|AllAfrica News: Latest|
|All Africa, All the Time.|
There is a story that governments of wealthy countries like to tell about the rich world's relationship with Africa. It is a story of generosity, charity and benevolence. It is a story of selfless aid givers supporting the needy and impoverished people of Africa.
While this is the story that governments like to tell, it is not the correct story. Research launched this week by Health Poverty Action, with a number of African and UK partners, shows that $192 billion a year is being taken out of Africa by the rich world - almost six and a half times the amount of 'aid' it receives.
Our research examined outflows from Africa across a wide range of areas. These include illicit financial flows, the repatriation of multinational company profits, debt repayments, loss of skills, illegal logging and fishing and the costs imposed as a result of climate change. We compared these to inflows - including aid, foreign investment and remittances.
We found that Africa's net loss is $58 billion a year. To put this amount into context, it is over one and a half times the amount of additional money that would be needed to deliver affordable health care to everyone in the world.
The current debate about the role of the UK in ending global poverty focuses mostly on how much aid we should give. As politicians line up to defend our 'proud record' as a donor, for the purposes of political point scoring, the charity sector has tended to respond by applauding the aid budget - and in so doing has reinforced this aid-based perception of our relationship with Africa.
We need to ask why then, despite years of this 'generosity', is the end of global poverty still nowhere in sight? Rather than tackling poverty, this false narrative has instead helped to reinforce paternalistic notions of Africa as a poor and corrupt continent, with helpless people in need of intervention from wealthy countries. The narrative ignores the fact that the rich aid givers are in fact taking more than they give.
In reality, Africa is not poor, but its people are being kept in poverty by a combination of inequitable policies, huge disparities in power, and criminal activities perpetuated and sustained by wealthy elites, both inside and outside of the continent.
The UK, with its network of tax havens, is at the heart of this theft from the continent. Yet this truth is rarely told, while politicians and charities praise the rich world for being the saviours of the poor. This perverse portrayal allows wealthy governments to publicly celebrate their 'generosity, while continuing to be party to the sustained looting of Africa - increasing inequality and creating the very poverty they profess to be solving through aid.
As the general election approaches, we - and especially the international NGO sector - must demand that the main political parties clearly set out not how much aid they will provide for the poor, but focus on what they will do to address the far bigger issue - putting a stop to the amounts regularly stolen from the poor.
It is time for us to face an inconvenient truth. It is not the world that aids Africa, but Africa that aids the world. Even more, it's time for us to communicate that truth.
Visit website to read the full report.
Martin Drewry has a long background in the voluntary sector, initially as an award-winning grass-roots community development worker in the UK, before moving to international development. After a few years as national secretary of World Action, a pioneering Methodist programme enabling young people and adults to take action for social justice, he spent the next decade as head of campaigns at Christian Aid. Here he played leading roles in Jubilee 2000, Drop the Debt, the Trade Justice Movement and was one of the elected coordinators of Make Poverty History. Martin’s academic grounding came from the Bradford University School of Peace Studies in the mid-eighties, an experience he valued. He became director of Health Poverty Action in April 2006.
Judging from the daily outpouring of commentary, opinions and reports, you would think that there were two African continents. One of them is the new land of opportunity, with seven of the world's 10 fastest-growing economies, offering limitless possibilities to investors. There is, however, this other image: a starving and hopeless continent, hungry and poor, corrupt and prey to foreign exploiters.
As Africans, we are tired of caricatures. But we are also tired of waiting – waiting to be led towards the one Africa we all want, the Africa that can and should be. We know the real Africa, filled with possibilities, dignity and opportunities, able to face its challenges and solve them from within. Never has the time been more right for us finally to realise our full potential. It is within our grasp.
As a scientist, I am always interested in facts. Africa is a land rich in resources, which has enjoyed some of the highest economic growth rates on the planet. It is home to 200 million people between the ages of 15 and 24 (pdf). And it has seen foreign direct investment treble over the past decade.
As the head of an institution whose business is investing in rural people, I know that you also need vision and imagination. At the International Fund for Agricultural Development we have banked on the poorest, most marginalised people in the world, and over and over again these investments have paid off for people and for societies. And more than half the people we invest in are Africans.
Almost 11 years have passed since the Maputo Declaration, in which you, as African leaders, committed yourselves to allocating at least 10% of national budgets to agriculture and rural development – key sectors in the drive to cut poverty, build inclusive growth and strengthen food security and nutrition.
Today, just seven countries have fulfilled the Maputo commitment consistently (pdf), while some others have made steps in the right direction. Eleven years is a long time to wait. I have seen projects turn desert into farmland in less time.
In just a few days, in Malabo at the 23rd African Union summit, I will join those of you, African leaders, who will gather to discuss this year's topics - agriculture and food security. This is my call: don't just promise development – deliver it; make it happen now. Make real, concrete progress towards investment that reaches all Africans, investments that prioritise rural people.
Our biggest resource is our people. To squander this is worse than wasteful. If we don't act now, by 2030 Africa will account for 80% of the world's poor (pdf). Is this the legacy that we want to leave for future generations?
The AU declared 2014 to be the year of agriculture and food security. And this is the year we look beyond the deadline of the millennium development goals to a post-2015 world with new goals and targets to reach. I hope this means that we will be dedicating ourselves fully to making agriculture a priority. GDP growth due to agriculture has been estimated (pdf) to be five times more effective in reducing poverty than growth in any other sector, and in sub-Saharan Africa, up to 11 times. Paradoxically, it is countries that lack lucrative extractive industries, and which have had to invest in agriculture, that have found out what is now an open secret: agriculture not only improves food security but also creates wealth. Small family farmers in some parts of our continent contribute as much as 80% of food production (pdf). Investing in poor rural people is both good economics and good ethics.
A full 60% of our people depend wholly or partly on agriculture for their livelihoods (pdf), and the vast majority of them live below the poverty line. It's not pity and handouts that they need. It's access to markets and finance, land tenure security, knowledge and technology, and policies that favour small farms and make it easier for them to do business. A thriving small farm sector helps rural areas to retain the young people who would otherwise be driven to migrate to overcrowded cities, where they face an uncertain future. Investing in agriculture reinforces not only food security, but also security in general.
In an Africa where 20 states are classified as fragile and 28 countries need food assistance, the need for a real rural transformation backed by investment and not just words is critical – I have often said that declarations don't feed people.
Investment must be focused on small family farms. Such smallholdings make up 80% of all farms in sub-Saharan Africa. And, contrary to conventional wisdom, small farms are often more productive than large ones. For example, China's 200 million small farms cover only 10% of the world's agricultural land but produce 20% of the world's food (pdf). The average African farm, however, is performing at only about 40% of its potential. Simple technologies – such as improved seeds, irrigation and fertiliser – could treble productivity, triggering transformational growth in the agricultural sector. It is estimated that irrigation alone could increase output by up to 50% in Africa (pdf). Rural areas also need the right kinds of investment in infrastructure – roads, energy, storage facilities, social and financial services – and enabling policies backed by appropriate governance structures that ensure inclusiveness.
If we look at the countries that have met the Maputo commitment, we see that investing in agriculture works. Given that agriculture has become lucrative for private investors, and that about 60% of the planet's available uncultivated agricultural land is in Africa (pdf), there is no mystery about why we hear of so-called "land grabs". Opportunity draws foreign investors. There is nothing wrong with foreign investment. But it has to be managed, for the benefit of all.
What is a mystery is why, with such a vast potential and a young population just waiting for a reason to seize it, our African leaders do not announce that they will redouble their efforts to drive an inclusive rural transformation, with concrete commitments, that will make Maputo a reality. I hope that, after the Malabo meeting, that will be a mystery no longer.
African economies have grown impressively. But it is time to stop focusing on GDP figures and instead focus on people. The majority of our people are engaged in agriculture, and the neglect of that sector must stop if we really want to realise the healthy, peaceful and food-secure Africa that we know can be. It is not a dream: it is a responsibility.
Kanayo F Nwanze is the president of the United Nations rural development agency, the International Fund for Agricultural Development
Foreign investors pouring money into Africa are increasingly turning away from commodities-led projects to tap into the growing consumer market, while smaller, less-established countries are also getting a bigger lion's share.
In its annual report on Africa released this week, EY revealed the continent became the world's second-most attractive investment destination in 2013, just behind North America. In addition, Africa's share of global foreign direct investment (FDI) reached its highest level in a decade, at 5.7 percent, while capital investments grew by 12.9 percent in the same period.
But 2013 also saw some major shifts in investment trends on the continent. Mining and metals, for instance, are no longer the main beneficiaries of FDI and the list of the top 10 countries in FDI projects showed some surprising trends.
While EY noted a "dramatic improvement" in perceptions of Africa over the last four years, the usual magnets for foreign investment are losing momentum. FDI flows into mining and metals, coal, oil and natural gas have become less prominent, according to EY, with their share of overall FDI projects at the lowest-ever level in 2013.
Instead, investors are turning to service- and consumer-related industries. The top three sectors – technology, media and telecommunications, retail and consumer products (RCP) and financial services – accounted for more than 50 percent of total FDI projects last year.
The expanding but still underpenetrated consumer market and the improving communication infrastructure boosted investments in RCP, which accounted for 17.5 percent of FDI projects last year.
Claire Schaffnit-Chatterjee, a senior analyst at Deutsche Bank, said that although the African consumer market was largely still for basic goods and services, this was changing as citizens became richer. "More than half of African households are forecast to have discretionary income by 2020," she told CNBC by phone.
Razia Khan, regional head of research for Africa at Standard Chartered, named Nigeria as one country which was likely to see increasingly diversified FDI flows, despite concerns about political instability and terrorism activities, such as the recent kidnapping of nearly 300 schoolgirls.
Nigeria recently overtook South Africa to become the continent's fastest-growing economy. Khan added that Nigeria's high birth rate would also boost consumer demand. "Already there are more Nigerian babies born every year than there are in the whole of Europe," she told CNBC by phone.
Watch out for…Zambia
However, for Africa's less well-established countries, the story may still be about commodities. "For small economies, the stuff that will really move the dial is resources," Khan said. She highlighted Ghana, Mozambique, Uganda and Zambia as "resource stories".
Zambia and Uganda both made their first appearances in 2013 on EY's top-10 list of most popular destinations for foreign investment, ranked by number of FDI projects.
Zambia is the world's third-largest copper producer and output is expected to double by 2020. The country is also rich in other natural resources, with fertile lands and hydro power, and is considered politically stable.
The Zambian government is also taking steps to develop various sectors beyond the mining industry, by setting up a sovereign wealth fund and boosting investment in infrastructure to develop tourism and agricultural industries.
As for Uganda, investors are attracted by the solid economic growth record, rapid population expansion and currently low per capita consumption. Uganda has also discovered oil, and is on track to become an oil producer by 2017, according to Khan.
Ghana and Mozambique moved up EY's ranks for FDI projects to occupy fourth and seventh place in 2013. Like Uganda, both have been boosted by recent energy discoveries – oil for Ghana , coal and gas for Mozambique – and the accompanying boom in infrastructure development.
Between 2014 and 2018, Mozambique's economy is seen expanding by 8 percent per year on average. "Mozambique has very strong growth prospects," Schaffnit-Chatterjee told CNBC.
Alice Tidey @AliceTidey
In 2005, Binyavanga Wainaina published a brilliantly sarcastic essay in Granta called "How to Write About Africa," advising people on how to sound spiritual and compassionate while writing a book about the continent.
"Always use the word 'Africa' or 'Darkness' or 'Safari' in your title," Wainaina advised. "Never have a picture of a well-adjusted African on the cover of your book, or in it, unless that African has won the Nobel Prize. An AK-47, prominent ribs, naked breasts: use these. If you must include an African, make sure you get one in Masai or Zulu or Dogon dress."
Wainaina had other tips: The people in said book should be depicted as hungry, suffering, simple or dead. The children should have distended bellies and flies on their faces. The animals should be depicted as wise and filled with family values.
Elephants are caring and good feminists. So are gorillas. Be sure to show how profoundly you are moved by the continent and its woes, and how much it has penetrated your soul. End with a quote from Nelson Mandela involving rainbows.
There's been something similarly distorted to some of the social media reactions to the Boko Haram atrocities. It's great that the kidnappings and the massacres finally are arousing the world's indignation. But sometimes the implication of the conversation has been this: Africa is this dark and lawless place where monstrous things are bound to happen. Those poor people need our help.
But this is more or less the opposite of the truth. Boko Haram is not the main story in Africa or even in Nigeria. It is a small rear-guard reaction to the main story. The main story in Africa is an impressive surge of growth, urbanization and modernization, which has sparked panic in a few people who don't like these things.
Many countries in sub-Saharan Africa are growing at a phenomenal clip. Nigeria's economy grew by 6.7% in 2012. Mozambique's grew by 7.4%, Ghana's by 7.9%. Economic growth in sub-Saharan Africa as a whole is predicted to reach 5.2% this year. Investment funds are starting up by the dozen, finding local entrepreneurs.
In 2011, roughly 60 million African households earned at least $3,000 a year. By next year, more than 100 million households will make that much. Trade between Africa and the rest of the world has increased by 200% since 2000. Since 1996, the poverty rate has fallen by 1% per year. Life expectancies are shooting up.
Africa should not be seen as merely the basket case continent where students, mission trips and celebrities can go to do good work. It has become the test case of 21st-century modernity. It is the place where the pace of modernization is fast, and where the forces that resist modernization are mounting a daring reaction.
We are seeing three distinct clashes. They're happening all over the world, but they exist in bold contrast in Africa.
The first is the clash over pluralism. Africa has seen an explosion of cellphone usage. It's seen a rapid expansion of urbanization. In 1980, only 28% of Africans lived in cities, but today 40% do. This has led to a greater mixing of tribal groupings, religions and a loosening of lifestyle options. The anti-gay laws in Nigeria, Uganda, Burundi and many other countries are one reaction against this cosmopolitan trend.
The second is a clash over human development. Over the past decade, secondary school enrollment in Africa has increased by 50%. This contributes to an increasing value on intellectual openness, as people seek liberty to furnish their own minds. The Boko Haram terrorists are massacring and kidnapping people — mostly girls — at schools to try to force people to submit to a fantasy version of the past.
The third is the clash over governance. Roughly 80% of Africa's workers labor in the informal sector. That's because the formal governmental and regulatory structures are biased toward the connected and the rich, not based on impersonal rule of law. Many Africans are trying to replace old practices with competent governance.
Too many of our images of Africa are derived from nature documentaries, fundraising appeals and mission trips. In reality, Africa faces in acute forms the same problems that afflict pretty much every region these days. Most important: Individual and social creativity is zooming ahead, and governing institutions are failing to perform the basic, elementary tasks.
David Brooks is a neo- conservative columnist for The New York Times.
The best untold story of the last decade may be the story of Africa. Real income has increased more than 30 percent , reversing two decades of decline. Seven of the world’s 10 fastest-growing economies are in Africa, and GDP is expected to rise 6 percent per year in the next decade. HIV infections are down nearly 40 percent in sub-Saharan Africa and malaria deaths among children have declined 50 percent . Child mortality rates are falling, and life expectancy is increasing.
This is a moment of great opportunity for Africans. It is also a moment of decision.
The choices that Africans and their leaders make will determine whether a decade of progress leads to an era of African prosperity and stability — or whether Africa falls back into the cycle of violence and weak governance that held back the promise of the continent for far too long.
The challenges are real. Bitter and bloody conflicts are embroiling South Sudan, the Central African Republic and Congo. Corruption remains rampant; the African Union reports that $148 billion is wasted through corrupt practices each year. Africa needs strong leaders and strong institutions to stand up for human rights, address discrimination against women and minorities, and remove restrictions on freedom of expression.
The United States and African nations have deep historic and economic ties. The U.S. government has invested billions of dollars in health care, leading to real progress in combating AIDS and malaria. Our security forces work with their African counterparts to fight extremism. U.S. companies are investing in Africa through trade preferences under the African Growth and Opportunity Act. As a friend, the United States has a role to play in helping Africans build a better future.
Many of the choices are crystal clear. African leaders need to set aside sectarian and religious differences in favor of inclusiveness, acknowledge and advocate for the rights of women and minorities, and they must accept that sexual orientation is a private matter. They must also build on their economic progress by eliminating graft and opening markets to free trade.
The conflict and crises that have held Africa back for too long were evident Friday when I flew into Juba, the capital of South Sudan. I remember arriving in Juba in January 2011 when the people of South Sudan voted overwhelmingly for independence. Even in that moment of jubilation, the threat of ethnic violence loomed just over the horizon.
The violence turned tragically real in December when fighting broke out between forces loyal to the government and militias aligned with a rebel leader. Today we see the echoes of too many earlier conflicts: thousands of innocent people killed, both sides recruiting child soldiers and a country on the cusp of famine.
Led by the U.S. special envoy to South Sudan, Donald Booth, the United States and our partners in Africa have been trying to mediate the conflict. On Friday, when I met with President Salva Kiir, I reminded him of our conversations about his nation’s promise. I urged him to set aside old grudges and reach a settlement with the opposition before that promise is soaked in more blood.
Resolutions of age-old grievances are difficult, but they are possible. For two decades, Africa’s Great Lakes region has endured a crisis as militants and gangs have fought over mineral wealth and ethnic differences. In recent weeks, Angola has demonstrated remarkable leadership in working with other African countries and the State Department’s special envoy to the Great Lakes region, Russ Feingold, to promote a framework for peace. There is a long way to go, but the progress is real and it represents hope for the region and the continent.
Our role in Africa goes beyond security assistance. We are working to develop the prosperity that is critical to a better future. One aspect of that effort is Power Africa, a public-private partnership conceived by President Obama to pump billions of dollars into the continent’s energy sector and double the number of people with access to electricity.
And we are engaging the promise of a new generation of leaders across Africa. This summer, 500 Africans will come to the United States for the Washington Fellowship for Young African Leaders. The fellowship is part of President Obama’s Young African Leaders Initiative, providing training, resources and platforms to support leadership development, promote entrepreneurship and connect leaders with one another and the United States. In August, the president will host the first summit between African and U.S. leaders.
Africa can be a beacon for the world: Dramatic transformations are possible, prosperity can replace poverty, cooperation can triumph over conflict. This is tough work, and it requires sober commitment, regional cooperation and a clear vision of a better future. The goal of a prosperous, healthy and stable continent is within reach if Africans and their leaders make the right decisions.
John F. Kerry, a former United States Senator is secretary of state for U.S.
Africa must deliver Europe from its darkness – Otabil
Motivational Speaker and Preacher, Dr Mensa Otabil says it is time for Africa - "the centre of Christianity" in the world - to rescue Europe from its “darkness.”
The International Central Gospel Church general overseer says despite the fact that Africa received the Christian gospel from European missionaries hundreds of years ago, the West has now sunk into darkness and needs Africa to show it the light.
Dr Otabil told his congregation in Church on Sunday that Africa has become the fulcrum of Christianity in the world and must now rescue her Christian benefactor.
“Hundreds of years ago, the gospel came to us from Europe; great missionaries came, laboured here, some of them died. Some of them took 20 years, 30 years to have their first converts. So many were killed just by malaria and new missionaries came. Eventually the gospel took roots in Africa; in Ghana, Nigeria and the rest of Africa and now, the Church is growing fast in Africa than the rest of the world.
“The centre of Christianity is no longer Europe, it’s Africa, and Europe is now the ‘dark’ Continent of Europe. They need the gospel. But whose gonna give them the gospel? Those they gave the gospel to 200 years ago. We took the seed. We have produced the seed. Now we have to take the seed back to the people who came to sow the seed to us,” Pastor Otabil said.
Source: Ghana Web
Economic growth projections are a tricky business, often requiring forecasters to revisit and change their projections. Nonetheless they provide us with a window into the future. A new report from the World Bank projects Sub-Saharan Africa to grow at 5.3 in 2014, up from 4.7 in the past year.
Compared to other regional blocs, projected growth in Sub-Saharan Africa ranks third, after East Asia at 7.2 and South Asia at 5.7. The paradox of the past several years of impressive economic growth in Africa is that it has been accompanied by little in job creation, and this trend is set to continue.
Many reports have documented the extent to which economic growth has failed to translate into real development in Africa. Weak job growth has remained stubbornly high during the past decade of sustained economic growth. The International Labour Organization classifies 82 percent of African workers as poor, because they are stuck into the informal sector of self-employment and have no good wage-paying jobs. A new United Nations report on Global Economic Outlook warns of the danger of this paradox which is an issue in many countries around the world, albeit, at differing degrees and for different reasons. Last May, the African Development Bank warned governments of "political instability" due to soaring youth unemployment. Around 12 million young people join the labor force each year in Africa and so far, only one fifth get jobs. Reason why every month or so, we watch in horror desperate young people drowning in the Mediterranean trying to cross to Europe for greener pastures. The Arab spring, which toppled governments in Tunisia, Libya and Egypt, was a reaction to disturbingly high unemployment among young people.
Poverty rate is not declining as fast as it should and those in extreme poverty, around half of Africa's population, can't find food nor quality education in news headlines of 'impressive economic growth'. Extreme poverty declined from 52 percent in 1981 to 48 percent in 2010, according to World Bank estimates, a mere 4 percent in 29 years. That is as slow as it can get in the 21st century of ubiquitous technology which, if harnessed, propels countries, as it did with those in Asia, to leapfrogging.
So why is Africa's job growth so weak while its economic growth outlook is just fine, even robust? The reasons are structural in nature and three-fold.
First, much of that 'robust' economic growth in the past decade in Africa has been driven by export of commodities or natural resources. McKinsey and Company estimates this resource boom to be responsible for 32 percent of Africa's GDP. The problem with commodity-driven growth is that it is not labor-intensive, but rather capital-intensive. Wealth from wells and the ground -- which then travels to far-flung places in pipelines -- tend to bypass people. In addition, let's remember that economic development springs from adding value to resources, not merely exporting them crude. This is why Angola's economy grew at 11.1 percent for the decade of 2001-2010, the fastest on earth, much of it from oil exports, while 60 percent of Angolans live under extreme poverty. Countries need to make deliberate choices to facilitate growth in key labor-intensive industries.
Second, while Africa needs investments in sectors such as infrastructure, technology and education, much of its finances keep leaking out to the rest of the world. In May 2013, a joint study by the African Development Bank and the Global Financial Integrity showed that from 1980-2009 Africa lost $1.2 to 1.4 trillion in illicit financial outflows -- in corruption, tax evasion and bribes. This amount is more than three times the total amount of foreign aid received in the same period and twenty-eight times higher than the annual foreign direct investments to Africa which, according to the United Nations Conference on Trade and Development, was at 50 billion in 2012. If this trend was reversed, Africa would be able to solve all of its economic woes with no outside assistance. Were it to be reversed even by 1 percent, well, the African Union headquarters wouldn't be a donation from China.
Third, there is no industrialization, not even in agricultural production, taking place when it should. It is getting expensive to manufacture products in Asia because of growing labor costs there and this presents unprecedented opportunities for Africa to venture into the manufacturing sector, a labor-intensive industry which could potentially solve the persistent and pervasive problem of joblessness. Last October, the African Development Bank declared, rightly so, that "Industrialization is a precondition for Africa's economic transformation." Manufacturing contributes less than 10 percent to Africa's GDP and employs even less of that percentage, an unhealthy structure for many resource-rich countries. Agriculture share in GDP is just 12 percent, according to OECD estimates, while it employs over 60 percent. What this shows is that wealth in Africa is not where people are. That is the paradox of Africa's 'impressive' economic growth, and a continuing sluggish job market.
Tackling this complex issue will take time, years or even decades, but first policymakers need understand its root causes and the limits of committing to create a 'certain number' of jobs by the government every year as a response to the crisis. Though such a response might be helpful, the real causes are structural in nature and must be tackled as such.
Obadias Ndaba is a commentor and columnist specialty on Congo and African affairs. His works have appeared in The Voice of America, The National Review, The African Executive, The African Liberty and The Africa Review, The Standard and The New York Times. Ndaba is a native Congo and was up brought in Rwanda, where worked in micro-finance and commercial banking. He is aso the president of World Youth Alliance.
Africa has the most natural resources in the world. For example: Just one country, the Democratic Republic of the Congo is estimated to have $24 trillion worth of untapped deposits of raw mineral ores, which is equivalent to the combined total Gross Domestic Product of Europe and the United States combined. These raw minerals include cobalt, copper, niobium, tantalum, industrial and gem diamonds, gold, silver, zinc, manganese, tin, uranium, coal, petrol and timber. It is believed that 80 percent of the world’s coltan is in the Congo.
Besides the raw resources, there are plenty other investment opportunities in Africa and with proper organized initiatives many African-Americans that may want to invest can make plenty of money for their efforts.
According to Jerome Almon, a businessman and an economist, “African Americans spend well over a trillion dollars annually, and it does us no good, however investing in Africa through business ventures can create thousands of new millionaires, and dozens of new billionaires in a wide range of categories.”
Below are 10 solid reasons why African-Americans should organize campaigns or join other solid initiatives to invest in Africa.
chinese in Africa
1. Indication of the new scramble
A good sign that there is a significant amount of wealth that can be made in Africa is the new scramble for the resources on the continent. Currently, China, Japan, the United States and other countries are positioning strategically to extract the resources from Africa.
For instance, many Chinese companies—some of which are backed by the government—have made significant investments in the Congo and other parts of Africa. The Chinese government have realized that it’s going to need resources from Africa to fund its growth, its consumption in the future and to make it a wealthier and more powerful nation.
2. Africa is Untapped
Ozii Obiyo, an international business consultant, used the term “untapped” to describe Africa’s potential for positive growth across many sectors, in a recent interview. For example, besides all the raw materials that are untapped, Africa has 60 percent of the world’s uncultivated arable land. Experts estimate that the continent’s agricultural output could increase from $280 billion (USD) –the estimate as of July 2010– to $ 500 billion (USD) by 2020 and as much as $880 billion (USD) by 2030. Investing in farming in African can be a lucrative venture.
There is major ground-floor opportunity for businesses in Africa. For the decade ended Dec. 31, 2009, an African composite index made up of eight countries, including South Africa, Nigeria, and Egypt, returned about 14 percent annualized. South Africa alone returned an average of 13 percent per year over that period. Compare that with the MSCI Emerging Markets Index (Morgan Stanley Capital International), which returned about 7 percent annualized, or the S&P 500, which lost about 3 percent over the same period.
4. Strong growth expectations
According to projections from the World Bank, nine of the 15 countries in the world with the highest rate of five-year economic growth are in Africa. Experts estimate that Africa is likely to grow by 4.7 percent over the next five years. Economists expect much slower growth in places like the United States and U.K. over the next few years.
5. Profitable companies
There are a number of well-known companies that are based in Africa, including South African Breweries and telecom company MTN. Africa’s total stock market capitalization now exceeds $1 trillion. A past study by two economists, Paul Collier and Jean-Louis Warnholz, found that from 2002 to 2007, the average annual return on capital of African companies was 65 percent to 70 percent higher than that of comparable companies in China, India, Indonesia, and Vietnam. That means the African companies were more profitable.
Africa also features about 10 stock exchanges, according to bizcommunity.com. The market capital has risen from $5.5 billion in 1988 to $569 billion in 2005 (excluding South Africa). In addition, small investors are able to access Africa’s growth potential through the T. Rowe Price Africa and Middle East Fund (nasdaq: TRAMX), launched in September 2007. The SPDR S&P Emerging Middle East & Africa (nyse: GAF) exchange-traded fund is another option, according to John H. Christy’s commentary on Forbes.com.
6. Demand for commodities
Ten percent of the world’s oil reserves and 40 percent of the world’s proven gold reserves are found in Africa, according to experts. In addition, Africa contains 90 percent of the world’s platinum reserves, about 80 percent of its cocoa and diamonds, 60 percent of its phosphate, 50 percent of its bauxite and chromium reserves, 20 percent of its titanium, and close to 15 percent of its oil and natural gas. As other countries like Brazil, Russia, India and China continue industrialize, they’re going to be demanding more and more of these commodities. (Source: US Geological Survey).
7. Domestic demand
As people begin to make more money in Africa, domestic demand is set to rise. Consumer spending for goods and services in sectors like telecommunications/Internet services, transportation, wholesale and retail is increasing. Africa’s consumption has grown by $250 billion since 2000, according to the Global Insight United Nations Conference on Trade and Development, McKinsey Global Institute. Estimates show that 85 million African households earned $5,000 (USD) or more in 2008. The numbers of households with discretionary income is projected to rise by 50 percent until 2018, reaching 128 million. By 2030, the continent’s top cities could have a spending power of $ 1.3 trillion. African households spent $860 billion in 2008. And African consumers as a class will spend about $1.4 trillion in 2020.
8. Tax-exemption opportunities
Ethiopia, among other African nations, offers significant tax incentives for import of investment capital goods. According to the Ethiopian Embassy, there is a 100 percent exemption on importing investment capital goods like plant machinery and construction material into the country. Also, products developed in Ethiopia are exempt from export tax.
9. Electricity investment
Helping Africa meet its electricity needs can be the light at the end of the tunnel for small investment opportunities that have long-term benefits. Infrastructure development projects are usually the type of investment opportunities reserved for big, institutional investors and project finance endeavors; however, Africa’s need for electricity is so deep that even smaller investors can offer solutions, albeit, on a much smaller scale. There are a lot of rural communities in Africa that are far removed from electrical grids. Individual systems, small geothermal plants, or diesel generators can be supplied to these communities under carefully crafted arrangements that can turn a profit for the investor/provider.
10. Renewable energy investment opportunities
The surge of renewable energy offers investment opportunities in Africa for small investors and small to medium-size businesses. Renewable sources of energy can be modular in their production and delivery; Africa is blessed with an array of renewable sources of energy like wind and solar.
G. Thorpe, Author at Atlanta Black Star
Source: Atlanta Black Star
The Obama administration made it official on Tuesday that it will host the first “U.S.-Africa Leaders Summit” in August at Washington.
A statement from spokesman Jay Carney reads:
"The White House is pleased to announce that the United States will host the first U.S.-Africa Leaders Summit in Washington, DC on August 5 and 6, 2014.
"President Obama looks forward to welcoming leaders from across the African continent to the Nation's Capital to further strengthen ties with one of the world's most dynamic and fastest-growing regions.
"The Summit will build on the progress made since the President's trip to Africa last summer, advance the Administration's focus on trade and investment in Africa, and highlight America's commitment to Africa's security, its democratic development, and its people."
The figures are staggering: between $1.2 trillion and $1.4 trillion has left Africa through illicit financial flows between 1980 and 2009—roughly equal to Africa’s current gross domestic product and surpassing, by far, the money it received from outside over the same period. Illicit financial flows are money earned illegally and transferred for use elsewhere. The money is usually generated from criminal activities, corruption, tax evasion, bribes and transactions from cross-border smuggling.
The numbers tell only part of the story. It is a story that exposes how highly complex and deeply entrenched practices have flourished over the past decades with devastating impacts, but barely making news headlines. “The illicit haemorrhage of resources from Africa is about four times Africa’s current external debt,” says a joint report by the African Development Bank (AfDB) and the Global Financial Integrity, a US-based research and advocacy group.
The report, Illicit Financial Flows and the Problem of Net Resource Transfers from Africa: 1980–2009, found that cumulative illicit outflows from the continent over the 30-year period ranged from $1.2 trillion to $1.4 trillion. The Guardian, a British daily, notes that even these estimates—large as they are—are likely to understate the problem as they do not capture money lost through drug trafficking and smuggling.
Turning logic upside down
“The traditional thinking has always been that the West is pouring money into Africa through foreign aid and other private-sector flows without receiving much in return,” said Raymond Baker, President of the Global Financial Integrity in a statement released at the launch of the report earlier this year. Mr Baker said the report turned that logic upside down, adding that Africa has been a net creditor to the rest of the world for decades. Professor Mthuli Ncube, Chief Economist and Vice-President of the AfDB, agrees: “The African continent is resource-rich. With good resource husbandry, Africa could be in a position to finance much of its own development.”
The composition of these outflows also challenges the traditional thinking about illicit money. According to estimates by the Global Financial Integrity, corrupt activities such as bribery and embezzlement constitute only about three per cent of illicit outflows; criminal activities such as drugs trafficking and smuggling make up 30 to 35 per cent; and commercial transactions by multinational companies make up a whopping 60 to 65 per cent. Contrary to popular belief, argues Professor Baker, money stolen by corrupt governments was insignificant compared to the other forms of illicit outflow. The most common way illicit money is moved across borders is through international trade.
Information: scanty and scattered
An eight-member high-level panel, chaired by former South African President, Thabo Mbeki, leads research by the UN Economic Commission for Africa (ECA) into illicit financial flows, assisted by the ECA Executive Secretary, Carlos Lopes, as the vice-chair. Other members of the panel include Professor Baker and Ambassador Segun Apata of Nigeria. The ECA blames illicit outflows for reducing Africa’s tax revenues, undermining trade and investment and worsening poverty. Its report will be released in March 2014.
Undoubtedly, the panel faces a daunting task. Charles Goredema, a senior researcher at the South African–based Institute of Security Studies, cautions the panel on the challenges ahead. Writing in the institute’s newsletter, ISS Today, Goredema warns the panel that it will find that in many African countries, data on illicit financial flows “is scanty, clouded in a mixed mass of information and scattered in disparate locations.” He ranks tax collection agencies and mining departments among the bodies most reluctant to share data.
Goredema lists Transparency International, the Global Financial Integrity, Christian Aid and Tax Justice Network as some of the advocacy groups that have tried to quantify the scale of illicit financial flows. The extent of such outflows remains a matter of speculation, he says, with the figures on Africa ranging between $50 and $80 billion per year. Other estimates by the ECA put the figure at more than $900 billion between 1970 and 2008. “The absence of unanimity on [the amount] is probably attributable to the fact that the terrain concerned is quite broad, and each organisation can only be exposed to a part of it at any given point in time,” Goredema writes, adding; “It is less important to achieve consensus on scale than it is to achieve it on the measures to be taken to stem illicit financial outflows from Africa.”
Underpricing trade deals
Nonetheless, research and advocacy groups who have worked on illicit outflows see a direct link between these outflows and Africa’s attempts to mobilise internal resources. Despite annual economic growth averaging five per cent over the past decade—boosted in part by improved governance and sound national policies—Africa is still struggling to mobilise domestic resources for investments. If anything, the boost in economic growth has ignited a spike in the illicit outflows, says Ambassador Apata in an interview with Africa Renewal. Overseas development aid, while helpful, has its limits, says the ECA.
There are many channels to move illicit money. These include over-invoicing or underpricing trade deals, transfer pricing and using offshore financial and banking centres and tax havens. Transfer pricing occurs when multi-nationals decide how much profit to allocate to different parts of the same company operating in different countries, and then determine how much tax to pay to each government. About three-fifths of global trade is conducted within multi-nationals.
“Many developing countries have weak or incomplete transfer pricing regimes,” according to The Guardian, citing an issue the paper authored by the Paris-based Organisation for Economic Cooperation and Development (OECD), a group of high-income economies. The paper says poor countries have weak bargaining power. “Some [countries] have problems in enforcing their transfer pricing regimes due to gaps in the law, weak or no regulations and guidelines for companies,” says the OECD paper, adding that poor countries have limited technical expertise to assess the risks of transfer pricing and to negotiate changes with multi-nationals.
Offshore tax shelters
According to the OECD paper, member countries are failing to identify company owners who benefit from money laundering. It criticises OECD members for not doing enough to crack down on illicit outflows. In order to prevent, uncover or prosecute money laundering, says the paper, authorities must be able to identify company owners. The OECD advises its members to invest in anti-corruption and tax systems in poor countries, as this has high payoffs.
The bulk of illicit money today is channelled through international tax havens, says the Thabo Mbeki Foundation, an NGO set up by the former president to promote Africa’s renaissance. The foundation accuses “secrecy jurisdictions” of running millions of disguised corporations and shell companies, i.e., companies that exist only on paper. These jurisdictions also operate anonymous trust accounts and fake charitable foundations that specialise in money laundering and trade over-invoicing and underpricing.
“Developing countries lose three times more to tax havens than they receive in aid,” said Melanie Ward, speaking to The Guardian. Ms Ward is one of the spokespersons for the Enough Food for Everyone IF campaign, a coalition of charities calling for fairer food policies, and head of advocacy at ActionAid, an anti-poverty group. The money lost, she says, should be spent on essential development of schools, hospitals and roads, and on tackling hunger, not siphoned into the offshore accounts of companies.
A 2007 joint report by the World Bank and UN Office on Drugs and Crime estimated that every $100 million returned to a developing country could fund up to 10 million insecticide-treated bed nets, up to 100 million ACT treatments for malaria, first-line HIV/AIDS treatment for 600,000 people for one year, 250,000 household water connections or 240 km of two-lane paved roads.
Support for new rules to rein in offshore tax shelters has come from an unlikely source—the leaders of eight of the world’s biggest economies, the Group of Eight (G8). Having been stung by the 2008 global financial crisis, the G-8 leaders at this year’s summit in Lough Erne, Northern Ireland, introduced—for the first time—rules to fight tax evasion. The rules will now require multi-nationals to disclose the taxes they pay in countries in which they operate.
During the run-up to the G-8 summit, advocacy groups campaigned to get rich countries to introduce laws on transparency in corporate taxes. Among them was the Africa Progress Panel, chaired by former UN Secretary General Kofi Annan. On the eve of the summit, it published its annual flagship report, Africa Progress Report 2013, strongly criticising the current rules on corporate transparency.
“It is unconscionable that some companies, often supported by dishonest officials, are using unethical tax avoidance, transfer pricing and anonymous company ownership to maximise their profits while millions of Africans go without adequate nutrition, health and education,” Mr Annan wrote in the foreword to the report. Tax evasion, he said, has cut into African citizens’ fair share of profits from their abundant resources.
In the end, the G-8 leaders adopted the Lough Erne Declaration, a 10-point statement calling for an overhaul of corporate transparency rules. Among other things, the declaration urges authorities to automatically share tax information with other countries to fight tax evasion. It states that poor countries should have the information and capacity to collect the taxes owed to them. The declaration further calls on extractive companies to report payments to all governments, which should in turn publish them.
While the Financial Times embraced the declaration as “an advance” in corporate transparency, Sally Copley, another spokesperson for the IF campaign, says in a statement, “The public argument for a crackdown on tax dodging has been won, but the political battle remains.” Copley wants the G-8 to impose strict laws on tax evasion.
For its part, Africa Progress Report 2013 calls for multilateral solutions to global problems because “tax evasion, illicit transfers of wealth and unfair pricing practices are sustained through global trading and financial systems.” It urges African citizens to demand the highest standards of propriety and disclosure from their governments, and rich countries to demand the same standards from their companies.
Initiatives by institutions in Africa and the adoption of the Lough Erne Declaration raise hopes for strict rules against illicit financial flows from Africa. “Seizing these opportunities will be difficult. Squandering them would be unforgivable and indefensible,” Mr Annan warns in his foreword to the panel’s report. Meanwhile, ECA’s slogan “Track it. Stop it. Get it” aptly captures what needs to be done about money flowing illicitly out of Africa.
Masimba Tafirenyika Special Advisor to UN Secretary General and Head of the Special Office of Special Advisor on Africa.