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CHANGE MAKERS
Watch: Why Socialism failed in Africa | George Ayitteh Tara Fela-durotoye - The Startup Story of a Home-grown Nigerian Make-up Brand that Sparked a Revolution

FEATURE ARTICLES
Djibouti: Strengthening Africa’s Passage to Prosperity Africa Must Assume its Place in the Global Battery Race | How Africa Can “Entrepreneur” its Way Out of Bad Leadership and the Vital Role of Innovation How International Trade can Unlock the Potential of the Cultural Economy in Developing Countries Economic Emancipation of African Nations The Role of Creative Policy Initiatives

SPOTLIGHT ON AFRICAN ENTREPRENEURSHIP
Diogo Vaz Roça

ALL OF THE ABOVE STRATEGY FOR DEVELOPMENT
Export Oriented Industrialization Strategies Intereconomics African Governance: Challenges and Their Implications

Unleash Africa Podcast

Google is a great example of a champion company known around the world. It was born out of an ecosystem in the United States where venture capitalism supports and drives entrepreneurship that has the chance to reshape the landscape of not only the country, but the world.


Listen to our latest episode: "Booming Industries for African Countries to Consider in 2020"

Catch up on earlier episodes at UnleashAfricanTrade.com.

 

Reform-Minded Change Makers

The “Unleash Africa” video feature has focused on the forces that are impeding the rise of African countries including corruption, on leadership qualities of the late Honorable Lee Kuan Yew, Prime Minister of Singapore and why that leadership quality is the missing ingredient in the governance apparatus of African countries, and on seminal entrepreneurs like Elon Musk who have redefined the playing arena of their enterprise and in some cases, a global paradigm shift.

In this video, we profile a beautiful and concise analysis of why African countries have been mired in poverty and dependence. In a nutshell, it is the deep-seated application of socialist agenda in the economic affairs of African countries. Through the agenda, African countries have wasted hundreds of billions of dollars that could have been better applied to extricating the countries for economic abyss. 

Why Socialism failed in Africa | George Ayitteh

Tara Fela-durotoye - The Startup Story of a Home-grown Nigerian Make-up Brand that Sparked a Revolution
by Lionesses of Africa


Tara Fela-Durotoye, founder of House of Tara, Nigeria

More than ten years ago, House of Tara founder Tara Fela-Durotoye, sparked a revolution that reverberated across Nigeria, creating a powerful corporate brand, a range of interesting makeup and skincare lines aimed at women of colour, and setting up Nigeria’s first make-up school.

Tara Fela-Durotoye is a Nigerian makeup artist and lawyer. A pioneer in the bridal makeup profession in Nigeria, she launched the first bridal directory in 1999, followed by the establishment of an international standard makeup studio, and the launch of the first makeup school in Nigeria. 

Over the past 16 years, Tara has been dedicated to realising her vision of building a globally respected beauty company of African origin. She is the founder and current CEO of House of Tara International; the creator of the Tara Orekelewa Beauty range, Inspired Perfume and the H.I.P Beauty range; and a highly respected mentor for make-up artists and small business owners. She is a genuine powerhouse and gamechanger in the cosmetics industry in Nigeria and an inspiration for the rest of Africa. 

'Creating a business that impacts and generates income, developing micro entrepreneurs who will grow their business and employ more people so as to make the Nigerian economy better is what's most important.'

Set up in 1998, House of Tara is a pioneer in the beauty and makeup industry in Nigeria and a trailblazer in the areas of retail, distribution channel management and education. Known also as an industry enabler, the brand, being the first to set up a beauty school in Nigeria has over 3,000 reps spread across the country and 14 stores to its name. Earlier this year, the company announced plans for its international expansion with rollout of 20 studios across Nigeria and presence in Kenya and Ghana by the end of 2014.

Tara’s early journey towards business and entrepreneurship was inspired by an advertiser, who spoke to her about being business conscious whilst she was still in secondary school. She remembers:  “I was in secondary school many years ago and a man came to speak to us and he came to speak to us as an entrepreneur, that is, as a business man. He was in advertising and because he was creative, I found him interesting. He made me interested in business....  I eventually went to the university and I studied law. As an undergraduate, while I was still in school I started a business. I started with just N15,000 (fifteen thousand naira). It is less than the cost of a blackberry phone. 

Tara started her entrepreneurial journey seriously in the beauty business when she was still a law student at Lagos State University. She later trained as a makeup artist of Charles Fox. Yet, her early interest in makeup and fashion was stimulated by her step mother, a highly fashionable and glamorous woman who used to work in the Ministry of Culture and studied Fine Arts. Tara says of her mother’s inspiration growing up:  “ She was a fantastic woman, very fashionable, so when you looked at her dressing table she had make-up products, she would paint her face in the morning, she never missed her hairdressing appointment, her nail polish was always perfect. I grew up seeing her adorn herself and I liked looking at her through all that process. I didn't know that a seed was being sown in my heart.”  

"We have given many people the opportunity to start up something as a business, to be business owners, to start up their own businesses and to make money from it but also to be financially independent and many them have had to employ one or two people as well and I think that gives greater joy, for us.”

Tara says of her entrepreneurial experience in those early days: “I started at a time when it wasn’t even popular for people generally to be entrepreneurs, unlike what obtains now. Many people, who were my peers, didn’t even fully understand the concept. Even for me, I didn’t wake up one morning to be an entrepreneur. The focus was on doing what I loved, which is, making women beautiful. This passion started when I was studying Law at the Lagos State University. From bridal make-up, the clientele began to expand, and slowly, it dawned on me that this was a big deal, and it could go far beyond a few random weddings and become a pioneering movement. I haven’t looked back ever since”.

Over the years, the House of Tara has achieved a lot of firsts in the Nigerian market. It launched Nigeria’s first Bridal Directory in 1999. It also established the first make-up school in Nigeria. Tara is very proud of one of her key achievements, ‘Be Inspired’, Nigeria’s first home-grown fragrance, and Orekelewa, a make-up line. Today, House of Tara has set its eyes beyond West Africa. It is aiming to make an impact across Africa and beyond.

Speaking about her early entrepreneurial challenges when first starting up the business, she says:  “At start up, we faced challenges with raising funds. In Nigeria, you need to be able to get financing and raising funds was a big problem.  Also, our industry is an informal one and as pioneers, we could not find standards to copy. It’s easier when you see something you can copy but when you have to think it through and make it up as they come along, it’s not easy. Now, we are dealing with challenges of attracting talent and retaining them; keeping the voice of the vision across multiple branches and across a number of people. We also face the challenge of people asking us to sell shares in the company and people consistently looking for ways to be part of the business that will boom.”

Tara’s entrepreneurial success story has been an inspiration to many young people. To date, over 1,500 students have graduated from her make-up school so far and many have gone on to start their own businesses, while some have become beauty bloggers. A number also work for international cosmetic brands, which like many western companies are keen to invest in the oil rich frontier economy. Tara has 80 full-time employees and over 3000 independent sales representatives across the country.

“Stay true to yourself, stay true to what you are trying to achieve, otherwise you get distracted. Side comments, how people think you should do things, and I think that everyone wants to hear their own voice so you need to stay true to yourself. Before you come out of your house you have to decide, yes this is what I want to do. You still need counsel but you should be able to apply counsel to your own decision to be able to take insightful steps.”

Speaking about the impact her entrepreneurial journey has had in the country, Tara says: “For us it’s the impact we are making that is most rewarding. The jobs… there are many people who are looking for jobs today and the beauty industry has given an opportunity for young people who are very excited about beauty, and you know Nigerians are very fashionable and love beauty. We have given many people the opportunity to start up something as a business, to be business owners, to start up their own businesses and to make money from it but also to be financially independent and many them have had to employ one or two people as well and I think that gives greater joy, for us.”

Tara made the Forbes’ list of 20 Young Power Women in Africa, 2013 and was also nominated as a Young Global Leader by the World Economic Forum.


This content was originally published on lionessesofafrica.com.

Lionesses of Africa Public Benefit Corporation is a social enterprise working to advance Africa’s women entrepreneurs, by building and delivering entrepreneur development programmes, mentoring programmes, business tools, digital media channels, community platforms, networking events and information resources. Delivered at scale to women entrepreneurs, always free of charge. 

Lionesses of Africa has over 750,000 users across 54 African countries and also reaches tens of thousands of users in the Diaspora in Europe and North America. It is on target to reach the goal of empowering one million women entrepreneurs across Africa.

Djibouti: Strengthening Africa’s Passage to Prosperity
by Penresa

“Djibouti is in the process of becoming an essential link in the economic globalisation. We shall remain faithful to our ideals of unity, equality and peace by remaining true to our core values and our hospitality, generosity and solidarity culture that we can be proud of our identity in a world subjected to cultural standardisation.” – His Excellency President Ismaïl Omar Guelleh.


Download the report here

Djibouti is successfully improving its position in the global market by enacting several enterprising reforms to enhance and improve conducive business environments, property registration, credit availability, as well as empowering sectors such as infrastructure, finance and energy. These measures are all a part of His Excellency President Ismaïl Omar Guelleh’s Vision 2035, which has already demonstrated great progress, as Djibouti has leapt from the 154th in 2017 to the 99th position in the 2018 World Bank Ease of Doing Business Report. Central Bank of Djibouti Governor Ahmed Osman Ali, says, “We have worked hard to improve our investment environment. In terms of investors’ protection, Djibouti ranked second worldwide in the World Bank Doing Business 2019 ranking, gaining 94 places compared to 2018. Djibouti offers great potential to investors in various sectors, as well as an attractive fiscal environment.” The Vision 2035 is a strategy that is built through the participation of Djibouti’s youth, political parties, civil society, businesses, development partners and the international community. The vision is based on five core pillars: Peace and national unity, Good governance, a diverse economy, Investing in human capital and Regional integration.

In utilising its advantageous geographic position and strengthening its place as East Africa’s hub, the Vision 2035 recognises that Djibouti is a natural gateway for bordering and nearby countries for sea and air cargo transportation. Dabar Adaweh Ladieh, General Director of the Société International Des Hydrocarbures de Djibouti (SIHD) says, “That is why Djiboutian ports, for instance, are destined to serve the whole region. Goods from Europe, the Middle East and Asia will arrive here. We will have an exchange centre thanks to our strategic plan and the President’s vision to develop infrastructure.” In keeping with this goal, Djibouti has been investing in new port terminals, as well. “SIHD, in partnership with other companies, is building a new stocking site in the Damerjog economic zone where there are also other projects to be realised, like the port and the stocking site of natural gas,” says Ladieh. “So, we are proceeding with this global vision in mind.”

Diversifying the economy is crucial to the Vision 2035, and the government is dedicated to ensuring consistent GDP growth, which will create over 200,000 jobs in the next fifteen years. One of the means to do this is through the energy sector. Djibouti is no stranger to ambitious projects if it means improving the livelihood of its people and securing a better future. As such, the government has enacted several programmes that seek to meet 100% of the country’s energy demand with renewable resources in order to combat pollution and decrease dependence on imported energy resources. This can be done through geothermal energy, wind energy, solar energy as well as waste energy. The government is currently moving into the production phase of geothermal energy, with wind energy production set to begin in spring 2020. Ensuring the abundant availability of reliable and cheap energy puts Djibouti on the cusp of a green revolution and is a crucial step toward the achievement of Vision 2035, with positive effect on investments and employment resonating throughout the economy. The government has also invested in highly specialised programmes that are designed to nurture the thriving young population. Mr Yonis Ali Guedi, Minister of Energy, states, “All these projects are to develop Djibouti, making sure that energy is abundant and cheap, to attract investors, jobs can be created, and the prosperity of our citizens can be increased. Development always needs energy, so, the country needs to provide itself with green and clean energy.”

In accordance with the strategy mapped out in Djibouti’s Vision 2035, the government has taken on an astounding series of projects aimed at updating Djibouti’s infrastructural landscape. Part of this plan is found in the country’s new International Free Trade Zone. Opened in July 2018, the DIFTZ marked a turning point in the history of Djibouti and the entire East African market. The Zone will inevitably boost local and international trade and create employment for Djiboutians. The Free Zone clearly represents Djibouti’s rapid and impressive transformation and serves as a beacon of light for the future, positioning the country as a hub for trade, logistics and finance.

In addition to the government’s dedication and all these vast improvements across many sectors, Djibouti’s participation in the African Continental Free Trade Agreement will also create an environment where investors can thrive. The AfCFTA is meant to create a tariff-free continent that could boost intra-African trade. Governor of Central Bank of Djibouti, Ahmed Osman Ali, states, “It is a great opportunity: it will grant access to a wider market to companies operating here. To take advantage of increased regional integration. We have invested heavily in port, road, rail and telecommunications. We remain very confident about the positive effects of the African Continental Free Trade Agreement in terms of activities, growth and job creation.”

Driving Djibouti’s Development Goals

Afreximbank Focus on Djibouti

Afreximbank has pledged to work with public and private entities in Djibouti in order to deploy the Bank’s trade finance programmes in support of the country’s economic priorities.

A small nation in the Horn of Africa, Djibouti’s location along the Gulf of Aden, its proximity to the Mandeb Strait, the southern entrance to the Suez Canal and Yemen gives the small African nation a strategic role to play along one of the world’s busiest trade routes. Ten percent of the world’s oil exports and 20% of all commercial goods traverse through the Suez Canal, passing close to Djibouti. With the vision to be the trade finance bank for Africa, Djibouti plays an increasingly bigger role within the Afreximbank portfolio.

Djibouti signed onto the African Export-Import Bank Establishment Agreement in 2016 marking the commencement of the partnership. At the signing of the agreement, President Ismaïl Omar Guelleh stated that this partnership will help the country advance its trade related infrastructure and the areas of logistics and renewable energy. The bank has also helped to promote and finance Djibouti’s industrial sector in the area of export manufacturing. With help in financing from Afreximbank, Djibouti has been able to further leverage its important geographic position to its advantage. It will also flourish in new areas of the economy such as tourism and investment.

During its partnership, Afreximbank has pledged to work with public and private entities in Djibouti and would link them with other African and international economic players in order to deploy the Bank’s trade finance programmes in support of the country’s priorities, including the development of renewal energy infrastructure through the Bank’s funding arrangement with KFW, the German development bank, construction of world-class tourism amenities under the Bank’s CONTOUR facility and expansion of Djibouti’s transport and logistics infrastructure. The trade and infrastructure development plans initiated by Djibouti are very impressive and have the potential to transform the country and to make an impact, not only in the region but across Africa, as the country moves toward becoming a key logistics hub for the continent.

Due to its location and the government’s recent policy reforms, the country is attracting more business and investment than ever. Djibouti has recently implemented a policy of international free trade zones, which enables foreigners to start business in the country easily and without paying profit taxes. These policies have been effective in recent years to attract much attention to the tiny nation as it seeks to create a conducive business environment. Already, our partnership has seen positive effects with Djibouti’s Ease of Doing Business ranking increasing in 2018 to 99 up from 154 in 2017. 

Djibouti is one of the many cases in which partnering with Afreximbank has helped countries develop their trade sectors. In 2017 Afreximbank focused on a forward looking initiative called Impact 2021, Africa Transformed. This initiative is fixed on strengthening four main sectors: intra-Africa trade, industrialisation and export development, trade finance leadership and financial soundness and performance. Just in 2018, Afreximbank saw 24% overall growth with a US$55 million increase in income. Up from US$229.8 million total income in 2017, the total income for 2018 was US$285.4 million. Afreximbank also saw a 13% growth in its assets totalling US$13.42 billion for 2018 due to a rise in net loans and advances. The bank’s operating profit saw an exceptional rise in 2018 to US$394.8 million from US$109 million in 2017.

This growth is continuing into 2019 with a 59% increase in total revenues for the first three months of the year compared to the same timeframe in 2018. Though it is a small country, Djibouti’s location elevates its status in geopolitics, and it is only logical to assume that its importance will continue to grow as nations turn their attentions to Africa and the Middle East. With a positive outlook ahead and a successful year behind us, Afreximbank is well on its way of achieving its vision and assisting Djibouti in its development goals. 

Footnote: The African Export-Import Bank (Afreximbank) is the foremost pan-African multilateral financial institution devoted to financing and promoting intra- and extra-African trade. The Bank was established in October 1993 by African governments, African private and institutional investors and non-African investors. Its two basic constitutive documents are the Establishment Agreement, which gives it the status of an international organisation, and the Charter, which governs its corporate structure and operations. Since 1994, it has approved more than US$67 billion in credit facilities for African businesses, including US$7.2 billion in 2018. Afreximbank had total assets of US$13.4 billion as at 31 December 2018. It is rated BBB+ (GCR), Baa1 (Moody’s), and BBB- (Fitch). The Bank is headquartered in Cairo.

The Central Bank Fights Financial Exclusion And Eases Business

Governor Osman Ali vows to do even more to attract banking activities to Djibouti and enable further growth.

Central Bank of Djibouti Governor Ahmed Osman Ali is a key player in the nation’s strategy of enabling infra­structure improvement and economy diversification to become an emerging country by 2035. Penresa sat with him to discuss the achievements of his mandate and his plans to keep supporting Djibouti’s Vision 2035

How is the Central Bank working to help Djibouti be­come a middle-income country by 2035?

The ambition to establish Djibouti as an emerging economy by 2035 is part of the national develop­ment strategy pursued by the government’s sec­toral policies. The objective is to transform Djibouti into an international logistic and financial hub.

The Central Bank is thus working for a more dy­namic, efficient, sustainable and inclusive financial sector. An initial comprehensive reform package began in the early 2000s: since then, the sector has grown from five to 36 financial institutions (in­cluding 11 banks, from two in 2006). Subsequently, to expand the financial sector, our priorities are fo­cused on the following points: The viability of the sector with the impressive strengthening of the supervisory framework, as well as anti-money laundering and anti-terrorist financing measures. Reference texts are regular­ly updated according to international standards;

The promotion of financial inclusion through initiatives such as the right to an account, with banks being legally obliged to open an account for people with a minimum income of DJF 40,000 (e200). Also worth mentioning is the develop­ment of microfinance and mobile banking. To ease access to credit for SMEs/SMIs we have established a Partial Credit Guarantee Fund and initiated the necessary reforms to launch leasing activities in Djibouti;

The modernisation of the national financial infra­structure with the introduction of i) a modern na­tional payment system taking into account the new paperless electronic payments (real-time gross settlement, automated clearing house…); and ii) a new fully automated credit information system.

The African Continental Free Trade Agreement is meant to create a tariff-free continent that could boost intra-African trade. Do you feel this will contribute to Djibouti’s economic growth?

It is a great opportunity: it will grant access to a wider market to companies operating here. To take advantage of increased regional integration (Djibouti is a founding member of COMESA), we invested heavily in port, road, rail and telecommunications. Djibouti is AGOA eligible, which is significant for our Indian and Chinese partners.

We remain very confident about the posi­tive effects of the African Continental Free Trade Agreement in terms of activities, growth and job creation.

You were awarded Central Banker of the Year 2018 at the Global Islamic Finance Award. What did you do to expand Islamic Finance?

We realised that a significant portion of our pop­ulation was marginalised in the financial sphere due to the lack of Shariah compliant financial products. We have made the necessary efforts to introduce and develop Islamic finance, and today the three active Islamic banks (the first of which established in 2006) represent 20% of the mar­ket. We also launched an annual Summit bringing together in Djibouti the institutions and eminent experts of International Islamic finance.

The award we received is an acknowledgement of the efforts undertaken by all stakeholders to achieve these results.

For the readers of FORBES AFRICA and the dis­cerning investor, why is NOW the best time to invest in Djibouti?

We have worked hard to improve our investment environment. In terms of investors’ protection, Djibouti ranked second worldwide in the World Bank Doing Business 2019 ranking, gaining 94 places compared to 2018. Djibouti offers great po­tential to investors in various sectors, as well as an attractive fiscal environment.

Developing And Connecting Djibouti Through A World Platform

Minister’s Round Table

 

From left: Hon. Ilyas Moussa Dawaleh, Minister of Economics and Finance, Hon. Mahmoud Ali Youssouf, Minister of Foreign Affairs and International Cooperation, Hon. Mohamed Ahmed Awaleh, Minister of Agriculture, Livestock, & Fisheries, Hon. Yonis Ali Guedi, Minister of Energy and Natural Resources.

Penresa sat down with Hon. Youssouf, Minister of Foreign Affairs and International Cooperation, Hon. Awaleh, Minister of Agriculture, Livestock, & Fisheries, Hon. Dawaleh, Minister of Economics and Finance and Hon. Guedi, Minister Minister of Energy & Water.

What big project is your ministry focused on right now?

Hon. Youssouf: We need to speed up the process of creating job opportunities. First, in education and then in job creation. That is why we are compelled to seek opportunities for young people and women. Djibouti has signed the ICSID Convention. You need a legal framework to reassure investors that their investment is protected. We hope that it will boost the volume of the investment, because more investment means more job opportunities. Vision 2035 is our development plan over the next 20 years that will help change the livelihood of people. Djibouti has also signed the African Continental Free Trade Agreement (AfCFTA). It is vital for African countries to create that common market because trade is the engine of the economy. When you have that framework, that facility to boost and step up the intra-African trade, it creates job opportunities, wealth, rapprochement between countries, community. We believe that the bigger the market is, the bigger the opportunities to create job and wealth.

Hon. Awaleh: The Ministry is involved in several projects focused on sustainable agriculture. Djibouti has an arid ecosystem; it is more or less a desert with black stones. The rainfall is on average 150mm per year and we have no rivers. The best three activities for Djibouti (because of saline ground) are date palms, greenhouse horticulture and livestock. One example is that we have a laboratory here for date palms. There are a lot of varieties, and the best variety is called Medjool. One kg of Medjool is about $US30. It is the highest price for a fruit. It is very difficult to get this variety: California, Israel and Morocco have it. One tree takes eight years to grow, and in all its life, a date palm will give you 10-20 shoots. The problem is that we do not have date palms here in Djibouti. So, we have done the research and we have discovered that we can produce date palms from cells. It has taken us 5-6 years, and we have chosen the best varieties. In the world, we are the fourth laboratory which produces Medjool dates in this way. We are proud to have introduced date palms specific for Djibouti.

Hon. Guedi: We are working toward 100% green energy. We are developing other forms of energy like wind and geothermal energy. We never had a real project in geothermal, but at the end of April/beginning of May 2019, the presence of geothermal energy in the Fiale project was confirmed. The three drillings were done at a depth of 2,600 metres. Now, we are going to move to the next step, the production. We have signed all necessary contracts as far as wind energy is concerned after one year of negotiations to finalise the production of 60 MW of wind energy with African Financial Cooperation in Ghoubet. As of now, the windmills are already being produced, using German technology. Completion of the project is 12 months, so in April/May 2020, we will start with the production of wind energy. We have also developed solar energy. The French company Engie contacted us for a first project for solar energy. We have already signed with EngieAfrique for the development of 30 MW solar station on the site of Grand Bara. This will be the first step and we hope that we will finalise all the documents for the project in two to three months. As you can see, the energy revolution in Djibouti is coming.

Hon. Dawaleh: The growth over the past five years has been 6-7%, which is comfortable. The balance of payment is now at a good level; in the past we had a very high debt, while now it is at 70%. All the macro-economic indicators are reasonable for Djibouti. The driving force of the economy of Djibouti is the port, the air, the airport and the infrastructure. We have six ports, we have trains. We deliver the flow of goods from COMESA countries to the world. We also intend to handle the flow of information and finance, of capital between COMESA and Djibouti because we want to be a hub for money, since our currency is pegged on the dollar. All people in the Eastern African region should put their money in Djibouti. We want to be the hub of the flow of capital and information, since we have seven telecommunication submarine cables, not only for Djibouti, Somaliland and Ethiopia, since the cable encompassing Africa runs through Djibouti. So, our focus areas are transport, flow of information and capital


This article was first published in forbesafrica.com

Penresa is an independent consultancy agency, specialized in marketing and communication for emerging markets.


Africa Must Assume its Place in the Global Battery Race
by Tariye Gbadegesin

It's time for Africa to build its own gigafactories and carve its niche in global lithium-ion battery production.

 

China-made Tesla Model 3 vehicles roll out of the manufacturer's Shanghai Gigafactory. REUTERS/Yilei Sun

In June, Europe’s leading battery startup Northvolt raised $1bn for a battery gigafactory in Sweden. The project is part of a larger attempt by Europe to develop an industrial policy around battery production, which could add €250bn ($280bn) to the EU economy by 2025.

But Europe is not the only player in the space: American and Asian automakers like Tesla and Toyota are building battery gigafactories in a bid to dominate the electric vehicle battery market.

Yet, one region is absent in the global battery production race. As the key producer of battery minerals, Africa is a lynchpin in battery supply chains. But African countries have fallen into a trap of exporting raw minerals and have missed out on opportunities for value-added manufacturing.

Africa needs to follow the US and Europe in adopting a forward-thinking policy on battery value-addition. By tapping into the potential of this multibillion-dollar industry, African countries must prioritise battery production to generate additional revenue streams for their economies.

The battery market is booming. The global transition towards cleaner fuels has spurred the demand for electric vehicles and investment in battery-powered storage systems.

Lithium-ion batteries have become the dominant storage technology due to their high energy density, and are increasingly used in the power and transport industries. The paradigm shift towards green power for utilities and automakers has contributed to mass battery production and adoption, pushing down battery prices.

Africa is home to approximately 30% of the world’s mineral reserves, many of which are mined as raw materials for batteries. In 2018, Zimbabwe and Namibia were among the 
top 10 countries for global lithium production, with Zimbabwe alone holding 11m tonnes of lithium ore in its Bikita mines.

Lithium, dubbed as the world’s hottest commodity, is a crucial lithium-ore battery component. The high demand for lithium-ore batteries and the surge in popularity of electric vehicles ensures that lithium will remain an indispensable mineral resource to the energy and auto industries.

Beyond lithium, other battery metals include cobalt, manganese, and graphite.

  • Cobalt is predominantly mined in the Democratic Republic of Congo (DRC), which in 2016 produced 60% of the world’s total cobalt supply.
  • Graphite exports to China from Africa rose by an impressive 170% in early 2019 due to heightened Chinese demand for the raw material. Tanzania is poised to become a significant graphite producer, with Tanzanian-based Mahenge Resources, receiving two major licences in February 2019 to proceed with mining projects.

While this mineral abundance emphasises Africa’s vital role in the battery market, a significant lack of investment in battery  production across Africa persists. This contrasts with the sweeping global investment into battery gigafactories. China, for instance, remains the dominant player in all stages of the global battery supply chain, with over 90 battery manufacturers and several gigafactories.

The concentration of supply in China poses supply-chain constraints due to the potential for changes in government policy or future geopolitical instability, such as the ongoing US-China trade spat. Such disruptions can create supply gaps in the battery market, which could in turn lead to volatile commodity prices or price uncertainty. Africa needs to recognise and tackle this problem by injecting more capital into its mineral production and refining capacity.

With the promise of the ratified African Continental Free Trade Area (AfCFTA), African countries can take advantage of potential disruptions in global battery flows due to the US-China trade war and start building its own regional supply chains.

Assembling a lithium-ion battery pack involves a complex supply chain. These complexities are exacerbated by China’s influence in battery production and consumption. China produces 74% of the world’s lithium-ion batteries and continues to expand battery plant operations despite its heavy reliance on raw battery metals from Africa. Even American manufacturers are forced to import from China.

But this is changing. Tariff imposition on Chinese exports to the United States are causing American companies to diversify battery production away from China. African governments can capitalise on this trend by investing in battery production. The AfCFTA allows African countries to build regional supply chains catering to global demand at reduced costs.

A robust regional supply chain could be as follows: the DRC and Zimbabwe provide the essential battery minerals while South Africa uses those materials to manufacture batteries.

Investments in supply-chain infrastructure have the potential to transform Africa into a global battery-production hub.

The global transition towards green energy and rapid decarbonisation holds significant opportunities for Africa, if seized correctly. As battery demand soars and European and American firms build battery gigafactories, African leaders must step up and include battery production as a continent-wide development priority. A strong regional battery supply chain, powered by the AfCFTA, will bolster Africa’s relevance in the international battery market.


This article was originally published on theafricareport.com.

Tariye Gbadegesin is currently the head of heavy industry and telecoms at Africa Finance Corporation (AFC), Africa’s leading infrastructure investment institution. Prior to AFC, she worked at Boston Consulting Group, International Monetary Fund, and PwC in the US, Kenya, Costa Rica and Nigeria.
 


How Africa Can “Entrepreneur” its Way Out of Bad Leadership and the Vital Role of Innovation
by Efosa Ojomo

Nigeria returned to democracy in 1999. But it took another 16 years for power to change hands, with the All Progressive Congress clinching the office of the presidency in 2015.

 

A motorcycle taxi driver known as boda-boda, from SafeBoda in Uganda. Innovation has been built on the back of the mobile industry

At the 2015 Quartz Africa Innovators Summit in Nairobi, one of Kenya’s best known tech investors and activists, Ory Okolloh, spoke about how entrepreneurship was being promoted to the point of being fetishized in Africa. Referring to the lack of basic infrastructure and weak governance, she famously said, “You can’t “entrepreneur” around bad leadership, we can’t “entrepreneur” around bad policy.”

That sentiment was widely hailed at the time and since then and has become quite popular. But what if sentiments like that inadvertently delay progress by causing us to demand “rich-country institutions” that just can’t work? Or more importantly, what if it actually blinds us from seeing the critical role entrepreneurship plays in helping Africa overcome bad leadership?

Rankings such as, World Governance Indicators, Corruption Perception Index, and the Global Competitiveness Report do a great job in contrasting the many failings of African governments with the successes of rich-country governments.

But they don’t tell the whole story. Consider this. In addition to being severely debt burdened, African governments have very limited funds to spend on their citizens; the average expenditure African national governments spent per citizen in 2017 was around $740. DR Congo, Central African Republic, and Burundi spent $39, $57, and $65 per citizen respectively. Contrast that with Norway, Denmark, and Sweden that spent $36,871, $30,415, and $27,000 per citizen respectively. 

Considering the severe lack of financial resources, which often dictate the level of technical, managerial, and operational capabilities of a government (you get what you pay for, even in the public sector), it is incredibly difficult to expect poor-country governments to function similar to the ones in rich countries. They’ll always end up at the bottom of indices like the aforementioned, and whatever progress some progressive new government makes is often short lived.

Thankfully, there’s hope for governments and citizens in economically poor countries. 

Innovation’s Value Creation

Understandably, innovation and entrepreneurship are often assumed to only be possible after a society develops, that is, after it fixes its institutions and builds reliable infrastructure. However, as we describe in our book, The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty, innovation is the process by which societies develop. 

More specifically, market-creating innovations, which transform complicated and expensive products into products that are simple and affordable so that many more people in society can have access to them, provide the most stable foundation for economic development that can lead to social change.

The most visible example of this phenomenon happening in Africa is in the mobile telecommunications industry. 

From barely nothing in the late 1990s, today virtually every African country has a thriving mobile telecommunications sector. Before this new industry was created, access to mobile phones were limited to those who were wealthy, but new business models made telecommunications so simple and affordable that the average African now has access to mobile phones. 

This industry has not only generated hundreds of billions of dollars of value, but also provides tens of billions of dollars in taxes annually and is responsible for more than three million jobs across the continent. In addition, thousands of other African startups—from payments and insurance to health and logistics—are leveraging this vast network to build new companies.

If the bold entrepreneurs such as Mo Ibrahim and Strive Masiyiwa—who risked capital and reputation to build this new industry—had waited for African institutions and infrastructure to develop, they’d still be waiting today. Instead, they created a new market that served the vast majority of people and that has led to significant development.

Innovation to Governance

What makes market-creating innovations so powerful is that they create jobs that provide income for many more people, and for the governments as well via taxes and licenses. This new dynamic not only empowers citizens to demand more from their governments, but it also begins to change the social contract in the region. In our research, we’ve seen this phenomenon play out in many prosperous nations today that boast “good governance.” Consider the United States, Europe, and fast growing East Asian nations.

In the United States, as more people created wealth for themselves during the Industrial Revolution, their dissatisfaction with corruption and government mismanagement was taken more seriously. “Politically, the rage of victims counted for very little in 1840, not much in 1860; by 1890, it was a roaring force” is how Stanford Law Professor Lawrence Friedman put it. 

During that era, the United States saw an increase in public outcry against government corruption and mismanagement. This gave rise to organizations such as Good Government Clubs, many of which fought to reform their local governments.

As America’s prosperity grew, so did the strength of these clubs. In their paper, The Rise of the Regulatory State, Edward Glaeser and Andrei Schleifer note, “American capitalism of the 1920s was less corrupt and abusive of workers and consumers than it was in 1900.” And most would agree that American capitalism today, while not perfect, is definitely more consumer and worker friendly today than it was in the 1920s. As innovation increases, governance improves.

This isn’t strictly an American phenomenon, however. In his book, Prosperity and Violence: The Political Economy of Development, Robert Bates describes the process by which corrupt and authoritarian European governments were forced by a growing middle class to build modern democratic institutions, including parliaments, that began to dictate budget expenditures, and courts, that grew in their power to arbitrate disputes among citizens.

And in several prosperous Asian countries, a similar evolution of their institutions and governance occurred. In Economic Growth and Development: A Comparative Introduction, Matthew McCartney provides evidence illustrating how fast growing East Asian nations shared similar “bad” governance characteristics in areas such as bureaucracy, rule of law, corruption, expropriation risk and contract repudiation, to poor-performing countries.

But as those countries became more prosperous, through investments in innovations, their governance equally improved. McCartney concludes that, “improving institutions was an outcome not a cause, of rapid growth in East Asia.”

And so, could it be that we have the equation backward in Africa? While governments should not be absolved of their responsibility to develop strong political and economic institutions that enable their constituents thrive, it seems that most efforts at instituting good governance in poor, African countries lead to little, if any, progress. Clearly, there must be a better way.

Development isn’t a linear process, and innovation and entrepreneurship alone won’t solve governance challenges or build strong political institutions. But market-creating innovations are often what begins the process of societal transformation, especially in poor countries. Though entrepreneurship is by no means a substitute for good governance, it is the best vehicle to achieve it.


This article was originally published on qz.com.

Efosa Ojomo is a senior research fellow at the Clayton Christensen Institute for Disruptive Innovation. His work has been published in the Harvard Business Review, the Guardian, Quartz, CNBCAfrica, and the Emerging Markets Business Review. He earned a BS in Engineering from Vanderbilt University and an MBA from the Harvard Business School.


How International Trade can Unlock the Potential of the Cultural Economy in Developing Countries
by Jen Snowball

 
There is growing interest in the creative economy in emerging markets in terms of its impact on employment and economic growth, as well as social and cultural impacts.

 
Evidence should inform policies aimed at realising the benefits of the creative economy. Shutterstock
   
In South Africa, for example, a recent study by the South African Cultural Observatory, found that the country’s creative economy contributed 1.7% to the economy in 2016. And that the creative sector grew faster than South Africa’s overall economy – by 4.9% between 2011 and 2016 compared with 1.6% for whole economy.

An important contributor to this growth is international trade in cultural goods and services. Cultural trade offers developing countries an opportunity to take advantage of the growing interest globally in cultural goods and services.

recent report on the outlook for the creative economy shows that the global market for creative goods more than doubled between 2002 and 2015. Its growth averaged more than 7% globally. In developing countries growth was even faster at 9%. The reports also shows that South-South trade in cultural goods and services is rising.

In South Africa, the export of cultural goods grew by 10.3% between 2015 and 2017. Since 2011 cultural goods exports grew more quickly than total commodity exports.

For Africa, there will be even greater opportunities if all 54 countries join the African Continental Free Trade Area (AfCFTA). This would create one of world’s largest single markets - US$4 trillion in spending and investment – offering great opportunities for mutually beneficial cultural trade.

Building on a recent meeting hosted by the United Nations Conference on Trade and Development (UNCTAD) in Geneva, this article outlines some of the trends and challenges in growing international cultural trade.

Potential Benefits

Cultural trade can be seen as the nexus between creativity and globalisation. The equal distribution of creativity can provide a way for emerging market economies to benefit from both.

The cultural economy is also a source of innovation in both products and processes. These can spill over into other industries, increasing their competitiveness and productivity. For example, a study of nine South American countries showed that a rise some creative industries exports (design, media and graphic arts) increased exports in non-creative sectors in following years.

Cultural trade also has non-market values associated with it. For example in “The Creative Wealth of Nations”, Patrick Kabanda argues that international trade in cultural goods can have a direct economic impact, as well as help build country brand or image. This, in turn, can have a positive effect on investment and trade in other sectors.

The important point, for the purposes of trade in the arts, is that one mode (of supply) can lead to another, in a self-reinforcing cycle that can create jobs, spur investment, boost growth, strengthen the bonds among people and cultures and promote the arts.

But the potential positive impacts won’t necessarily be achieved automatically. Emerging economies need realistic, evidence based policies that are built on their specific “cultural economy” for the benefits to materialise.

Challenges and Trends

Research in both developed and developing countries shows that the vast majority of cultural or creative industry firms are micro enterprises employing fewer than 10 people. In sub-Saharan Africa, there is also a high level of informality, with an International Labour Organisation report estimating that the informal sector accounts for 66% of employment in the region.

Small, informal firms face particular difficulties in the cultural economy of the developing world. This affects their ability to benefit from international trade.

One of the key factors affecting the ability of these firms to thrive is there access to e-commerce, according to a UNCTAD report. A recent PWC report on the entertainment and media outlook in South Africa, Kenya, Ghana and Tanzania underscores this. It points to the rising proportion of digital revenue in the sector.

Yet African small and medium sized enterprises have low adoption rates of e-commerce technologies like mobile-money. This means that they risk being excluded from the digital economy that increasingly facilitates trade. This also translates into a generally low proportions of cultural and creative industry firms who have access to international markets, as shown by some South African research.

Another area that affects companies in the sector are the terms of intellectual property country’s trade under. For example, research has found that trade agreements with an intellectual property clause increases implementation time. But, on the positive end of the scale, intellectual property provisions can increase trade flows from developing to developed countries.

This suggests that intellectual property legislation can help to make trade between the global north and global south more even. However, some authors argue that, for cultural content that can be shared online across boarders, traditional trade barriers (like quotas and intellectual property legislation) cannot be enforced and will not be effective.

In South Africa, the value of payment for intellectual property imports still far exceeds the value of intellectual property exports.

Precariousness of Cultural Employment

Another challenge that needs to be addressed is the precariousness of jobs in cultural employment, especially for young people and women. Encouraging and supporting structures, such as industry associations and co-working spaces, are important in improving working conditions for cultural sector workers.

An additional challenge is the startlingly low proportion of young women in cultural occupations compared to young men in countries like South Africa.

This is an important moment for emerging markets to capitalise on the globalisation and culture nexus. New trading partners with emerging markets, as well as with traditional, developed economies, are growing.

There is clear potential for cultural trade to contribute to sustainable development. But this is not an automatically positive relationship, and specific policies to manage challenges, especially for micro-enterprises, will be needed.


This article was originally published on theconversation.com

Jen Snowball is a Professor of Economics at Rhodes University, and a researcher at the South African Cultural Observatory, which is funded by the Department of Sport, Art and Culture.


Economic Emancipation of African Nations
The Role of Creative Policy Initiatives

by John I. Akhile Sr.


The creativity of political leaders drives economic development. Boris Johnson just proved it in Britain's last election. He is proposing another bold economic policy, which is to build a bridge between Britain and Ireland. There are many naysayers to this plan as there were to Brexit. It is probably not a good idea to bet against the shaggy-headed one. Whether you agree with him or not, he has properly read the U.K voter better than anyone since Margaret Thatcher. Strategic infrastructure development can be a game-changer for spurring economic development. Examples are the creation of the World Wide Web; Transcontinental Rail in the United States; High-Speed Rail; the Euro Tunnel; Panama Canal; to name a few. All of these were bold, improbable ideas that came to fruition. Africa has numerous bold ideas that will create transformative growth. However, African governments and African people have to take the lead in their realization. 


There are immense possibilities in African countries if leaders take the initiative to unleash the latent economic energy of their populations both within and without their countries. Political leaders of African countries have to decide what is more important to them; lifting of their people from poverty or lining their pockets to cling to power for the sake of having power. To be successful, one must study success. Likewise, poorer nations should study economically successful nations. For African leaders, there are many candidates in the world economy to study and mimic.

The creativity of political leaders led to the resurgence of Japan post-World War II. Prime Minister Shigeru Yoshida created a synergistic marriage between government and business, which led to the reinvention of the disbanded Zaibatsu as the Sogo Shosha. It was a perfect interventionist strategy underpinned by the creation of the then JETRO, "Japan's Export Trade Organization." The Sogo Shosha was a conglomeration of businesses that exported Japanese goods to the world and imported raw materials for Japan's industries. The proficiency of this group of companies led to Japan rising to the second-largest economy in the world, a position it held for decades until unseated by China.
 
Interventionist policies fueled the rise of the Asian Tigers. All four original Asia Tigers prospered through export-oriented industrialization strategy, which they all in some form copied from Japan's export prowess. In Hong Kong, small scale manufacturing for export of textiles and electronic appliances created the basis for the island's economic growth, which has since diversified to include financial services. Taiwan's economic interventionism promoted contract manufacturing, agricultural exports, and computer industries. In South Korea, guided capitalism was how Park Chung Hee described his government's economic strategy, which was underpinned by the export of small-scale manufacturing products. The strategy like that of all Asian Tigers was a stir climber approach which has led to South Korea's rise to the 12th ranked economy in the world, with a GDP (nominal) of 1.62 trillion dollars. 
The maestro of Singapore, Lee Kuan Yew, and his gang of Super Ministers figured it out. Their interventionism was to play to Singapore's strength by creating an enabling environment that is attractive to blue-chip international companies to use Singapore to produce goods for re-export to their domestic and international markets. That is how Singapore has become a hub for high-tech manufacturing in the supply chain of technology companies, including Hewlett Packard and Apple. They also managed to attract major oil companies to set up crude oil processing in Singapore, which is not a producer of crude oil. Singapore is now a global leader in the manufacture of petrochemicals. 

They have taken advantage of every possible opportunity in the global economy to create a vibrant niche for Singapore, a country of only five million people, yet possessing a 363 billion dollar economy that is ranked 34th in the world. Singapore's Per Capita GDP of $63,000 per annum is ranked 3rd in the world. Singapore is a first-world economy and country. It is a tremendous feat coming from where it was in the 1960s after the break up of the Malay Republic when per capita GDP was 400 dollars per year, less than that of some African countries.
Deng Xiaoping's creativity unleashed China's latent economic energy that was locked in the Chinese people. He used exhortations like; 'Poverty is not socialism. To be rich is glorious;" It doesn't matter if a cat is white or black as long as it catches mice;" "We mustn't fear to adopt the advanced management methods applied in capitalist countries (...) The very essence of socialism is the liberation and development of productive systems (...) Socialism and the market economy are not incompatible (...) We should be concerned about right-wing deviations, but most of all, we must be concerned about left-wing deviations."

Deng Xiaoping compelled a communist country to adopt a capitalist economic system. The result is Chinese people, not the government, have transformed China and lifted themselves out of poverty. In 1978, the GDP of China was 219 billion dollars. In 1987, when he retired, it was 387 billion dollars, but it was only the beginning. The momentum and energy that the little big man of China introduced into the Chinese economy and people have led to continued GDP growth that has resulted in China posting a GDP of 14 trillion dollars and the second-largest economy in the world. Policies and the actions of political leaders matter.

 

African leaders have a road map out of impoverishment. It starts with identifying the right economic strategy and pursuing the achievement with dogged intentionality. The time to start the journey is now….to be continued in the next issue of Unleash Africa Newsletter.
 
1 Potter, David M. "Evolution of Japan's Postwar Foreign Policy." Nanzan University, 2008
2 https://www.investopedia.com/insights/worlds-top-economies/

3 guidemesingapore.com/business-guides/incorporation/why-singapore/singapore-economy---a-brief-introduction 
4 https://www.washingtonpost.com/news/monkey-cage/wp/2018/12/19/40-years-ago-deng-xiaoping-changed-china-and-the-world/

JohJohn Akhile Author Photon I. Akhile Sr. is the author of two books: Compensatory Trade Strategy: How to Fund Import-Export Trade and Industrial Projects When Hard Currency is in Short Supply and now Unleashed: A New Paradigm of African Trade with the World. He is also the President of African Trade Group LLC., a U.S. based trading company.


Diogo Vaz Roça
A Feature of Unleash Africa Editorial Team
 

Vaz Roca is a farm to the retail grower, processor, and exporter. They sell various tangential products, including dried fruits harvested from their property. It is precisely the philosophy of business that Africans will do well to support. 



One plantation, one chocolate, one brand – is the slogan of this company that initially started as an agricultural venture, but quickly grew into one of Africa’s pioneering chocolate industries, helping to establish Africa’s fine cocoa potential. Diogo Vaz’s historic plantations, coupled with their ancestral know-how has allowed them to grow and enhance their successful campaign, year after year.


Cocoa, introduced from Brazil into the island of Principe in 1822, had its first large-scale plantation started back in 1852. Diogo Vaz Roça, however, has its roots tracing back from 1880. With a growing reputation as the world’s largest producer of cocoa, the potential of São Tomé and Príncipe was always there. As Jean-Remy Martin (the chairman of Kennyson Group) says: “There is no shortcut with cacao.”

Diogo Vaz’s historical plantation, the “Roça”, has an exceptional landscape, its location entrenched deeply between the volcano (São Tomé Peak) and the Atlantic Ocean. Kennyson Group, who acquired the plantation in 2013, are the ones managing it, with a slow and steady rise all but assured. The existing staff has been preserved, wages have been improved and living conditions have changed for the better, confirming the successful story of this company. 

What makes this company unique, though, is that they rely on the ancestral savoir-faire (social grace), passed on from farmer to farmer on the island. Add modern methods and contemporary technology to all that, and you have a winning formula. All of these facts just serve as a powerful testament to the work African people put into their heritage – and their work certainly does not go unnoticed.

Another thing that deserves plaudits is their ambitious replanting program, which features an intricate 6-step program. The first one, cocoa processing, includes harvesting each pod hand by hand to prevent damaging the tree. After that, it is fermenting and drying, which usually takes about two weeks in total. The next stage is the roasting and winnowing, and they are crucial, as they allow for developing the color and the flavor of the beans. Finally, the blending and molding, as well as packing, is what we all witness when gazing upon those delicious final chocolate bars.

Their mission is further enhanced by their strong will to preserve the land they cultivate. Furthermore, their program’s primary aim is to concentrate on rare and authentic varieties, concentrating on traceability and quality, above all.  In addition to cocoa, there is also a wide variety of fruits growing on these plantations – jackfruit, pepper, vanilla, papaya, mango – chief among them all. 

All of these factors point to one common goal – to support the African community and highlight its accomplishments. As of today, this plantation is in support of roughly 1000 people, coupled with four large village communities in its surroundings. There is a school, medical clinic, and church, so we can safely establish that this community is thriving with every passing day. The company sells chocolate confectioneries for retail as well as chocolate slabs for the professional market.


Unleash Africa Editorial Team

Editorial:

Unleash Africa’s rai·son d'ê·tre is to share contents that stimulate discussions about development paths and options for the countries of Africa because the prevailing winds are not favorable and change is necessary. Throughout Africa, poverty and its attendant cargo of ills is expressing itself in grotesquely violent ways. It portends a future of certain militarist conflagration the like of which the continent has not experienced because the embers of conflagration will be supplied by a very large and largely hopeless, youth population. Whether it’s Boko Haram in Northern Nigeria, Niger Delta Avengers in Southern Nigeria, Al-Shabbab in Kenya, unrest in Mali and Central Africa, political and economic disenchantment in South Africa, the smoldering yet unquenched embers of the Arab Spring in Northern Africa, the continent is perched on a cauldron of volcanic socio-economic-political faults. Add to that mix the drop in global commodity prices, especially crude oil, and it is not surprising that voices of consequence in the affairs of the countries are beginning to sound an alarm about rising debt of African countries. "All of the Above Strategy for Development" highlights outside-the-box and traditional export-oriented business strategies that point the way for policy makers to intensify policy prescription in order to maximize or start to implement them.

In this feature, we present a brilliant look into Export-Oriented Industrialization Strategies for economic development. It sets forth both a predicate and subject for export of goods and services as a pathway for economic development.


Export Oriented Industrialization Strategies Intereconomics
By Neil Dias Karunaratne

 
Neo-protectionist Backlash

The shift to export Oriented industrialization has led to an acceleration of manufactured exports at the rate of 14% per annum. Eight newly industrialised countries accounted for 70 % of this increase between 1970-72. The advanced countries experienced mounting unemployment and inflation after the recession triggered off by the OPEC crisis in 1973. They have reacted to increasing manufactured exports by erecting more and more non-tariff barriers which are clumsy in responsiveness and create uncertainty amongst exporters in developing countries. Non-tariff barriers are the core of advanced countries' neoprotectionism to fend off competition from newly industriailised countries in their markets. These neoprotectionis! measures run counter to the spirit of the market mechanism and of the GATT Articles forbidding quantitative restrictions on trade. The non-tariff barriers were instituted as temporary voluntary export restraints on cotton textile exports by a few countries. But the long term cotton textile agreement has now become permanently institutionalised and extended to other products in the form of the Multifibre Agreement of 1974. Besides, voluntary export restraints, government to government orderly marketing arrangements and "organised free trade" are being actively promoted by advanced countries to contain the flow of textile, footwear, electronics, engineering, steel and shipbuilding products from developing countries. Arrangements to cartelise the production of steel, synthetic fibre, and ships have been reported. These neo-protectionist machinisations do not augur well for the pursuit of a successful export oriented industrialization strategy by developing countries. 


Neo-protectionism has been viewed as a recrudescence of neo-mercantilism designed to export advanced countries' unemployment, recession and factor market distortions to developing countries in a "beggar thy neighbour" policy scenario reminiscent of the 1930s Depression. 

In the United States, the Trade Act in 1974 liberalized the eligibility conditions for assistance to domestic industries threatened with "substantial" injury caused by import competition. In many advanced countries massive revamping operations have been undertaken to make senile domestic industries survive in the face of import pressure in the belief that they might one day become internationally competitive. Massive subsidies of a quarter of a million pounds were paid out in 1977 under the British Temporary Employment Subsidy Scheme to protect the British shoe industry. In France, the ailing Boussac textile empire has received handsome handouts. The OECD shipbuilding industry has been heavily subsidised. The lack of positive adjustment assistance in advanced countries and the proliferation of domestic support schemes make a mockery of international trading dynamics. 

Politicians, unionists and academics have found common cause in raising the bogey of unemployment caused by cheap imports from developing countries. Empirical evidence from Britain indicates that unemployment caused by imports in the footwear industry was a mere 0.4 % during 1970-75. In the USA hardly any unemployment was caused by the penetration of manufactured exports from developing countries during the period 1960-75. In Germany no net job losses occurred due to trade in manufactures. During 15 years (1960-75) manufactured exports from developing to advanced countries increased by only 0.8 %. It is noteworthy that 75 % of the increase in textile trade during 1972-75 was due to trade between advanced countries. In clothing the corresponding percentage was nearly 48 %. In 1978 the advanced countries controlled 60 % of their own market in textiles and 86 % of the market in clothing. Thus any t~unemployment caused by trade in these sensitive labour-intensive goods could be squarely apportioned to trade between advanced countries rather than to manufactured exports from developing countries.

The rising tide of neD-protectionism has also been sanctified by the prestigious Cambridge Economic Policy Group (CEPG). The new Cambridge macroeconomics contend that massive controls on manufactured imports would lead to employment generation by promoting import substitution. They argue that neo-classical devaluationist prescriptions cannot rectify the fundamental balance of payments disequilibria of advanced countries as institutional forces (such as real wage demands) would trigger off cost-push inflation. Such inflationary pressures would negate employment creation through exports by undermining the competitive position of the countries concerned. The "siege economy" of CEPG is, however, dismissed with scepticism by mainstream neo-classicists who contend that its implementation would result in stagnation and more unemployment¹³. Even if protectionist policies succeed, it needs to be noted that unemployment is fungible; jobs created by import substitution are likely to be fewer than jobs lost by export shortfalls in the more productive and skillintensive export sectors ¹⁴. 

The failure of advanced countries to play the international rules of the game has not been chastised by GATT. GATT's safeguard clauses are eroded by manipulation, and the onus of current account deficits due to export shortfalls is blamed on developing countries by the IMF when financing them through tranch facilities. The prospects for export~induced development are bleak indeed as powerful advanced countries call the tune in the trade game. The predicament of the developing countries is caused by the advanced countries' policies that could be summed up as: "free trade when you are strong: nationalism when you are weak ''¹⁵.

13 Cf.W.M. Corden,I.M. Little, M.F.G. Scott: Import Controls versus Devaluation and Britain's Economic Prospects, London 1975. 
14 Cf. J. Tu mlir : Can the International Economic Order be Saved?, in: The World Economy, October 1977. 
15 S. Lall, op. cit.


This article was originally published on econstor.eu

Neil Dias Karunaratne was born in Matara, Sri Lanka, the second child to Peter and Emelda Karunaratne. Neil grew up in Matara, a beachside city on the southern tip of Sri Lanka, in a large family with three brothers and three sisters. Neil was enrolled at SAC on 17 January 1950 and was admitted as a hosteller. It was during his time at St Aloysius that he developed a lifelong drive for academic achievement and excellence. He obtained a 1st division in the Junior exam in 1952 and a 1st division in the Senior exam in 1954. He was a bronze medalist of the Royal Life Saving Society and a Queens Scout and Troup Leader for a short spell. He passed his Voucher exam in the St John’s Ambulance brigade and was a member of the Under 16 athletics team. Neil was the holder of the Abeyesundere Memorial Scholarship.He left SAC in May 1955, while in HSC I, since the College had no facility for students pursuing a career in Statistics, and joined St. Thomas’ College, Mt Lavinia. Neil went on to complete a Bachelor’s degree in Arts (Economics) at the University of Peradeniya between 1956 and 1959.  Following his Bachelor’s degree, Neil subsequently started working, as a lecturer in economics at the University of Colombo, and, also in a government job with the civil service (the Bank of Ceylon). During this time, in the early 1960s, Neil developed an interest in econometrics and began to pioneer the teaching and research in this field in Sri Lanka.

Governance:

Governance to African countries is like oxygen to humans. It is crucial to the prospects of African countries achieving economic prosperity without disintegrating into civil conflict. It is the ability of political leaders to create the enabling factors that will facilitate maximization of the competitive advantage of every country, no matter the size or the amount of resource endowments. Better, more competent governance structures and environment is the missing element that African nations need to unleash the potential of their people and country. We will discuss it frequently in this segment of the newsletter.

In this issue, we are starting a large multi-insert report commissioned by AU about governance in African countries. To quote the authors “The imperative for the development of an African-generated governance report is three-fold: first, this homegrown report is consistent with previous decisions of the AU Assembly to take control of its own development agenda and accountability mechanisms; secondly, the research methodology in this report benefits considerably from consultations with the AU Organs and Institutions, Regional Economic Communities; and unfettered access to Member State informants and state-held data; thirdly, the report is generated by Africans for Africa, which improves prospects for the implementation of its recommendations..” The failure of good governance structures in African countries lies at the heart of all that ails the countries of the continent. Hopefully, the origination of the report will lend actionable credence that will propel action on the part of leaders and their governments.

 

The Africa Governance Report: 
Promoting African Union Shared Values
by the African Peer Review Mechanism (APRM) In Collaboration with the African Governance Architecture (AGA)

CHAPTER 2: THE AFRICAN GOVERNANCE POLICY FRAMEWORK

2.1 Constitutive Act of the African Union 

The Constitutive Act of the African Union is the foundation of the governance framework. The Act is the basis for policy and institutional arrangements; it defines the establishment, objectives, and principles of the AU and the major implementing organs and institutions. Reflected in the Constitutive Act are global values, principles, and norms relating to human rights, sovereignty, peace and security, good neighbourliness, cultural and socio-economic values and international cooperation that are also contained in the Purposes and Principles of the UN¹¹ as stated in the Charter of the United Nations (UN) Organization. The Constitutive Act also calls for the promotion of sustainable development at the economic social and cultural levels as well as the integration of African economies (Article 3(j)). 

2.2 African Union Shared Values 

The African Union Vision is to achieve “An integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the international arena”.¹² Thus, unity, prosperity, peace, citizen empowerment, and global engagement are the common goals that inform collective decisions and actions. 

Article 3 of the Constitutive Act has the following objectives: achieve greater unity and solidarity between African countries and the peoples of Africa; defend the sovereignty, territorial integrity and independence of its Member States; accelerate the political and socio-economic integration of the continent; encourage international cooperation, take due account of the Charter of the United Nations and the Universal Declaration of Human Rights; promote peace, security, and stability on the continent; promote democratic principles and institutions, popular participation and good governance; promote and protect human and peoples’ rights in accordance with the African Charter on Human and Peoples’ Rights and other relevant human rights instruments; and promote cooperation in all fields of human activity to raise the living standards of African peoples. 

The AU has a set of shared values which could be categorised around: democracy and good governance; rule of law and human rights; peace and security; and continental development and integration. 

2.3.1 Democracy and Good Governance 

The African Union aims to promote democracy and good governance among its Member States. That serves to confirm that these ideals are critical to the attainment of development, peace, security and governance on the continent. Apart from the Constitutive Act, the AU commitment to these ideals manifests in various instruments, including the Charter of Democracy, Elections and Governance (ACDEG); OAU/AU Declaration on Principles Governing Democratic Elections; the New Partnership for Africa’s Development (NEPAD) Declaration on Democracy, Political, Economic and Corporate Governance; the (Algiers and Lomé) Declarations on Unconstitutional Changes of Government; and African Union Convention on Preventing and Combating Corruption.

2.3.2 The Rule of Law and Human Rights 

The AU seeks to promote respect for the rule of law and human rights, as expressed in other instruments including: the African Charter of Human and Peoples’ Rights; the Kigali Declaration on Human Rights in Africa; the Protocol on the Statute of the African Court of Justice and Human Rights; the Protocol to the African Charter establishing the African Court on Human and Peoples’ Rights; the Protocol to the African Charter on Human and Peoples' Rights on the Rights of Women in Africa; the Solemn Declaration on Gender Equality in Africa; the African Charter on the Rights and Welfare of the Child; the African Youth Charter; and the Draft Protocol to the African Charter on Human and Peoples’ Rights on the Rights of Persons with Disabilities in Africa. 

2.3.3 Peace, Security and Governance 

Peace and security are another major objective of the AU. Hence the Protocol Relating to the Establishment of the Peace and Security Council of the African Union; the African Union Post-Conflict and Reconstruction Policy Framework; the Conference on Stability, Security, Development and Democracy (CSSDCA); the AU Convention Governing the Specific Aspects of Refugee Problems in Africa; and the African Union Convention for the Protection and Assistance of Internally Displaced Persons in Africa. The Constitutive Act mandates the Memorandum of Understanding (MoU) on Cooperation around Peace and Security between the AU, RECs and the Coordinating Mechanisms of the Regional Standby Brigades. 

2.3.4 Continental Integration, Cooperation and Security 

Continental economic development and integration is the other major focus for the AU as reiterated in the Declaration on the theme of the 2012 Summit, “Towards Greater Unity and Integration through Shared Values”. The AU is progressing towards the realization of the African Economic Community (AEC). Although the original purpose of the RECs was to facilitate regional and continental integration, they have increasingly been involved in peace and security and governance issues. Regarding these, the Constitutive Act mandates the 2008 Protocol on Relations between the RECs and the AU. 

2.4 The Structures of African Governance 

There is an elaborate institutional framework for the realization of the ideals of: democracy and good governance; rule of law and human rights; peace and security; and continental socio-economic sustainable development and integration. The political institutions decide on policies and priorities whereas the administrative are the implementers of those political choices. The political and administrative institutions are at three levels: The Continental, Regional, and Member State. The successful achievement of the objectives of AU collective decisions and achievement of the AU Agenda 2063 and the UN SDGs depends on the functioning of implementation structures at all these levels. 

2.4.1 Member States 

The Member States have diverse constitutions that are the basis for their political, economic, and administrative governance. These constitutions are not derived from the AU Constitutive Act but influenced by their specificities and different cultures. The Member States have their own varying governance systems.

2.4.2 The Regional Economic Communities 

The RECs are regarded as the building blocks for achieving continental goals of the AU, especially through regional development and integration. However, they assist in operationalization of African Peace and Security Architecture initiatives, in collaboration with Regional Mechanisms. Eight RECs are officially recognised by the AU: Arab Maghreb Union (UMA); Common Market for Eastern and Southern Africa (COMESA); Community of Sahel-Saharan States (CEN-SAD); East African Community (EAC); Economic Community of Central African States (ECCAS); economic Community of West African States (ECOWAS); Intergovernmental Authority on Development (IGAD); and the Southern African Development Community (SADC).

2.4.3 African Union Structures 

At the Continental level, there are the following principal organs of the AU: (i) the Assembly of the Union; (ii) Executive Council; (iii) Peace and Security Council; (iv) Pan-African Parliament; (iv) Legal organs; (v) AU Commission; (vi) Permanent Representatives Committee; (vii) Specialised Technical Committees; (viii) Economic, Social and Cultural Council; and the African Committee on the Rights and Welfare of the Child (ACERWC).

to be continued in next Month’s Unleash Africa Newsletter


11 See Annex 1, Table 1: Highlights of the interrelationships of the Global UN and OAU/AU principles, purposes and objectives. 
12 African Union Commission (AUC), 2015. Agenda 2063 – The Africa We Want.


This article was originally published on au.int.

The African Peer Review Mechanism (APRM) is a mutually agreed instrument voluntarily acceded to by the member states of the African Union (AU) as a self-monitoring mechanism. It was founded in 2003. The mandate of the APRM is to encourage conformity with regards to political, economic and corporate governance values, codes and standards, among African countries and the objectives in socio-economic development as well as to ensure monitoring and evaluation of AU Agenda 2063 and SDGs 2030.
The African Governance Architecture (AGA) is a mechanism for dialogue between stakeholders that are mandated to promote good governance and bolster democracy in Africa. In the book entitled The African Union Law (Ed. Berger Levrault, 2014, p. 29) Blaise Tchikaya established the link between conceptual platform called AGA and the modernisation of International Law applicable to African states. The AGA is fundamentally one aspect – probably the most significant – of recent international law of governance.
Unleashed: A New Paradigm of African Trade with the World is now available to buy at any of the sites listed below. 

Unleashed Site | Bookmasters | Amazon.com
African Trade Group’s Infrastructure Project for African Countries

African Trade Group has designed a project that addresses internal roads, which is one of the most important infrastructure challenges facing African countries, with a very innovative infrastructure plan.

Highlights of the plan:

  • It is a private sector-driven initiative. It will involve the private and public sector in every participating African country.

  • The funding for the project is through private capital markets and will be led by one of the world’s preeminent financial services firms. They will partner with financial services companies in every African country in market making and deal structuring.

  • The payment for the project is designed around the resources capabilities of African countries using conventional and unconventional means.

  • Indigenous African contractors will sort out and be invited to supply construction services in each country in order to contribute to the process of building long-term capacity within a country.

  • African labor will make up a minimum of 50% of the jobs that emanate from the project in each country.

  • The project manager will be a renowned world-class civil engineering company. They will partner with other firms of renown and qualification.

We encourage our African readers who are in high office to contact us for additional information. Also follow the link to read additional details about the plan.



African Trade Group

Our Mandate
To deliver Africa to the world and the world to Africa. 

Our main focus is on African trade. We specialize in helping clients in African countries to develop industrial projects. We will broker commodities and manufactured goods to and from the global market to African countries. In the area of industrial exports, we will help our clients to develop export oriented industries and market the goods produced in hard currency markets.

Our Vision

Our goal is to be a key component of the transition of African countries from raw materials exports to industrial goods export. In addition to contributing to the rise of export industries in every African country, African Trade Group aspires to become the premier company in the trading of commodities and manufactured goods of African origin.

Contact Us
John I. Akhile Sr
Publisher
www.unleashafricantrade.com
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