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Africa Forum: Challenges and HopeEmpowering Approaches Toward
Sustainable Development
Robert C Byrd Center for legislative StudiesShepherd UniversityWest Virginia
March 28-29, 2008
Charles Chukacchuka@msn.com
2
Introduction
“In response to complaints that we only cover the NEGATIVE aspects of the news, here is a list of all the people in the world who were NOT killed today.”
Bizarro, by Dan Piraro, published in the Express, a publication of the Washington Post, 09/22/05
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“With rare exceptions, the people I encounter, from all walks and stations in life, still think of Africa as the “dark continent” made darker still by the ravages of AIDS and the ongoing conflicts that occasionally produce enough carnage to merit a minute or two on a television newscast. But just as not all Africans are dark-skinned, neither is the continent a dark place. In fact, the continent of Africa is a multifarious place, comprising fifty-four countries, home to some 800 million people, encompassing a multitude of ethnicities and races and a complex range of eccentricities." “
Hunter-Gault, Charlayne, New News out of Africa, Uncovering Africa’s Renaissance, Oxford University Press, 2006
AFRICA’S TIME HAS COME
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Outline
Introduction New news Old news Role of business empowerment Some suggestions on way forward
THE NEW NEWS
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ACRONYMS SSA: Sub-Saharan Africa HICs: High-income countries LDCs: Developing countries ECA: Europe and Central Asia LAC: Latin America and the Caribbean EAP: East Asia and the Pacific SA: South Asia MENA: Middle East and North Africa GNI: Gross national income GDP: Gross national productivity FDI: Foreign direct investment NOT: Net official transfers NDF: Net debt flows TFP: Total factor productivity
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8
Expenditure on Education (Percent of GNI)
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Pe
rce
nt
EAP ECA LAC MENA SA SSA HICs
9
Technological Diffusion(Years from discovery to reaching 25% threshold)
0
20
40
60
80
100
120
1800-99 1900-50 1950-75 1975-2000
EAP
ECA
LAC
MENA
SA
SSA
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Figure :Technological Diffusion in SSA(Years from 5% to 25% threshold)
0
20
40
60
80
100
120
5 Percent 85 56 18
25 Percent 109 69 21
1800-99 1900-50 1975-2000
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Figure : Foreign Direct Investment 2000-06 (Percent of GDP)
0
0.5
1
1.5
2
2.5
3
3.5
1970-79 0.5 0.5 0.5 0.3 0.6 0.5 0 0.7
2000-06 2.9 2.7 2.3 2.2 3.5 1.1 0.7 2.5
MICs LICs EAP ECA LAC MENA SA SSA
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Figure : Inward FDI Flows 1970-2006(Percent of Fixed Capital Formation)
0
5
10
15
20
25
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
Pe
rce
nt
LDCs Africa
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Figure : Private Debt and Equity Flows ($ Millions)
-5000
0
5000
10000
15000
20000
25000
30000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Equity flows Guaranteed debt Non-guaranteed debt
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Figure: FDI Flows ($ millions)
43
45
81
32
69
57
90
65
63
39
14
89
1
10
30
9
14
56
2
12
35
2
16
55
91
68
83
50
17
49
39
40
39
52
99
77
43
67
15
91
25
12
56
5
13
54
3
20
38
9
23
30
0
0 5000 10000 15000 20000 25000 30000 35000 40000 45000
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
FDIn Profit
15
Real GDP Growth 1994- 2008
0
1
2
3
4
5
6
7
8
9
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Pe
rce
nt
HICs LDCs Africa
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Figure : Net Official Debt Flows
-8000
-6000
-4000
-2000
0
2000
4000
6000
8000
10000
$ m
illio
n
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
NDF NOT
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Official Net Debt Flows and Transfers – 1996-2006
-7000
-6000
-5000
-4000
-3000
-2000
-1000
0
1000
2000
3000
$ M
illio
ns
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Net flows Net transfers
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Official Debt Outstanding, Disbursements and Repayments
0
20
40
60
80
100
120
140
160
$ B
illio
ns
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Outstanding
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External Debt to GDP 1994-2008
0
10
20
30
40
50
60
70
80
90
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Per
cen
t
LDCs Africa
20
Consumer Prices 1994-2008
0
10
20
30
40
50
60
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
An
nu
al P
erc
en
t C
ha
ng
e
LDCs Africa
THE OLD NEWS – THE TROUBLE WITH AFRICA
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Figure : TFP – By Income Group(Relative to US in 2005 Index US = 100)
0
20
40
60
80
TFP 77.1 53.1 23.7 9.6 5.6
HIC1 HIC2 MICs1 MICs2 LICs
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Figure : Total Factor Productivity (TFP) – By Region(Relative to US in 2005, Index US = 100)
0
5
10
15
20
25
TFP 8.4 21.7 19.3 13.3 5.8 5.6
EAP ECA LAC MENA SA SSA
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Figure : Technological Progress 1990-2005, By Income(TFP annual growth)
0
0.5
1
1.5
2
2.5
3
3.5
%Change 1.3 0.7 1.2 3.2 1.7
HICs1 HICs2 MICs1 MICs2 LICs
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Figure : Technological Progress 1990-2005, By Region(TFP annual growth)
0
1
2
3
4
5
6
%Change 5.1 2.2 0.2 0.5 2.3 0.2
EAP ECA LAC MENA SA SSA
WHY THE GAP?
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The World Bank, in its Global Economic Prospects 2008, writes “A central finding..is that most developing countries lack the ability to generate innovations at the technological frontier. ..Moreover, relatively thin domestic technology sectors and much better economic and scientific opportunities abroad mean that many nationals of developing countries perform cutting edge research in high-income countries. ..2.5 million of the 21.6 million scientists and engineers working in the US were born in developing countries.”
An organization called The Share The World’s Resources (STWR) writes “Africa trains and sends 77,000 professionals abroad each year to work in North America and Europe. There are more Ghanaian doctors in New York than in the whole of Ghana”
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Populations Without Electricity 2005 (Millions)
0
100
200
300
400
500
600
700
800
Popl 547 224 706 45 48
SSA EAP SA LAC MENA
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Access to Electricity, 2005(Percent of Population)
0
10
20
30
40
50
60
70
80
90
100
Percent
Total
Urban
Rural
Total 25.9 88.5 51.9 90 86.7
Urban 58.3 94.9 69.7 98 92.7
Rural 8 84 44.7 65.6 76.8
SSA EAP SA LAC MENA
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Figure :Costs of Access to Technology(Percent of monthly income in US$)
0
5
10
15
20
25
Per
cen
t
World HICs EAP ECA LAC MENA SA SSA
Fixed line phones
30
Total Per capita Wealth and Component 2005($ Thousands)
0102030405060708090
100
$,00
0
EAP ECA LAC MENA SA SSA HICs
Total wealth (TW) Intangible capital(IC)
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Natural Resource Depletion (NRD) and Consumption of Fixed Capital (CFC), 2005 (Percent of GNI)
0
5
10
15
20
25
30
35
Per
cent
EAP ECA LAC MENA SA SSA HICs
CFC NRD
32
Adjusted Net savings, 2005(Percent of GNI)
-10
0
10
20
30
40
50
EAP ECA LAC MENA SA SSA
Gross national savings Adjusted net savings
CAN THESE CONSTRAINTS BE ADDRESSED?
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Are Empowerment Approaches a Solution?
Well, that and perhaps a short prayer. A short prayer for new leadership as training is not the whole
answer.
Ronald Bailey wrote in The Wall Street Journal in 2007 “The World Bank’s path breaking Where is the Wealth of Nations convincingly demonstrates that the “main springs of development” are the rule of law and a good school system. The big question is: How can the people of the developing world rid themselves of the kleptocrats who loot their countries and keep them poor?”
Scaling up empowerment programs should help to eliminate unnecessary human suffering, stem civil conflicts and keep children in school.
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Role of Empowerment Approaches
Every empowerment approach adds some value: management approaches; improving access to finance approaches; community participation approaches; and gender empowerment approaches; income transfers approach, and so forth.
And in some circumstances, affirmative action. To both keep children in school and address SSA’s technological
deficit, wo approaches deserve special attention: Inclusive and Shared Growth Approacheso South Africa’s experiment with Black Economic Empowerment; Capacity Building and Supply Chains Approacheso African Management Services Company (AMSCO); ando The Strategic Partnerships approach of MOZAL.o BHP Billiton’s company procurement system.
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Inclusive and Shared Growth Approaches (Cont.)
Black Economic Empowerment (BEE) In it’s a Strategy for Broad-Based Black Empowerment, the South African
Government states “South Africa has enjoyed 10 years of consistent growth. Much has been achieved since 1994. Unfortunately, the extent to which this growth has been shared equitably amongst all South Africans is not yet adequate for the requirements of a stable, integrated and prosperous society…we need to take additional colleective actions in order to achieve our objective,..This ….argues for the state to actively lead the development and implementation of a focused and coherent strategy to achieve broad-based black economic empowerment…”
Mary Alexander wrote ““South Africa’s policy of black empowerment (BEE) is not simply a moral initiative to redress the wrongs of the past. It is a pragmatic growth strategy that aims to realize the country’s full economic potential.” “Black empowerment is not affirmative action, although employment equity forms part of it. Nor does it aim to merely take away wealth from white people and give it to blacks. It is simply a growth strategy, targeting the South African economy’s weakest point: inequality.”
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Inclusive and Shared Growth Approaches (Cont.)
In 1998 Donald McNeil took a more critical look at BEE and said “Black empowerment is the rage in the private sector and the law in the public sector. In the last four years, so many empowerment deals have been struck that blacks now control 28 companies worth a total of more than $13 billion, about 6 percent of the Johannesburg Stock Exchange.” “In general blacks and whites are surprised and pleased that it has gone so well. The leading “black chip” companies outperformed the Johannesburg Consolidated Investments Ltd., one of the country’s oldest mining houses.” “But there is growing dissatisfaction with mega-deals that enrich only a few fortunate and well-placed blacks.”
Later on in 2006, Jim Sutcliffe commented on the success of BEE “It is pushing the growth rate …on to a higher trajectory. It has helped the 12-year-old democracy move ahead of India as a destination for foreign direct investment.” “The number of black people in the upper brackets grew 30 percent and the proportion of blacks in the top income brackket is now 20 percent, up from close to zero a decade ago.”
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Capacity Building and Supply Chains Approaches
AMSCO The Africa Management Services Company (AMSCO) was
established more than 15 years ago to provide African businesses with access to a range of training and professional management services that help them to become more sustainable, profitable and globally competitive organizations. Since then, the company has helped hundreds of companies in Africa to develop strong professional management teams and create sustainable businesses that provide employment to thousands of people.
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Capacity Building and Supply Chains Approaches
MOZAL The management of Mozal wrote on their official website:
“From the beginning of the Mozal start-up, there has been a drive to identify and develop local companies and make them competitive in a completely new business environment, that of aluminum production. A program was developed to educate and train the newly formed small and medium enterprises (SMEs) on a world-class tendering package, allowing them to compete with foreign companies. Work packages were exclusively allocated to local companies so as to enhance their development. This was done without compromising the principles of competitive pricing, compliance to specifications, timely delivery and safety.” “The Mozal Community Development Trust (MCDT) was established in August 2001 by the Mozal shareholders to develop ..five key areas: small business development; education and training; health and environment; sports and culture; and community infrastructure. The targeted community includes those within 10 km radius of the smelter. …MCTDT believes that the community should take ownership of programs and play a proactive role in improving their lives.”
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Capacity Building and Supply Chains Approach (Cont.)
Management on BHP Billiton has a similar approach in the implementation of BEE:
“Our objectives are to provide access by black suppliers to the company’s procurement activities, with a resultant greater participation in resource-related industries, and to ensure that all buying organizations within the group have the support to successfully achieve legislated procurement targets.”
Management on BHP Billiton has a similar approach in the implementation of BEE:
“Our objectives are to provide access by black suppliers to the company’s procurement activities, with a resultant greater participation in resource-related industries, and to ensure that all buying organizations within the group have the support to successfully achieve legislated procurement targets.”
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Can Africa Make It?
Yes, Africa can. New leadership is already emerging and hope is becoming a reality in a
number of countries. Africa can lip-frog the digital divide to mitigate the problem of being land
locked. Africa launched an e-Schools Initiative to fund internet access in 120 schools in 16 countries by mid-2007.
Africa needs to focus on human development and spend more on primary and tertiary education.
Africa should utilize its natural resources to invest in human development and institutional capacity building. Botswana is already doing that and the lessons can be replicated across the continent.
Africa’s resource curse is curable: Already 17 countries are reported to have signed up to participate in the Extractive Industries Transparency Initiative (EITI).
A little external help is needed to address regional infrastructure bottlenecks and expedite continental and regional integration. The continent needs to be made into a large domestic economy.
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thank you
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