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Alpha Blondy, February 5, 2013 in
The Myth of Africa's Rise!
BY RICK ROWDEN
Why the rumors of Africa's explosive growth have been greatly exaggerated.
Recent high growth rates and increased foreign investment in Africa have given rise to the popular idea that the continent may well be on track to become the next global economic powerhouse. This "Africa Rising" narrative has been most prominently presented in recent cover stories by Time Magazine and The Economist. Yet both publications are wrong in their analysis of Africa's developmental prospects -- and the reasons they're wrong speak volumes about the problematic way national economic development has come to be understood in the age of globalization.
Both articles use unhelpful indicators to gauge Africa's development. They looked to Africa's recent high GDP growth rates, rising per capita incomes, and the explosive growth of mobile phones and mobile phone banking as evidence that Africa is "developing." Time referred to the growth in sectors such as tourism, retail, and banking, and also cited countries with new discoveries of oil and gas reserves. The Economist pointed to the growth in the number of African billionaires and the increase in Africa's trade with the rest of the world.
But these indicators only give a partial picture of how well development is going -- at least as the term has been understood over the last few centuries. From late 15th century England all the way up to the East Asian Tigers of recent renown, development has generally been taken as a synonym for "industrialization." Rich countries figured out long ago, if economies are not moving out of dead-end activities that only provide diminishing returns over time (primary agriculture and extractive activities such as mining, logging, and fisheries), and into activities that provide increasing returns over time (manufacturing and services), then you can't really say they are developing.
AFRICA BY THE AFRICANS: Young Tastemakers Aim to Challenge Stereotypes
Nana Ekua Brew-Hammond catches up with a few of the influencers determined to change the global image of the continent.
The stereotypes about Africa/Africans are too many to list here. They’re mostly negative, myopic depictions that focus on war, famine, abject poverty, disease, and corruption. In other oversimplifications, Africans are written up as model immigrants, overachieving geniuses, or displaced chiefs moonlighting as gas station attendants.
Outside of these caricatures, many Africans are going to work and school, voting in their local elections, and spending way too much time on Facebook. And they’re over the ignorance that has collectively miscast them. In response, a swelling movement of young Africans are launching concerted efforts to wrest the image of Africa from entities and interests that don’t promote a balanced understanding of the continent.
Among this group is South African professor Sean Jacobs who founded the incisive Africa is a Country, billing it as “the media blog that's not about famine, Bono, or Barack Obama.” Ghanaians Sandra Appiah and Isaac O. Babu-Boateng launched Face 2 Face Africa Magazine to combat portrayals of Africa as pathological and troubled.
Likewise, Nigerian-American Enyinne Owunwanne started ecommerce boutique Heritage 1960 to promote what she says is “the best of the best, when it comes to African fashion, lifestyle and culture”. Fellow Nigerian-American Ngozi Odita initiated AFRIKA21 to broaden the conversation around what 21st century Africa really looks like, apart from the stereotypes.
It’s weird how history repeats itself.
56 years ago, Kwame Nkrumah led Ghana to Independence from British colonial rule determined to “prove to the world that when the African is given the chance, he can show to the world that he is somebody”. This legacy of the misrepresented African was formed more than 200 years prior, when Europe and, later, America made the mad dash to Africa for natural resources and cheap labor to keep pace with the demands of the West’s rapidly industrializing economy. Today, as American and European economies flounder in the global recession, scarcity of jobs/opportunities coupled with forecasts of Africa’s economic growth is making Africa look really shiny again.
Discovery Channel’s “Jungle Gold” reality series depicts “rookie American gold miners” seeking their fortunes in “the dangerous and gold-rich jungles of Ghana” after losing everything in the 2008 real estate crash. The Washington Post recently noted a wave of Portuguese citizens heading to Mozambique, quoting one Portuguese official as saying, “Everyone is feeling the pinch of the economic crisis, and Mozambique offers a lot of opportunities… People think this is El Dorado.”
The fashion industry is also taking serious interest in not only the styles popular on the continent, but in creating strategic business alliances as well. In 2012, for the first time Mercedes-Benz Fashion Week sponsored African Fashion International’s annual event in South Africa. Likewise, Vogue Italia co-sponsored the inaugural Ghana Fashion and Design Week. Editor-in-chief Franca Sozzani reportedly “initiated distribution of African fashion products through shops in Europe and America as well as through QVC” as a UN Goodwill Ambassador of Fashion 4 Development.
Under Sozzani L’Uomo Vogue dedicated its June 2012 issue to the continent, the cover line assuming responsibility for “Rebranding Africa.” Sozzani explained in a Huffington Post piece about the issue: “Africa needs to rebuild a new image, far removed from the one the media usually convey reporting on wars and famines that, although actually occurring, are not the only side to show.”
What’s different about this juncture in history as it relates to the renewed global interest in Africa is Africans can far more easily shut down foreign assumptions and misinformed initiatives even as they create their own platforms to define the continent, and themselves, on their own terms.
When L’Uomo Vogue’s issue hit stands, Jacobs’ Africa is a Country published a scathing review. Calling the issue “an embarrassing and insulting shambles,” the blog post systematically, and convincingly, undermined the “Rebranding Africa” premise.
“I have to say I hate that phrase, ‘rebranding Africa,’” entrepreneur Owunwanne, 31, expressed. She explains, “You look at people who thought Africa was all about famine, war, AIDS, etcetera; and it’s from their perspective that Africa needs to be rebranded. Now, you look at Afropolitans,” Owunwanne continues, using a term that has referred to young cosmopolitan Africans, “we don’t feel like Africa has to be rebranded. We already know what the brand of Africa is and what the potential is.”
Ghanaian Samuel Asiedu-Gyan* who promotes literature and technology in the West African nation and works with election blogging project Ghana Decides echoes Owunwanne’s sentiment. “Those who branded us must do their rebranding,” he says, “for the obvious reasons that the negatives and deliberate misconstructions are falling apart.”
Whatever the motives behind the desire to rebrand, it’s hard to deny the stubbornness of the stereotypes that have come to define Africa on the global stage. For this reason, New York-based Appiah and Babu-Boateng launched Face 2 Face Africa Magazine, embracing “Africa Re-branded” as their tagline.
“When we say ‘rebranding Africa,’” Appiah, 23, clarifies, “it’s not just…rebranding Africa to non-Africans, but to Africans ourselves.” Citing her personal evolution, Appiah who was born in Ghana and lived in Italy as a small child before moving to the States when she was 12 admits, “I was completely ashamed of being African, and there are a lot of people today who are also going through the same stages. There are a lot of Africans here who don’t want anything to do with the continent.”
With the magazine, Appiah hopes to give young readers in particular a view of Africa they can be proud of. “We want to start by instilling a sense of pride in them so that they can see the necessity and the need for them to go back to the continent and help solve some of the issues there.”
For many Africans, there’s more at stake than proving to the world Africa can solve her own problems. Eager to deepen the connection between their parents’ birthplace and take advantage of the continent’s growth potential, the first-generation of Africans born outside the continent are starting to return in waves. Meanwhile, Africans living in Africa want to stay and improve conditions.
Odita, who is producing the upcoming Social Media Week Lagos, has observed the shift over time. Recounting trips to her family’s native Nigeria in the ‘90s, she says “All my cousins, people I knew, friends, everybody was just wanting to exit Africa. They were just like ‘I want to go to school in America. I want to go to school in UK. I wanna leave. As soon as I’m old enough, if I can get a visa, I’m leaving.’” She adds, “Now, when I go home, and when I go other places, whether it’s Dakar or just talking to other people, …young people are just very prideful of where they’re from.”
With the Lagos social media conference and her AFRIKA21 program, Odita, 37, wants to offer platforms that showcase and extend this pride. “I’m always bringing people together to talk about how great the continent is and all the really great things that are happening, but we’re doing it in New York or we’re doing it in Boston. …we should be having this conversation on the continent ‘cause that’s where all these things are happening that we’re talking about. We can get a firsthand account from the people who are creating all these things.”
Desire to focus on Africa’s positives notwithstanding, neither Odita or the others interviewed for this piece are about ignoring the challenges impacting the continent. But, Odita points out, “the only way that you can change people’s perceptions is to show them another perspective. Show them another image, and that’s what branding is.”
Asiedu-Gyan says it comes down to fairness in news coverage. “Europeans have negatives,” he points out. “There are homeless, hungry people living on less than two dollars a day in the United States, how often do we read or watch that on CNN or BBC?”
Diaspora bonds: some lessons for African countries
Abstract: This economic brief draws out lessons from the most publicized Diaspora bond issuances globally – that of Israel, India and Ethiopia with the aim of exploring their applicability to the African context. It intends to provide insight to potential African issuers on what aspects to ponder prior to issuance. This economic brief concludes that Diaspora bonds are an important fundraising vehicle but that critical to their success in Africa are both soft and hard factors: intensive marketing based on disaggregated data on the Diaspora and credit enhancement to entice investors and reduce risk perception. In this regard, development finance institutions such as the African Development Bank have a critical role to play in providing statistical data, advisory services and risk mitigating financial instruments to help African countries realize their aspirations to issue.
This economic brief draws out lessons from the most publicized Diaspora bond issuances globally – that of Israel, India and Ethiopia with the aim of exploring their applicability to the African context. It intends to provide insight to potential African issuers on what aspects to ponder prior to issuance. This economic brief concludes that Diaspora bonds are an important fundraising vehicle but that critical to their success in Africa are both soft and hard factors: intensive marketing based on disaggregated data on the Diaspora and credit enhancement to entice investors and reduce risk perception.
In this regard, development finance institutions such as the African Development Bank have a critical role to play in providing statistical data, advisory services and risk mitigating financial instruments to help African countries realize their aspirations to issue.
The Bank recognizes that by default and by design, traditional methods of raising finance domestically are losing influence. We have to conceive of new ways of financing development, and can no longer depend on a limited envelope. Given the shifting patterns in development finance and traditional donor funding, domestic resource mobilization efforts are getting renewed focus. There is a need to develop new instruments to ensure financing for growth enhancing projects on the continent. Diaspora bonds are one way in which this can be achieved. In particular, these bonds can be used to underwrite infrastructure projects which will have the greatest transformational impact to the continent.
The experience of the major Diaspora bond issuers, namely Israel, India and Ethiopia provides many lessons to be learnt, some of which are applicable to African countries and some which instruct potential issuers on challenges to avoid. It is clear that African countries will need robust analytics on their Diaspora members, credit enhancements to entice overseas nationals to invest and trustworthy government institutions which protect the interest of the bondholders.
The Bank’s currently available instruments including Trust Funds and Guarantees as well as its interest to co-finance physical projects or private equity funds are just a few of the ways the Bank can add to the momentum of leveraging African migrant resources for development. Remittances are a powerful tool the African continent must use to expand the overall resources at its disposal. As such, the African Development Bank remains the continent’s partner in accessing the benefits of Diaspora bond issuance.
An African Summer?
George Ayittey, president of the Free Africa Foundation compares the Arab Spring with Africa's village revolutions in the 1990s and explains what is needed to make democracy sustainable.
After the Arab Spring erupted in North Africa in the Spring of 2011, there was widespread speculation that it will spread to sub-Saharan Africa. Indeed, it sparked sporadic street protests in Angola, Burkina Faso, Cameroon, Sudan and several other African countries. But they quickly fizzled -- thanks to brutal crack-down by security forces. Actually, sub-Saharan Africa’s “Village Revolutions” in the early 1990s pre-dates the Arab Spring but since the outcomes are strikingly similar, it would be more useful to compare the two and ascertain what lessons can be earned from them.
During the struggle against colonialism, African nationalist leaders made democracy their rallying cry and demanded its establishment across Africa. But suddenly after independence in the 1960s, the same nationalist leaders rejected democracy as a “Western institution.” Kwame Nkrumah of Ghana, for example, dismissed it as “imperialist dogma.” They then proceeded to establish Soviet-style one-party socialist state systems and declare themselves “presidents-for-life.” Statues of Marx and Lenin graced the capitals of Angola, Benin, Ethiopia, and Mozambique. In 1990, just 4 of 53 African countries were democratic.
After the collapse of the former Soviet Union in 1989, Africa’s emperors suddenly found themselves with no clothes. “Village revolutions” swept across Africa, toppling many of them. From 1990, ordinary Africans, including women with babies strapped to their backs, braved bullets and staged street demonstrations, demanding democratic pluralism and resignations of their presidents. Dictators met the protesters with tear gas, stun grenades, arrests, kidnappings, bullets and curfews. But the revolutionary ferment, which began in Benin, spread to Cape Verde Islands, Mali, Malawi, Togo, Zaire, Zambia and eventually ending in South Africa with the election of Nelson Mandela in 1994.
In all, Africa’s village revolutions produced six outcomes:
1. Peaceful, non-violent transition to democracy: Benin (1991), Cape Verde Islands (1992), Sao Tome & Principe (1992), South Africa (1994) and Zambia (1991);
2. Ferocious resistance to change, resulting in civil war and carnage: Somalia (1991), Burundi (1993), Rwanda (1994), Zaire (now Congo DR, 1996);
3. Successful ouster of dictators but subsequent hijacking of revolutions by groups that were not part of the revolution: Ivory Coast (1992), Nigeria (1993), Tanzania (1995);
4. Reversals of the revolution with dictators replaced by crocodile liberators: Ethiopia (Mengistu Haile Mariam by Meles Zenawi, 1991), Gambia (Dawda Jawara by Yahya Jammeh, 1994), Liberia (Samuel Doe by Charles Taylor, 1990), Niger (Mahamane Ousmane by Gen. Ibrahim Mainassara, 1996), Sierra Leone (Gen. Joseph Momoh by Capt. Valentine Strasser, 1992) and Uganda (Milton Obote by Yoweri Museveni,1986);
5. Ousted dictators clawed their way back to power: Benin (Mathieu Kerekou, 1996), Congo-Brazzaville (Denis Sassou-Nguesso, 1997), Madagascar (Didier Ratsiraka, 1996);
6. Dictators learned new tricks to beat back the democratic challenge: Angola, Burkina Faso, Chad, Cameroon, Ghana, Sudan, Togo and Zimbabwe.
Only the first of the six was desirable. The rest produced a serious set-back for the democratic struggle and a descent into chaos and civil wars. Black Africa’s village revolutions were marginally successful. The number of democracies increased from 4 in 1990 to 12 in 2004 and has remains stubbornly stuck at 15 today. Africa is still not free.
A few lessons can be drawn from Africa’s Village Revolutions that can be discerned elsewhere. First, not all revolutions succeed. The Iranian 2009 Green Revolution flopped; the 2005 Cedar Revolution of Lebanon self-immolated and the flower revolutions in Eastern Europe wilted. Second, not all revolutions produce desired outcomes. They can be hijacked – as has been the case in Tunisia and Egypt, They were started by the youth but have been hijacked by senile clerics, some in exile for decades. Libya is fractured and in turmoil while the horrific slaughter of civilians by Syria’s Bashar al-Assad continues; over 60,000 dead so far. Elsewhere, a deadly stand-off has settled in Yemen and Bahrain.
Third, toppling a dictator is only the first step in establishing a free society. The next step is dismantling the dictatorship itself. It is analogous to having a bad driver with a defective vehicle. After sacking the driver, the vehicle itself must be fixed; else the new driver would land in a ditch. In far too many countries, the second step was either not attempted, debauched or manhandled, which leads to a reversal or hijacking of the revolution. Sub-Saharan or Black Africa’s village revolutions in the early 1990s, which occurred in over 40 countries, provide a treasure trove of revealing insights as to why some succeed while others fail.
Four factors determined their success or failure: The receptivity of the dictator to change; the body managing the transition; duration of the transition process; and implementation of constitutional and institutional reform.
Much bloodshed was avoided when dictators accepted the need for change and the transition was managed by a broadly representative body. For example, Benin's 9-day "sovereign national conference" in Feb 1990 convened with 488 delegates, representing the broad spectrum of Beninois society and elections were held in 1991. South Africa employed the same vehicle – Convention for a Democratic South Africa or CODESA – in July 1991, with 228 delegates andculminated in the election of Nelson Mandela in March 1994. [For the Arab Spring, a Grand Majlis or a Loya Jirga as was the case for Afghanistan in 2003, would be more appropriate.]
Third, a hasty transition period proved counter-productive. It took the US 13 years (1776-1789) to transition from independence to democratic rule. South Africa took three years. A short transition period – say, 6 months – does not give new parties time to organize while giving old opposition parties an edge – as occurred in Tunisia and Egypt.
Finally, after the transition a whole battery of reforms must be implemented. Dictators manipulated the Constitution and packed all key state institutions with his supporters and cronies. For a revolution to be sustained, the constitution must be revamped and institutions cleansed of the “nomenklatura.” Sadly, in many countries, real reforms were not implemented, allowing the return of authoritarianism: Ethiopia (under Meles Zenawi), Liberia (under Charles Taylor), Uganda (under Yoweri Museveni), Russia (under Putin), Kyrgyzstan(under Kurmanbek Bakiyev), Georgia (under Mikhail Saakashvili) and Ukraine (under Viktor Yanukovich).
In all cases, however, one lesson stands clear: Wherever the transition was managed by the military or a rebel group, the outcome was disastrous: Military dictators simply manipulated the process, created their own parties (Ghana, Uganda and Myanmar),shooed in their favorite parties (Mali, Nigeria) or “civilianized” themselves by shedding military uniforms and donning civilian clothes (Burkina Faso, Chad, Gambia, Ghana, Niger). Nigeria’s transition by its military dictators was the most egregious.
General Ibrahim Babangida began the transition in 1985. After frequent interruptions and devious maneuvers, he created exactly two parties for Nigeria in 1992 because the US has two major parties. Then he wrote their manifestoes too: “One a little to the left, the other a little to the right.” And when the June 12, 1993 presidential elections produced a winner he did not like, he annulled the elections altogether.
Next to manage the transition was General Sani Abacha. He called a Constitutional Conference in 1994 with 396 delegates, who were "guests of the military." A fourth of their number (96) was selected by himself. When in 1997 he finally allowed five political parties to be registered, they all immediately chose him as their presidential candidate!
General Abdulsalam Abubakar was the next to attempt constitutional engineering but he played “hide and seek” with the exercise. For Nigeria’s 1999 transition to democracy, he had TWO Constitutions prepared and held them closely to his chest. Which to release depended upon the election results. If the results went one way, Constitution A would be released; if they went the other way, Constitution B would be released. Thus, Nigerians went to the polls in March 1999 without knowing whether or not there was a Constitution, nor its contents.
The outlandish chicanery was matched by Myanmar’s (Burma’s) military junta of Than Shwe in 2010. The military wrote the Constitution, reserved a quarter of the seats in national and local assemblies for itself, created its own party, Union Solidary and Development Party (USDP), and blocked other parties from participating in the Nov 7, 2010 elections. Then three days before the vote, it declared “victory.” Similarly in Egypt, the Supreme Council of the Armed Forced (SCAF) so bungled the transition that street protesters are now demanding its resignation.
It is tough to start a revolution and topple a dictator. Formidable still is managing the transition and implementing reforms. Bungling either allows crocodile liberators and quack revolutionaries to take over. As Africans are wont of lamenting, “We struggle very hard to remove one cockroach from power and the next rat comes to do the same thing. Haba! (Darn!).
The hypocrisy of "aid" to Africa (there's a reason the fiercest defenders of aid are invariably white) by Siji Jabbar
Does it piss you off the way Africa is written about in connection with development aid? It does me. It's not so much the mere fact of writing about Africa and aid that does it, but more the way Africa is portrayed as a continent whose inhabitants survive purely on the benevolence and generosity of the West, continent as bottomless pit, a place that takes and takes and takes, and what is omitted from this portrayal of Africa.
Development aid ought to be criticised and phased out, but it's annoying when critics take aim at the wrong target. It's even more annoying when the critic is African. The most recent article I came across on the subject was a one republished here and here with the title: "Why Western Aid to Africa Is a Waste".
I'll take a look at what's left out of most articles about aid-to-Africa in a minute, but first a brief look at an idea put forward in the article that does a huge disservice to Africans. The idea is that Western donors come from societies that have scaled Maslow's hierarchy of needs, and now exist at the very top where the only needs they're concerned about are those of self-actualisation, whereas Africans are at the bottom of the pyramid, struggling to satisfy their basic needs of food, water, shelter and warmth, needs Western donors haven't had to think about in a long time.
This is to write about Europeans and Africans as homogeneous masses, rich Westerners, poor Africans. Aside from the argument that people tend to span multiple layers of the hierarchy at the same time, Google shocking poverty in Europe and you will quickly discover that there are millions of Europeans who have a lot more on their minds than self-actualisation. But even more dangerously misleading is the idea that all or most Africans exist at the lowest level of Maslow's hierarchy of needs, all struggling desperately to survive, so that Western donors and their development projects are "attempting to pull peasant minds still grappling with physiological needs up to self-actualization when they haven't yet figured out how to achieve safety, love/belonging or self-esteem."
It is because of writing like this that many people I have come across in Europe find it hard to grasp the idea of a socio-economically diverse African population, and even harder to believe there are ordinary middle class people in Africa with similar concerns and a similar sense of responsibility to that of middle class people elsewhere in the world (and I'm not talking about the Africa Bank of Development's patronising redefinition of "middle class" as those spending between $2 and $20 per day. Just normal middle class people who have been to university, hold down regular jobs, occasionally go on vacations and worry about getting their kids into good schools.). In the last few decades, the size of this middle class has contracted and expanded with the fortunes of the different countries on the continent, and when things have gotten particularly bad in any country, those who could leave did so, but the class does exist, and didn't just spring into existence with the publication of that Africa Bank of Development report.
When Europeans encounter Africans abroad, do they think we'll all refugees? I imagine some must. On some occasions when I've reminisced about my own childhood, I've been told I must have been among the "upper class", whatever that is. All the middle class professionals, the doctors, engineers, architects, university lecturers and professors, lawyers, all these people don't exist in the minds of many people outside Africa because they did not grow up on a media diet that depicted such Africans. Thus, outside of the music pages, Africans are either desperately poor, helpless, gullible and easily exploited, or they're obscenely rich because they're corrupt. Europeans and Westerners may be seeing a wider variety of Africans in their newspapers and magazines since the Economist published its mea culpa in 2011 and "Africa Rising" became the new mantra, but it's probably going to take another couple of decades of balanced representation of Africans in the international media (and in popular culture) for the conditioning to be checked and reversed.
Okay, let's talk about development aid.
Development aid is not free money
There's a type of argument known as 'Proof by assertion'. It is an argument in which a proposition is repeatedly restated regardless of contradiction, and continues to be repeated until challenges dry up and the assertion is accepted as truth, even if it is a lie. That's what has happened to the aid-to-Africa story. It has been told and keeps being told in a way that seems calculated to paint a false picture of Africa and its relation to aid. And this is what the blog post about Western aid being a waste is guilty of.
When a European or American grows up hearing and reading about aid to Africa, year in year out, it's understandable if this repeated association affects the way they see Africans, in the abstract or in day-to-day life. I wonder if it's a continuous source of bafflement to such individuals that no African they meet ever appears grateful for all this money given to Africa by generous Westerners. Or maybe Europeans believe they shouldn't expect gratitude because the money is a form of penance for the sins visited on Africans by their forefathers.
The word "aid" itself is a misnomer, hiding the fact that development aid is not free money. When you read articles like this one in Forbes magazine, you are led to believe it's free, but it isn't. Unfortunately, this is the way aid is usually written about, so people in the West (but also in Africa) think their respective governments are "giving" Africa and other developing regions money to waste as they desire because, I don't know, Westerners are too generous for their own good or something. It's a nice story, and no doubt, it makes people in "donor" countries feel good about themselves. But it's not quite true.
Here's Dambisa Moyo (author of Dead Aid) writing in the Wall Street Journal: Even after the very aggressive debt-relief campaigns in the 1990s, African countries still pay close to $20 billion in debt repayments per annum, a stark reminder that aid is not free. In order to keep the system going, debt is repaid at the expense of African education and health care. Well-meaning calls to cancel debt mean little when the cancellation is met with the fresh infusion of aid, and the vicious cycle starts up once again.
By the 1980s, money was being lent to countries all over the world. High interest rates were increasing to levels where debts became impossible to pay. “Almost inevitably, higher international interest rates led to worldwide recession” (Moyo, 2009, p.18). As countries were defaulting their loans, the only solution seemed to be through restructuring the debt owed. Since government involvement was perceived to be the cause of growth decline, privatized institutions such as the IMF’s Structural Adjustment Facility provided more loans to countries to pay off previous debts.
CONTINUE READING.....................HERE http://www.thisisafrica.me/opinion/detail/19902/the-hypocrisy-of-aid-to-africa-there-s-a-reason-the-fiercest-defenders-of-aid-are-invariably-white#.UafzL1_3sgA.facebook
'Africapitalism' promises new model of African self-empowerment
Continent's investors increasingly drawn to development model based on using private-sector investment to stimulate growth.
For investors seeking profits, Africa is impossible to ignore. Sub-Saharan Africa has six of the world's 10 fastest-growing economies over the past decade; glossy conferences, heads of state, and private funds all tout the huge returns possible for investing money on the continent.
But now key figures in the private sector are advocating new models of "philanthropic investment". "Africapitalism", as one African billionaire has called it – also known as "venture philanthropy" and "philanthro-capitalism" – combines unashamedly for-profit investment and free-market capitalism with the objective of stimulating economic development. Some proponents say that, properly handled, the model could overtake aid as the main way of alleviating poverty. "Africapitalism is the philosophy that the African private sector has the power to transform the continent through long-term investments, creating both economic prosperity and social wealth," said Tony Elumelu, the Nigerian billionaire who founded the United Bank for Africa and is now CEO of Heirs Holdings.
"It is also a call to action for us Africans to take responsibility for our own development – and for non-Africans to evolve their thinking about how best to channel their efforts and investments in the region."
Elumelu, who coined the phrase "Africapitalism" in 2010, is one of a growing number of philanthropists and investors using their personal wealth and business expansion to generate jobs and, they say, widespread economic benefits for African countries.
"We have noticed an increase in wealthy Africans coming forward about their giving," said Mary Glanville, managing director of the London-based Institute for Philanthropy. "We have seen at first-hand the benefits of supporting, not subverting, local infrastructures that will aid local development."
The institute cites the example of the Indigo Trust, which is investing in a "co-creation hub" in Nigeria to provide business support for social technology ventures. "It is a proactive provision of support activities – including advice, training, [and] mentorship – alongside which there is access to funding through Indigo's network of local and international partners," said Glanville.
In May, the One Thousand and One Voices investment movement was launched. A $300m fund (£195m) offering "patient capital", the initiative is designed to avoid what it sees as the "dependency" created by philanthropy for economic development, but also the short-termism of other private equity ventures, driven simply by quick returns.
"Our objectives are akin to the objectives of philanthropy – lifting millions of people out of poverty," said chief executive Hendrik Jordaan. "Philanthropy does have a role to play, for example in relieving pain and suffering where a free-market society may not have a solution, but the tool that we believe should be used for economic development is private-sector investment."
The One Thousand and One Voices project – founded by brewing scion John K Coors – offers what it says is a more effective means of achieving development objectives. It has attracted some of the world's richest families, who feel that years of philanthropy have failed to achieve their aims.
"The families we are seeing are yearning for a model that can demonstrate results, and these investments – done properly – are proven to have the most positive long-term impact," said Jordaan. "We intend for this movement to unlock not just these families' financial capital, but their intellectual and relational capital that is so powerful, and could be harmonised and unleashed for good."
Claims that private-sector investment can really solve Africa's problems are not without controversy, however.
"The idea that private-sector investment is good and aid is bad, as some advocates of this theory have said, is completely ahistorical," said Duncan Green, senior strategic adviser at Oxfam. "If you look at any other country that's developed, it's involved a relationship between the private sector and state.
"I think that this is really about a gut feeling that a lot of Africans are sick of hearing themselves described as victims, with which I completely sympathise. It's true that there is a dynamic African private sector that plays an absolutely central role. But the view that aid drives out investment is not accurate – relative to the private sector, aid money is actually really small."
The new breed of investors feel that aid flows perpetuate the inaccurate notion that Africans are dependent on outside help, whereas their approach is one of African self-empowerment. But the involvement of wealthy investors in the development debate has increasingly blurred the lines between private investment and philanthropy.
In May, fashion designer Ozwald Boateng asked African philanthropists to help raise $400m to kickstart $68bn of Africa's infrastructure development.Boateng, who created the Made in Africa Foundation based on a mantra of "understanding what Africa can do for itself", also hopes to create "diaspora bonds" that would allow Africans overseas to invest in road, railway, port and power projects.
"This is unequivocally the new trend in development," said Jordaan. "We are seeing it every day, everywhere."
Beware Africa's "Middle Class"
If you have considered investing in Africa, you have no doubt been influenced by frequent recent reports on the continent's apparently large, burgeoning middle class. These rising Africans are said to be increasingly armed with the hard currency, and the taste, to pay for your goods and services.
But if you have actually taken some steps toward attaching hard numbers to this supposedly massive middle-class consumer base, you probably have also found a fair amount of confusion.
Part of that confusion stems from the tendency of commentators to postulate the existence of all-purpose middle-class African consumers (let's call them AMACs) who behave homogeneously regardless of where they are in Africa and what their backgrounds are. This approach can beef up the numbers, but it can also lead to some ridiculous arguments about what exactly is being talked about here.
The most popular view, supported by the likes of The New York Times, the African Development Bank, and the World Bank — all powerful influencers of how the world thinks about Africa — puts the number of AMACs at more than 300 million. They arrive at this number by counting all types: cattle-ranchers, roadside food vendors, taxi drivers, etc.
On the other end of the spectrum, Citigroup Africa economist David Cowan has actually said that there is no middle-class consumer segment in Africa. Instead, Africa has only two super-classes: the über-rich, and a large sprawl of poor people who nevertheless are inclined towards consumption.
Between these extremes is a multitude of other estimates. Top global consultancies Deloitte and McKinsey estimate the size of the African middle class at between 200 million and 300 million. A widely quoted economics commentator for a global bank with a huge presence in Africa has said there are 120 million AMACs. A consultant with the management advisory group Global Pacific says that only 5% of Africans earn enough to qualify for the "global middle class," bringing the number down to 50 million. The OECD, the so-called Paris Club of rich nations, puts the number at 32 million.
A nice spectrum we have here: from zero to 300 million with almost everything in between. It's a frustrating state of affairs if you are a busy investor hoping to play this 'expanding African consumer base' business. Unless there's a better way to approach the problem. Maybe it's a waste of time to quarrel over quantities when it is the AMAC idea itself that needs unpacking.
For a start, Africa's middle class is exceptionally heterogeneous. It is that fact — rather than the sheer number of middle class consumers or even the pace of growth in these numbers — that can have the most effect on the economic role and business significance of Africa's middle class.
Across Africa, incomes are rising fastest among those engaged in brokering trade in goods and services across fragmented markets. These are the people who shuffle goods from one trade-post to the other, braving tattered roads, noisome customs officers, leaking kiosks (serving as warehouses), clueless laborers, and even more clueless technicians. As economic conditions improve across Africa, these folks are the first to know and the first to scale up their operations.
These are the importers who have never heard of a "letter of credit," much less opened one, the "suitcase merchants" who travel to Dubai and the Far East every month to haul in cheap consumer goods on baggage trolleys, as well as their collaborators who stay at home to push the stuff in the open-air markets. These are the second-hand goods dealers and distributors opening up small towns to commerce. They are the vanguard of the African middle-class.
These people are rarely well-educated, though, and they share none of the cultural traits seen in the West and Asia as prerequisite to a middle-class life. Many young and educated Africans, on the other hand, share few of the economic traits associated with middle-class status elsewhere. Lacking a regular income and strong social networks, and bereft of the professional grooming and mentorship opportunities available to true middle-class types, they have become a monument to an educational system increasingly at odds with the social and economic realities of the new Africa.
This amazing contradiction in most African societies — of an expanding educated underclass and an 'uneducated' rising economic class — sums up why the African economy is struggling to acquire the characteristics one would expect of an economy bursting with middle-class vibes. Simply put, even were the number of middle-class people expanding as dramatically as some observers claim, there is no guarantee that market and consumer behavior would look anything like what emerged in other societies when their middle-class population begun to approach critical mass.
For the prospective investor in Africa, then, it is obvious that qualitative factors should matter more than quantitative factoids in shaping your strategy. Because even were you to find consumers interested in your products, you may struggle to serve them because your assumptions about customer-service skills in the local market may turn up to be completely flawed. Your assumptions regarding how quickly you may be able to 'educate' your consumers to embrace certain attitudes, expectations, or user skills (for example using your web-based tool rather than coming over to your brick and mortar joint) may be far off the mark.
The qualitative character of the middle class in your targeted African country has implications for your human resource strategy, public relations, government relations, corporate responsibility and citizenship, reliance on local financial instruments, operational effectiveness, and the overall sustainability of your market position.
It makes sense therefore to focus on your energies on understanding more about the unique contextual situation of the middle classes in your chosen country of engagement in Africa than to turn yourself into an amateur census-taker.
Alpha, Africa will go nowhere until it industrialises and starts producing things.
^ thanks for your comment.
we are making the necessary arrangement to ensure all small to medium sized businesses are supported.
Ina abti, you take the pi.ss ma istiri? Kulahaa we are making the necessary arrangement to ensure all small to medium sized businesses are supported.
PS: LOL @your location. Isn't that an oxymoron of the finest quality?
couple of interesting videos to share.
very informative stuff.
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