”AID FOR TRADE: Paving the way for future investments and

Growth in Africa”

Janvier M. Nzigo

WHY POVERTY IN AFRICA:

1. Colonial Period2. Independence and Post-Independence period3. Africa and Cold war4. Bad governance; which has brought/ influence:

• Absolute poverty• High level of unemployment• High level of inequality• Lack of Human capital structures(…)

• Foreign debt: USD 300 billions, in 2009 (NEPAD)

• Wars, Conflicts and uprisings (47 countries since independence)

• Bad (or non existing) infrastructures• Capital flight• Lack of Trade and FDI

AID: The solution to the problem?

• The USA gives +/- USD 25 billions per year• Germany: USD 13 billions• Scandinavian countries, Luxembourg and the

Netherlands gives each 1% of their GNI to aid• Other OECD countries: 0.7%

• ”Over the past 60 years at least $1 trillion of development-related aid has been transferred from rich countries to Africa.” (Dambisa Moyo)

Case: Fighting Malaria• An estimated 3.3 billion people throughout the

globe were at risk of malaria in 2010.• Malaria has been reduced worldwide

by approximately 17% since 2000.• 91% of all malaria deaths worldwide occur in Africa.• Delivery of insecticide-treated bed nets (ITNs) has

risen from 5.6 million in 2004 to 145 million in 2010.• The most effective treatment for malaria (ACT) has

increased in availability from 11.2 million in 2005 to 181 million in 2010.

- WHO World Malaria Report (2011)

• Milenium Development Goals:- The African continent has the highest

improvements in terms of access to education for women and girls. MDG 2 (Achieve Universal Primary Education is most likely to be achieved by 2015)

- ”With only three years left to achieve the Millennium Development Goals, Africa is reporting mixed progress in achieving the goals: there is still a lot of work to do in specific areas such as gender and health, and many challenges remain…”

Mr. Nnadozie, UNECA Press Release No010/2012

REMITTANCES: an alternative solution (?)

• Remittances dominate aid yet remain unspoken• The World Bank believes global remittances will be

close to $600 billion a year.• ”Money transfers from workers abroad to family

back home have tripled in a decade and are three times larger than global aid budgets”. – The Guardian

• AID has helped reduce child and maternal mortality, malaria and other deadly diseases

• AID has helped African countries to score points on the Millennium development goals

• AID has helped maintain poor countries budgets;…• But, after 60 years AID did not lift Africa out of

poverty

IS IT THE TIME TO TRY SOMETHING ELSE?

2011 Human Development Index

Connecting Africa to the rest of the World

Global shipping routesSource: seaweb.org

• ” Africa is disconnected from the global economy, which is very bad news for a continent that desperately needs international trade (the disconnection is both symptom and cause of the lack of trade). Lack of international trade = poverty for small economies. This lack of trade links reflects many factors: rich country protectionism, domestic policies on customs & tariffs & foreign investment, poor port and road infrastructure, thus very high land transport costs within Africa, barriers crossing borders within Africa; Africa stereotypes that discourage foreign investors and so on…

- William Easterly

Africa’s lion economies

The African continent is the next frontier. With seven of the ten fastest growing economies of the world being African countries, this is a market that can not be overlooked by Norwegian investors or companies with international ambitions. - NABA

• IMF World economic Outlook 2012: Iraq: 10.80China: 8.37Niger: 7.96Mozambique: 7.86Ghana: 7.74Zambia: 7.66Congo: 7.57Ivory Coast: 7.56Rwanda: 7.23 Cambodia: 7.17

WHY INVESTMENTS IN AFRICA• From “the Hopeless continent” to “Africa rising (The

economist)• Massive Chinese investments in a decade• “100 millions Africans lives like an average Norwegian”

(Aftenposten, Web edition Dec 24, 2010)

- In contrast to Aid, Investments creates job opportunities- Jobs generates economic growth - Investments lifts people from poverty to middleclass.

• Only four African countries were embroiled in armed conflict in 2010, compared with 14 at the end of the 1990s. (Ban Ki-Moon, july 2010)

• In 22 countries of sub-Saharan Africa, the HIV incidence rate declined by more than 25 percent between 2001 and 2009 (UNAids reports)

• And the most under-communicated newsflash is this: Africa is currently one of the world’s fastest-growing regions in the world.

SUSTAINABLE INVESTMENT

• CSR and Local Content: The Norwegian way• Respecting international Laws on Trade,

Human rights• Example: STATOIL in Angola (23 out of 46 are

locals)

AID+ INVESTMENTS• Aid that focuses on Education, the Environment

and the transfer of technology• Aid that pave the way for future investments• WHY EDUCATION?InnovationKnowledge transmissionNatural resources managementSelf disciplineModernity

ConsciousnessImprovement of Standard of lifeDecreases/ fight Child labourEntrepreneurshipAttractive to Foreign InvestmentTransparency and Criticism to state Insight and Knowledge of (Basic and general)

Human Rights Aspirations to Democracy and the rule of law

”For the past decades, Norway’s relationship with the

African continent has been characterised by aid. Our job is to contribute to Africa’s progress by focusing on investments,business and trade.”

Trond Giske, Norway’s Minister of Trade and Industry (keynote speech at the Norwegian-African Business Summit 2011)

www.investinafrica.no