge of how long and how intense the droughts will be. Information like this would help them decide when to plant and harvest.
In Cote d’Ivoire, cocoa farmers live in fear of heavy downpours in the rainy season which can lead to their farms flooding. This is a major threat to cocoa which accounts for 20% of the country’s gross domestic product. Around 5 million people depend on the cocoa industry.
If farmers were warned about intense rainfall they could take action to try and mitigate the risks. For example, those in low-lying areas could enhance soil structure to improve water filtration in times of flooding.
The National Meteorological and Hydrological Services is mandated by national laws and recognised in the Convention of the World Meteorological Organization.. Its aim is to collect and serve meteorological and hydrological forecasting and warning systems at country level. But it operates well below capacity in several African countries because of under funding and low visibility.
In Africa, about 80% of the data from the meteorological service is unable to provide proper climate information and early warnings. This is as a result of decades of neglect by governments. It is worse in Africa than anywhere else in the world because massive investment and modernisation is needed.
Some African countries have a small number of operational meteorological stations to make important data available. In the Omo-Gibe region of Ethiopia, for example, hydrological equipment was installed three years ago by the government and the UN Economic Commission for Africa.
But the World Metrological Organization estimates that an additional 4000 to 5000 basic meteorological observations are needed across the continent. The World Bank estimates that about USD$1 billion is needed to modernise Africa’s meteorological services. It also estimates that a minimum of USD$400 million to USD$500 million per year will be needed to support modernised systems, including staff costs and operating and maintenance costs.
The private sector could play a role
Governments don’t have the capacity and expertise to provide complete solutions, particularly when it comes to the investment needed. They will require partnerships in the agriculture, insurance and telecommunication sectors. These partnerships are necessary for the collection and the delivery of data and for critical services including risk analysis, commodity prices, insurance and secure payment schemes.
There are good examples of innovative solutions being put in place. ECONET, a local mobile phone operator in Zimbabwe, recently started a large scale weather-indexed insurance for farmers in Zimbabwe, known as Ecofarmer. The service has benefited 900,000 farmers so far.
Strong political support is needed to increase smart systems through partnerships – between national authorities, technical agencies, non-governmental organisations and the private sector.
But, most importantly, African governments must invest in modernising their weather and climate data. And they must forge strong partnerships with private companies and businesses.
Recent years have seen the international business community look to the promise of growth through doing business in Africa, the world’s last frontier for the development of new business opportunities. The previous focus on China as the place to be is now waning, and the new concentration on Africa is evident.
However, there are major risks for businesses in an emerging market environment such as the countries in sub-Saharan Africa. Two of the most significant are the fluctuations in the value of local currencies against international currencies like the US Dollar, and the dependency many states in Africa have traditionally had on commodities.
When commodity prices fall, currency volatility often also hits the country; this explains the instability of recent years in the currencies of countries like South Africa, Zambia, Ghana, Angola and Nigeria. But, when a country pegs its currency to an international currency, as is the case in some Francophone states in West Africa, which are pegged against the Euro, currency instability is less likely to arise.
Countries like Angola – worldwide, the state with the second least-diversified economy - and Nigeria have in recent years experienced the risk associated with a single focus in the economy, and their economies have not shown the growth experienced in earlier times. The International Monetary Fund (IMF), for instance, reported in early 2016 that oil-producing economies in Africa were likely to experience just 2¼% growth, a significant drop from the 6% growth experienced in 2014.
This comes as a result of the dramatic drop in the international oil price and slowing demand for oil – in fact, last year saw the lowest oil price in 20 years.
Many states in Africa are beginning to realise the value of moving away from a single focus in their economies. So, although it’s the region’s biggest oil exporter, Nigeria has significantly diversified its economy, with construction, film, services, transport and retail playing a big role in the country’s GDP.
As the IMF indicated in 2016, ‘medium-term growth prospects remain favourable’ in many parts of the continent, largely because the factors that facilitate growth, like the improved business environment, remain in place. Those more open to private sector involvement – such as in Rwanda, Kenya and Nigeria – have seen the growth of a wealthier middle class, and these are people with the means and the need to travel.
The value of local businesses partnering with global corporations must also be highlighted: the local partner’s understanding of the business environment and legal issues in the country will certainly assist the corporation to establish itself in the country. A significant issue for the hospitality sector is the huge size of the population on the continent, as well as in the growth of a middle class in some states.
So, while both currency fluctuations and a sustained low oil price are factors of concern, there are other signs that suggest economic growth potential, and consequently make countries attractive to international hospitality groups. The Harvard Business Review has highlighted the resilience of an economy as a gauge for international business investors. A range of factors point to a resilient economy: strong human capital; stable democratic systems; low dependence on commodities, as is the case in East Africa; and the strength of regional currencies that are pegged to an international currency. In addition, the huge size of the population on the continent suggests great potential for future business.
Marriott International takes a range of factors into account when planning its expansion on the continent – not low commodity prices or currency fluctuations only. It aims to have a presence in 18 sub-Saharan states by 2025, and these locations are mostly those identified as having resilient economies with GDP growth of over 3% per annum, and offering good potential for business going forward. Over the next five years, 65 new hotels will be built across countries like Nigeria, Ghana, South Africa, Uganda, Kenya, Madagascar, Mauritius, Senegal, Gabon and Rwanda.
So, despite some challenges for the business environment in Africa, the future remains positive, and the hotel industry is certainly poised for growth on the continent.
- By Danny Bryer, Area Director of Sales, Marketing and Revenue Management at Protea Hotels by Marriott®.
The questions that I get asked most often by students, policy makers and political leaders are: “can democracy work in Africa?” and “is Africa becoming more democratic?”.
As we celebrate Africa Day and reflect on how far the continent has come since the Organisation of African Unity was founded in 1963, it seems like a good time to share my response.
Some people who ask these questions assume that the answer will be “no”, because they are thinking of the rise of authoritarian abuses in places like Burundi and Zambia. Others assume that the answer is “yes” because they remember recent transfers of power in Gambia, Ghana and Nigeria.
Overall trends on the continent can be read in a way that supports both conclusions. On the one hand, the average quality of civil liberties has declined every year for the last decade. On the other, the number of African states in which the government has been defeated at the ballot box has increased from a handful in the mid 1990s to 19.
To explain this discrepancy, I suggest that we need to approach the issue a little differently. Instead of focusing on the last two or three elections, or Africa-wide averages, we need to look at whether democratic institutions such as term-limits and elections are starting to work as intended. This tells us much more about whether democratic procedures are starting to become entrenched, and hence how contemporary struggles for power are likely to play out.
When we approach the issue in this way it becomes clear that democracy can work in Africa – but that this does not mean that it always will.
The rules of the game
Democracies are governed by many different sets of regulations, but two of the most important are presidential term-limits and the need to hold free and fair elections. Because these rules have the capacity to remove presidents and governments from power, they represent a litmus test of the strength of democratic institutions and the commitment of political leaders to democratic principles.
So how are these institutions faring? Let us start with elections. Back in the late 1980s only Botswana, Gambia and Mauritius held relatively open multiparty elections. Today, almost every state bar Eritrea holds elections of some form. However, while this represents a remarkable turn of events, the average quality of these elections is low. According to the National Elections Across Democracy and Autocracy dataset, on a 1-10 scale in which 10 is the best score possible, African elections average just over 5.
As a result, opposition parties have to compete for power with one hand tied behind their backs. This helps to explain why African presidents win 88% of the elections that they contest. On this basis, it doesn’t look like democracy is working very well at all.