State of the African Continent

Implications for investment and sustainable economic development

Alex O. Awiti, PhD

The Earth Institute at Columbia University in the City of

New York

May 22nd 2008

 Characterization of Africa
ƒ “Africa suffers from ‘new age primitivism”-Robert
Kaplan

ƒ “The state of Africa is a scar on the conscience of the

world” –Tony Blair October 2nd 2001

ƒ “The curse of the Nation-State”-Basil Davidson

ƒ “Shackled continent” –Robert Guest

ƒ “Poverty and stagnation”- Commission for Africa 2005

ƒ “Poverty trap”-Jeff Sachs

A plausible model for the
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 Solution space
ƒ “Enlightened re-imperialism” –Norman Stone

ƒ “New kind of partnership”-Commission for Africa

ƒ “Big, big push forward”-Tony Blair 2005

ƒ “To do things piecemeal is vacuous”-Jeff Sachs 2005

ƒ “Searchers” Bottom up” –Easterly, Prahalad, Yunus -

2006
A veritable food crisis?
ƒ Trends in Food production
– Africa’s farms produced on a per capita basis, 3% less in 2005
than in 2001
– 12 % less in 1975, and 19 % less than 1970.
ƒ WRI 2006

– 1966-70 African countries were net exporters

– Late 1970s Africa was importing 4.4 million tons of food
– Mid 1980s it was importing 10 million tons of food a year
– 19 million tons in 2002
– More than 15% as food aid
ƒ USDA 2004
ƒ The images of victims of a food crisis in Niger in 2005
looked like something the world had seen before - the
famine in Ethiopia in the 1980s.

ƒ In early 2006 a food crisis erupted in Africa

– in the Horn of Africa 11 million people were affected.
– Three and a half million people were in need of emergency
assistance in Kenya.
– In the Democratic Republic of Congo, where 71% of the
population are undernourished,
– In northern Uganda, where 48 per cent of children are stunted
due to chronic food insecurity
ƒ Low direct investment in Africa’s
agriculture
ƒ USAID fell by 75 % between 1980-2004
ƒ World Bank funding dropped to 8 % between 1978 -2006
ƒ Africa governments devote 5 % of their annual budgets to
agriculture

ƒ Food aid
– 99% of food aid from the US is sourced
domestically
– Costs 50% more
– Vested interest
ƒ Provides commercial benefits to farmers and shipping
companies
– WFP receives 48% of its food from the US
ƒ Disastrous performance reflects a failure to increase
productivity of human labour in agriculture

ƒ Mostly by women
ƒ Work the fields with hoes and wooden ploughs
ƒ Non hybrid seeds
ƒ No fertilizers
ƒ Small crops of maize struggling on cracked soil
ƒ Animals kept for milk are stunted
ƒ No veterinary services

– Africa has only increased its investment in Agriculture

by 20% in the past 20yrs-WDR 2008
 Opportunity
ƒ Two-thirds of citizens in Africa depend on agriculture for farming
and employment
– Agricultural production is the main path out of poverty in rural Africa
ƒ Access to high quality seed
ƒ Access to fertilizer
ƒ Appropriate fertilizer application rates
ƒ Credit to rural smallholder farmers

ƒ Global headwind of high food prices

– Interlinked with oil prices, rising incomes in India and China, use of corn for
ethanol
ƒ Climate change –biotechnology
– Variability
– Rainfall totals
– Efficient water management
– Index based insurance
ƒ The unmatched philanthropic resources of Bill &
Melinda Gates is turning the tide back to pro-poor
agricultural science
– With RF Bill & Gates Foundation has created the Alliance for
Green Revolution in Africa (AGRA)
ƒ $169 million dollar grant making
ƒ Bill & Melinda Gates = 800 million in grants
– Largest donor to the CGIAR
– Funds some FAO activities

ƒ The US will use a portion of food aid funding to begin

purchasing crops directly from farmers in Africa, This
initiative would build up local agriculture markets and
help break the cycle of hunger
• High population density -0.8-1.8billion
by 2050
» By 2025 per capita land holding in 14 countries will be
below 0.07 ha, the benchmark for land scarcity.

– Urbanization presents the best opportunity for

efficiently allocating land, energy, water &
sanitation, health services, finance and
education.

• Urbanization -free up land for appropriate

mechanization and efficient food production
– policy that integrates economic and spatial
planning
An inordinate disease
burden?
• The burden of disease results from a small number
of conditions
• Infectious diseases (Malaria, TB, HIV/AIDS, Diarrhea,
respiratory infections
– Vaccine preventable diseases (Measles, Polio)
• nutritional deficiencies
• Unsafe childbirth
– 3 million African children die from malaria annually
– Institute for Democracy in South Africa
– HIV/AIDS killing more officials than can be replaced

• Global Health Workforce Alliance- March 2008

– The global shortage of health professionals is 4 million;
1 million in Africa
 The Health Challenge: The case of Malawi

• In 2003, there were 252 Surgery 17

doctors registered by the OBGYN 14
Medical Council of Malawi General Medicine 13
(MCM) of whom 51.2% were Paediatrics 8
Malawian and 48.8% non- Ophthalmology 8
Malawian.
Anaesthesia 5
– 72 specialists of whom 23 Public Health 2
were Malawian nationals Other 5
and 49 were foreigners
Total 72
• Neglected Tropical Diseases
– River blindness, Lymphatic filariasis, Schistosomiasis
• Bill & Melinda Gates
– $68.2 million for research
• President Bush announced expansion of US efforts- 2008

– In 2003, President Bush launched the President's

Emergency Plan for AIDS Relief (PEPFAR), committing
$15 billion over five years to combat global HIV/AIDS.
• Shared solidarity of ordinary people facing a calamity,
especially the anger of women

• In 2005, President Bush launched the President's Malaria

Initiative (PMI), committing $1.2 billion over five years to
reduce malaria deaths by 50 percent in 15 target African
countries.

• American Idol Spotlights Malaria No More as Feature Charity

On "Idol Gives Back“----$ 70 m
Conflict and internal displacement

“The works of peace cannot flourish in a

country governed by an intoxicated
Despot… commerce, manufacturing,
agriculture..” William Woodsworth
Too many conflicts, too few decent armies to sort them out

The CPA that ended a 50 year civil war

between the North and the SPLM could
collapse.
•2m died; 4m were displaced

In Dafur 200,000 people are dead; 2.5 m

* refugees-

Congo’s war 1998-2003 killed 4m

The UN failed twice in Somalia
and horribly so in Rwanda,
failing to prevent some 800,000
deaths.
(mostly from hunger and disease)
•The epidemic of violence also
spreads HIV/AIDS
•Today, in North Kivu, DRC
550,000 have fled fresh violence in
eastern Congo
In Somalia, 800, 000 are displaced across
the country
•Harvest has failed
Education and Training
• According to UNESCO’s Regional overview on sub-
Saharan Africa, in 2000 only 58% of children were
enrolled in primary schools
• According to a 2005 USAID report 40% of school-
aged children in Africa do not attend primary school
– 46 million African children have never stepped into a
classroom
• 55 % of these children are girls
– Universal Primary Education
• Teachers, classrooms, reading and writing material
• Millions of new learners trapped in failing schools
• Proliferation of private schools, especially in urban areas
• Outreach programmes for poor and marginalized children
• The 1960s and 70s saw the emergence of “developmental
university”
• Higher education was a lever of national development
• Train civil servants and political elite
• “Decolonize” content to solve the real-life problems of the newly
independent sates
• In the 1980s “developmental university” was criticized as
elitist and expensive
• Financial endowments fell dramatically across Africa
• in a context of general economic crisis, with
• With the economic downturn of the 1980s and 90s (lost
decade) the civil service could no longer employ graduates
of higher education and the private sector offered very
little prospect of employment for those completing
classical university courses

• Access to universities and tertiary institutions is very low

– University of Nairobi has graduated less than 100,000 since its
inception in 1970’s
– California has over 190,000 registered lawyers
Investment/business
climate
• Trade with Africa is complex
– Poor access external resources in a sustainable
manner to leveraging these resources for domestic
development
• Africa attracts marginal FDI flows
– Most FDI is resource-seeking reinforcing commodity-dependent
export profiles with weak linkages to domestic markets, low
potential for regional integration
» in contrast to Asia where FDI is market-seeking and
efficiency-seeking = regional economic powerhouse

– Supporting infrastructure is woefully weak

– Transport, ports, energy, water, financial, technological and
managerial and regulatory
» This reflects a shortage of resources devoted to building
physical/technological capacity
» Colonial legacy which devoted resources to developing
access to commodity export-low density rail
 Never too late to scramble ?
• India-Africa summit April 2008
• In February 2008 George Bush visited five
African nations
– America’s attitude has changed sharply since a pentagon
report in 1995 said that Africa was of “very little
traditional strategic value”.
• In 1998 Clinton made the first trip of a US president
to Africa
• Euro-Africa summit in December 2007
– Unfortunate past and complex present of trade,
aid and migration
• China-Africa summit October 2006
 China burden or boon ?
• China is rapidly expanding its influence in Africa
• aid-for-oil strategy, trade deals, debt forgiveness
• The Chinese do not “fuss” about corruption, human rights and
accountability

• China could also be the tripwire for Africa's

potential failure to attain sustainable economic
growth.
– China’s appetite for oil, timber and minerals may derail
economies diversification initiatives
– Rent seeking behaviour and profiteering by ruling elites
– Resurgence of unsustainable debt burden through
Chinese infrastructure and export credit loans.
• Angola has a $4bn line of low-interest credit; debt paid in oil
– Early this year, China said “Western style” democracy
was inappropriate for Africa
Implications of water scarcity for energy
• Low generation capacity
– Long power outages in Nigeria, Ghana, South
Africa, Kenya, Uganda
• Highly centralized, national grid system
– opportunity to harness wind and solar, geothermal
as well as small hydro-power plants through
distributed systems to cater to small cities/villages
• Ghana & Nigeria broadband capability but spotty
power supply
• In March 2008 South Africa’s government backed a
proposal to raise electricity prices by 60 % in the hope
that a reduction in consumer demand will solve a dire
power shortage in the country
Banking and Finance
• Only 20% of Africa’s families have a bank
account
• Only 50% in South Africa have a bank account
• In Uganda and Tanzania-less than one bank per
100,000 people
• $700 to open a bank account in Cameroon

• Private credit accounts for 18% of GDP in

Africa
• But less than 5% in Angola, Chad DRC
• Compared to 30% in South Asia
• The economic upturn in Africa is now getting the
attention of foreign investors
– Nov 2007 Industrial and Commercial bank of China
bought 20% ($5,6b) in Standard Bank of SA
– Barclays Bank believes the sponsorship of the English
Premier League will give it an edge in Africa
• Targeting the middle and lower end of the market

• Few Africans have bank accounts but they have

mobile phones
• In Kenya, SA and DRC financial services are now offered over
the mobile phone
• In Kenya where less than 10% have a bank account, 1million
people now use M-PESA, a mobile-payment scheme
• In Ghana, the Susu collectors gather money
from scale traders for safe keeping
• Barclays recognizes that collectively the Susu
represent a market worth $154 m.
• Now the bank offers training, savings accounts and
loans to Susu; and no defaults have been reported

• Enforcing contracts is still problematic

– WB it takes about a year in 40 out 48 countries
in the Africa to enforce a contract
• In Malawi, DRC, Mozambique procedures to recover
debt cost more than the value of the debt itself
Crisis of Governance
• The African Nation-state has not been
liberating and protective of its citizens: on
the contrary, its gross effect is constricting
and exploitative

• “Politicians are men who compete with

each other for power, not men who use
power to confront their country's problems.”
• Ruth First- The Barrel of a Gun, published in 1970
ƒ Resource abundance is posing a special challenge
to governance

– In Sudan, Nigeria, Sierra Leone, Liberia, DRC, Angola

resources are fuelling conflict, corruption, economic
decline and pushing more children into poverty

– According to Transparency International, many of

Africa’s resource rich countries have the highest
perceived corruption
 Motivating good governance
• African states must build institutions that generate
socio-economic and political stability.
– Incentives from the Mo Ibrahim prize
– Peer review mechanism-NEPAD

ƒ The Millennium Challenge Account to support governments

that commit to rule justly, invest in people, and encourage
economic freedom.
ƒ To date, the Millennium Challenge Corporation has signed seven
compacts with African countries totalling $2.4 billion to fight
poverty through economic growth

ƒ EITI of the UK and George Soros’ Publish-What-You-Pay

campaign aim to address some the problems that limit the
contribution of Africa’s resources to economic growth
Critical levers for Africa’s development
• Governance
– Strong local governance
– Local accountability

• Infrastructure
– Energy
– Transportation
– Irrigation
– Water (storage and distribution)
• Human services
– Health
– Education
– Housing-spatial planning-high space constraints
• Urban/rural
• Conservation
– Food production
– Financial services
 A Proposition for New Age Partnership for Africa’s Development

Investments Private/Public Partnerships

New investments

Local Governance, Infrastructure, Health,

Agriculture, Education

High public/private
Productivity

Rise in local savings

and investments

Sustained socio-economic and political development

 Thank you
aawiti@ei.columbia.edu
www.envidevpolicy.org