Nepad 2017 by Contact Media

CONTENTS

CONTENTS View from the top

10 12 14 16

Perspective from NEPAD CEO, Ibrahim Mayaki Perspective from NEPAD Business Foundation CEO, Lynette Chen Perspective from NEPAD Business Foundation chairman, Stanley Subramoney Perspective from World Economic Forum head of Africa, Elsie Kanza

African interest 18

Be your own champion! Graça Machel, one of Africa’s most respected people, calls on the continent to stop trying to emulate the rest of the world and to find our own expertise.

The scourge of child trafficking South Africa implemented radical requirements for travelling with children to prevent child trafficking, but many criticised this by claiming it wasn’t a problem.

Africa’s most generous philanthropists Foreign aid is not as popular as it used to be, but Africa’s own rich and powerful have taken on the mission to help the continent’s needy.

Agriculture, food security and a greener environment 30

From farming to innovation ‘Old style’ farming – where little could be controlled – has made way for a cutting-edge agricultural technology revolution to take root.

Green charcoal to the rescue in DRC The EcoMakala project has not just protected the Virunga National Park from devastation, it has boosted the lives of thousands of farmers.

An answer to the water crisis A South African civil engineer has invented a watersaving solution that could have a huge impact on agricultural irrigation for years to come.

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42 42

African countries square up for ivory trade battle The heated debate over the continent’s ivory trade is ongoing, but are we any closer to finding agreement among countries?

Rescuing savannah elephants Cameroon, Chad and the Central African Republic were helpless when their elephant population was virtually decimated by poaching. Things have changed and there has been a successful effort to conserve the region’s elephants.

Turning the tide on flooding There has been horrific recurrent flooding in Uganda caused mainly by bad catchment area management, but the rural community is adopting better approaches to address this dilemma.

The sustainable blue economy: a foundation for development Looking out to sea, we aren’t usually concerned about how much money countries can make from the ocean. The ocean, however, can be valuable in enriching economies.

Helping the gorillas helps the people too While gorillas continue to face many threats across central Africa, the birth of twin western gorillas offers renewed hope for the conservation of the species and its habitat.

Regional infrastructure and development 56

Nuclear – is it the answer? Some believe that the only solution to the continent’s power crisis is nuclear, while others believe it spells doom.

Cities of the future There is much talk about creating smart cities in Africa, but what impact can they have on the existing overpopulation, poverty and desperation?

Water diplomacy The Lesotho Highlands Water Project is just one of a number of bodies of water that has the potential to be a transboundary pathway to co-operation and peace between countries.

OUR BUSINESS IS YOUR BUSINESS SUCCESS IN AFRICA The NBF provides critical public and private sector linkages for the acceleration of Africa’s development projects from inception to implementation.

PwC embarks on its own business across the African continent

Unlocking African Potential

More and more investors around the world are seeing the growth po – especially its substantial demographic edge. Africa has become one most popular investment destinations. Six of the world’s fastest-gro are in sub-Saharan Africa (SSA).

Our focus areas:

Foreign investors are planning new developments and expanding existing ones in Africa. Africans are leading the way with more investments, showing optimism about the growth and investment potential of the continent. According to the recent Regional Economic Outlook for SSA published by the International Monetary Fund (IMF), gross domestic product (GDP) growth is expected to go up from 5% in 2013-2014 to 5,75% in 2015. This is a positive view. However, some countries do face serious challenges. In West Africa, the Ebola virus has caused the tragic loss of human life and is also placing significant strain on several economies.

Some countries have to contend with their own domestic and internal challenges: South Africa’s growth has been low due to difficult labour relations and not being able to supply enough electricity, amongst other things.

On a more positive note, the IMF projected a record investment into Africa of USD80 billion in 2014, from both advanced and emerging economies. Real estate, financial services, telecommunications, infrastructure, resources and consumer-facing businesses are some of the industries that will drive growth and attract international trade and investment.

Global megatrends are also influenc According to PwC research, African changes, urbanisation and demogra main trends that will transform thei five years. They know how these tre business and the way Africa is seen. of Africa will be affected by internal trends, especially the fast urbanisati the rise of middle-class consumers.

Most large Western corporations are one of the three largest cities in SSA and Lagos. By 2060, Africa’s middle 1,1 billion, which will by then be 42% according to the African Developme creating significant opportunities, p in the sectors in which richer consum money, such as recreation and servic

As to the findings of our own research on Africa and the numerous interviews that PwC has conducted with CEOs across the continent, we are more convinced than ever that despite many challenges in Africa, the African story is positive. At PwC we embarked on our own business journey into Africa several years ago and have continuously looked at ways in which to stay ahead of the game.

Daniel Silke, political analyst and au Future: Top trends that will shape So World’, presents a convincing case fo focusing on the growth of cities and rapid rise of the African consumer.

This means actively seeking to recruit and retain the best talent, as well as investing in our business to better serve our clients in Africa. Recently, we established an integrated PwC Africa business, made up of firms in

The ever-changing African landscap and opportunities for companies doi the continent. It is through our enga with clients that we are able to call o range of expertise and skills, as wel analysis that may be useful to those

Web: www.nepadbusinessfoundation.org | Tel: +27 (0) 10 596 1888 | Email: info@thenbf.co.za | Fax: +27 (0) 10 596 1889 | Twitter: @thenbf Supported by:

the predominantly English-speaking West and East Africa, which is led an single leadership team. In 2014, PwC alliance with PwC in the UK to meet for professional services as trade act regions grows. What this means for positioned to serve them better acro benefit of PwC’s global reach.

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CONTENTS

Developing African airport cities Airports are now driving economic location just as railways did before. Find out about the advent of the ‘aerotropolis’ in Africa.

90 The island nation that is meeting the world halfway Mauritius is so much more than the perfect holiday destination. Professor Lyal White explains that it is an economy to emulate in a number of ways.

Africa, the great disruptor Technologies are leapfrogged on the continent and harsh conditions ignite inventions.

Water, water everywhere, but nobody travels on it There are numerous bodies of water on the continent where it would be much simpler and quicker to get from one place to another by crossing the waterway, but invariably that doesn’t happen.

94 Time to bank Africa Until recently, the only banks on the continent that ventured out of their own country were from South Africa. But this has changed as other African banks have begun to expand their influence.

Partnerships solve infrastructure backlogs Public-private partnerships have the potential to solve sub-Saharan Africa’s profound infrastructure and service backlogs. What is the status of these projects in Africa and the way forward?

Human development and capacity building 84

Youth unemployment: The other side of the coin Fred Swaniker considers who is responsible for getting our young people into work and what they should be doing.

Not just any education… Youth don’t just want skills, they want university degrees because they believe nothing else will get them a good job. What is the impact of this myth?

Economic performance 88

Africa’s position in ‘course-correcting’ radical changes in the global environment Dr Nkosana Moyo, founder of the Mandela Institute for Development Studies, considers how Africa is affected by and should respond to the global overshooting of the mark.

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Trade and investment 98 Will free trade agreements save intra-regional trade? With so many regional integration groups in Africa, Peter Draper asks why the continent is lagging behind on intra-African exports. 102 Foreign funds can support industrialisation Foreign direct investment offers an opportunity for countries to develop their industrial potential so as to benefit from exporting finished goods rather than simply raw materials. 106 Connecting the countries and people Cross-country trade and communication depend on transportation and there has never been enough on this continent. What new developments facilitate this?

Governance, security and democracy 108 A tale of the two continents of Africa Is the future of business in Africa on the rise or not? Rivaj Parbhu looks at this complex issue from both sides. 112 Overcoming the damages of colonialism African countries defeated colonialism, but how did they manage their institutions once the Europeans left? 116 Can we open up Africa to all its people? An African Union passport remains a pipe dream, but how feasible will it be to implement it by 2018?

The opportunity: Africa

Africa’s a continent of contrasts, unique challenges and amazing opportunities. Succeeding here depends on having a deep understanding of local issues, a global perspective, and the ability to use these to build tailored solutions. We’ve been doing business in Africa for almost a century, and over 9000 professionals in 66 offices are working with our clients to add value to their businesses. It’s what we do. At PwC in Africa, we don’t see problems, we see opportunities. www.pwc.com/africa

CONTENTS

118 Good corporate rule versus poor government Can good corporate governance and increased investment survive amid poor state governance? 120 Men must play their part to fight gender violence Gender violence cannot be stemmed by women alone and men play an even bigger role in changing the status quo, writes Mmatshilo Motsei.

Advertorials 24 WP Transport Transporting goods through Africa 28 Dow AgroSciences Harnessing the power of science to solve the challenges of the growing world

Cross-cutting issues

32 Biomin Ensuring you stay naturally ahead

122 Soccer stars peaking too early On the face of it, teenage African footballers excel but they seem to lose their mojo once they become adults.

54 Gauteng Growth & Development Agency Let the GGDA expand your vision of Gauteng’s economy

124 Africa’s shot at a future of digital money What can we learn from the past to take into the future of money on this continent?

66 City of Johannesburg Joburg’s plan to boost business takes off 76 Bombela Achieving a transforming transport vision through a public-private partnership 82 Classic Revivals Modellers and Classic Revivals: Growing from a small family business to a big family business

122

96 Sub-Sahara Power Distributors Sub-Sahara Power Distributors brings power to the people 100 Export Credit Insurance Corporation Committed to Economic Growth

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THE OFFICIAL NEPAD YEARBOOK 2017

NBF BOARD MEMBERS 2017

Stanley Subramoney Chairman of NBF Board CEO Menston Holdings

Geoff Rothschild Chairman of NBF OPSCO Trustee Brand South Africa

Patrick Kabuya Chairman of NBF ARC Senior Financial Management Specialist World Bank

Graҫa Machel Patron of the NBF Founder The GraÇa Machel Trust

Dr Nkosana Moyo Patron of the NBF Founder Mandela Institute for Development Studies

Dr Reuel Khoza Patron of the NBF CEO AKA Capital

Yvonne Mhinga Member of NBF Board Managing Director Chaka Chaka Promotions and Princess of Africa Foundation

Mark Gregg-MacDonald Member of NBF Board Group Executive: Planning and Monitoring Transnet SOC

Sean Murphy Member of NBF Board Divisional Manager: Sub-Saharan Africa Mott-MacDonald

Prof Wiseman Nkuhlu Member of NBF Board Managing Director Eclectic Capital

Mark Williams Member of NBF Board Founder Surenet

Andile Sangqu Member of NBF Board Executive Head Anglo American South Africa

Gregory Nott Member of NBF Board Director Norton Rose Fulbright SA

Prof Mahomed Jahed Member of NBF Board Director: Parliamentary Budget Office Parliament of South Africa

Patron Chairman NBF Board Operations Committee Audit and Risk Committee

Lynette Chen Member NBF Board CEO NEPAD Business Foundation

Cas Coovadia Member of NBF Board Managing Director The Banking Association of South Africa

Trevor Brown Member of NBF Board Chairman Deloitte Africa

FOUNDING PARTNERS

Koko Khumalo Independent Senior Partner Ernst & Young

PLATINUM MEMBERS

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CREDITS The NEPAD Business Foundation Tuscany Office Park, Ground floor, Building 9, 6 Coombe Place, Rivonia, 2128, Johannesburg, South Africa

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Acknowledgements

We especially thank Lynette Chen and Terrence Mutuswa, who assisted in directing content development for the NEPAD Yearbook at the NEPAD Business Foundation. We also thank Dr Ibrahim Mayaki and Ricardo Z Dunn, who coordinated support from the NEPAD Planning and Coordinating Agency. & C O M M U N I C AT I O N S

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Editor: Peta Krost Maunder CEO & Development Director: Sean Press Managing Director & Publisher: Donna Verrydt Head of Finance & Operations: Lesley Fox Design & Layout: Janine Louw Copy Editor: Sarah Taylor Proofreader: Angie Snyman Production Co-ordinator: Gwen Sebogodi Account Executives: Paul Styles, Damian Murphy, Chioma Didi Okoro, Quincy Matonhodze, Michelle Jones, Melanie Scheepers Contributors: Luke Alfred, Suresh Chaytoo, Lynette Chen, Monica Dowie, Raymond de Villiers, Peter Draper, Peter Fabricius, Dianna Games, Stuart Graham, Helen Grange, Yazeed Kamaldien, Elsie Kanza, Christian Mpassi, Fidelis Pegue Manga, Dr Ibrahim Mayaki, Mmatshilo Motsei, Dr David Obura, Dr Colman O’Criodain, Eddy Oketcho, Tamsin Oxford, Rivaj Parbhu, Vicki Shaw, Stanley Subramoney, Fred Swaniker, Rose Thuo, Liesl Venter, Lesley Wentworth, Professor Lyal White.

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THE OFFICIAL NEPAD YEARBOOK 2017

NEPAD FOCUS AREAS AND CONTACT DETAILS NEPAD BUSINESS FOUNDATION

Tuscany Office Park Building 9, Ground floor 6 Coombe Place Rivonia, 2128 South Africa

CEO’s Office

Lynette Chen (CEO) PA email: jackie.kanusu@thenbf.co.za PA tel: +27 (0) 10 596 1892

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REGIONAL INTEGRATION AND INFRASTRUCTURE

AGRICULTURE AND FOOD SECURITY

NEPAD New York

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REGIONAL INTEGRATION AND TRADE

SKILLS AND EMPLOYMENT FOR YOUTH Skills and Employment for Youth

Tonderai Mazingaizo Email: tonderai.mazingaizo@thenbf.co.za Tel: +27 (0) 10 596 1904

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CLIMATE CHANGE AND NATURAL RESOURCE MANAGEMENT Strategic Water Partners Network of South Africa (SWPN-SA)

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ECONOMIC AND CORPORATE GOVERNANCE

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Website: www.nepad.org

Africa Infrastructure Desk (Afri-ID)

Nick Tandi Email: nick.tandi@thenbf.co.za Tel: +27 (0) 10 5961

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NATURAL RESOURCES GOVERNANCE Natural Resources Governance Dr Hamady Diop PA email: BettyA@nepad.org PA Tel: +27 (0) 11 075 5026

INDUSTRIALISATION SCIENCE, TECHNOLOGY AND INNOVATION Industrialisation Science, Technology and Innovation Prof Aggrey Ambali PA email: MargaretR@nepad.org PA Tel: +27 (0) 11 256 3551

CROSS-CUTTING THEMES Southern Africa Business Forum (SABF)

Lesley Wentworth Email: lesley.wentworth@thenbf.co.za Tel: +27 (0) 10 596 1906 Website: www.southern-africa-business-forum.org

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VIEW FROM THE TOP

Building “The Africa We Want” through industrialisation Perspective from NEPAD Agency CEO Dr Ibrahim Assane Mayaki addresses how we can create the continent we envisage through industrialisation.

he first two decades of the 21st century ushered in real transformation of the African continent, and the last decade in particular has received very positive reviews. Africa is regaining the growth momentum of the 1970s and remains on course to achieve the aspirations and goals as encapsulated in the African Union (AU) Agenda 2063 – the 50-year guiding vision for the transformation of the continent. The implementation of Agenda 2063 is packaged into 10-year implementation plans with identified priority areas of focus. Industrialisation is embedded at the core of these priority areas and is seen as a crosscutting catalyst to attaining the aspirations and goals of Agenda 2063, delivering on the promise of “The Africa We Want”. African countries must adopt a strategic and proactive approach by working together to promote and scale-up industrialisation efforts to leverage the continent’s power for the socioeconomic development of its people. It is only through industrialisation that the continent can overcome some of its challenges. It is not an overstatement to say that industrialisation is a critical engine for

economic growth and development. If managed prudently and effectively it can contribute to creating employment opportunities and reposition the continent to becoming competitive in the global trading environment. However, despite the huge potential for industrialisation, Africa still exhibits low levels of it compared to other continents. This can be attributed to a slow start, but the continent has now scratched the surface of industrialisation to reveal its significant potential for improving the lives of its people and the finish line certainly looks promising in accordance with the aspirations and aims of Agenda 2063.

The continent needs to maximise its comparative and competitive advantage in commodity-based industrialisation and add value to its resources. African leadership has also shown commitment to enhancing industrialisation on the continent. For example, in 2007 the AU developed an action plan for the Accelerated Industrial Development of Africa, with one of its main focus areas being human capital development and sustainable science, technology and innovation. For industrialisation to be realised effectively on the continent, infrastructure development must be prioritised. Some of the hurdles that have impeded the transformation of the African continent in the past are embedded in inadequate infrastructure. In 2012, the Programme for Infrastructure Development in Africa (PIDA) was endorsed by African heads of state. Under PIDA, issues like regional road infrastructure, physical and procedural improvements at border crossings, port infrastructure and energy inter-connectors are being addressed with the Regional Economic Communities, as well as at country level.

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Trade also continues to play a major role in Africa’s economic performance and it has the potential to promote tradeinduced industrialisation of the continent. For this reason, trade policy must be crafted and implemented conscientiously, as well as managed with regular assessment of its effectiveness in close relation to industrialisation. In May 2016, the NEPAD Agency launched a transport and logistics initiative called MoveAfrica, which aims to address transboundary and logistic sectors in Africa, thus facilitating the free movement of people and goods on the continent. MoveAfrica complements the framework of the AU’s Boosting Intra-African Trade initiative. Africa’s industrialisation should also take advantage of its abundant and diverse resources. Moreover, the continent needs to maximise its comparative and competitive advantage in commoditybased industrialisation and add value to its resources. Making effective use of Africa’s human capital, both within the continent and in the diaspora, is the entry point to making the industrialisation agenda sustainable in the long term. This then calls for an even bigger investment in our greatest asset on the continent – the youth. Africa has the youngest population in the world, and it is this population that will supply the much-needed human capital in the years to come, even as the continent becomes increasingly industrialised. Therefore, we need to ensure that investment into industrialisation and innovation is on a par with the growing demands for skills development, employment and entrepreneurship from our youthful population. The NEPAD Agency is building capacity to ensure that regulatory systems in Africa are improved and harmonised to promote the adoption of emerging technologies. The agency is also supporting countries to develop sustainable mechanisms and a culture for financing their own innovation and development. Private-public partnerships are also encouraged to harness the potential of new and emerging technologies to accelerate the industrialisation of Africa.

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VIEW FROM THE TOP

Moving forward with foresight Perspective from NEPAD Business Foundation CEO Lynette Chen, chief executive officer of the NEPAD Business Foundation, shares her views on why Africa must ensure its industrialisation is based on sustainability principles.

t is the vision of our age to see Africa’s 55 states become integrated into a sustainable and solid economy that is supported by high levels of intra-African trade. With Africa going through the “fourth industrial revolution”, strong trade ties within the continent are the key to realising the shared goal among our governments – which is to raise the standards of living for all African citizens to global levels. As a continent, we have to appreciate our assets and the opportunities they present us. An example is our ballooning able-bodied demography and its potential to improve Africa’s economic prospects. The key lies in being proactive in the economic and social growth strategies implemented by our governments and businesses. This means looking closely at projections of population growth alongside unemployment rates as well as reworking the education system to plan for future skills so that new entrants into the labour force are exactly what the economy needs. Currently, millennials are joining the labour force with high expectations and a very different mind-set. We have to find ways to harness their energy, enthusiasm and technological capabilities. There are huge opportunities for our youth in sectors such as financial technology, digital healthcare, urban transportation and start-up funding. I believe that this generation has the ability to develop innovative solutions to Africa’s numerous challenges by drawing on global developments and adapting them to fit Africa’s unique circumstances.

A self-reliant continent

With rising protectionist sentiments the global landscape is changing and political agendas are shifting. A growing number of countries are beginning to divest themselves from heavy involvement in other nations’ affairs, opting to focus on solving home-based problems and domestic prosperity. This means that the flow of investments is likely to change and Africa will have to become the primary investor for its own development. As such, Africa’s industrialisation will remain a priority and this is in line with the African Union’s Africa Agenda 2063 as well as the SADC Industrialisation Strategy. Industrialisation is the catalyst required to propel Africa into becoming a global economic powerhouse, provided that we create manufacturing and processing hubs that can facilitate more local trade and include African small and medium-sized enterprises (SMEs) in the value chain. At the NEPAD Business Foundation (NBF), our programme activities are aligned to focus on Africa’s industrialisation and integration. Our resultsoriented delivery mechanism and value proposition now centres on trade and investment facilitation. Through our memorandum of understanding (MoU) with the SADC Secretariat, the Southern Africa Business Forum (SABF) was established in 2015 as an inclusive regional platform for the private sector across the region to engage with the secretariat to implement the SADC Industrialisation Strategy. It is acknowledged that the private sector has to lead and implement this industrialisation strategy and, therefore, a close partnership between governments and the private sector is critical to ensure that the industrialisation objectives are reached. The relationship between the NBF and the SADC Secretariat is supported by the work we are doing in other areas, such as in infrastructure through the NBF Africa Infrastructure Desk (Afri-ID), where we are co-ordinating the collaboration between five rail operators on the North-South Rail www.nepadbusinessfoundation.org

THE OFFICIAL NEPAD YEARBOOK 2017

Corridor project to improve efficiencies and create a seamless rail route between South Africa and the Democratic Republic of Congo. In addition, the SABF has seven active working groups focusing on developing the necessary enabling environments to create crossborder value chains in the pharmaceuticals, mining, agribusiness and fast-moving consumer goods (FMCG) sectors. However, these investments into setting up factories and manufacturing hubs will require basic infrastructure to be in place, such as energy, water, transport and information and communications technology. Coupled with the need for hard infrastructure is the necessity to address “soft infrastructure” issues such as delays at border posts, non-tariff barriers and the harmonisation of regional standards, tariffs and regulations. The SABF working groups are addressing these issues to remove barriers and bottlenecks to trade and investment in the SADC region. All these components are important to create a conducive and enabling environment for industrialisation, trade and investment to take place in SADC and throughout Africa. Based on the work we are doing, it is our strong belief that this continent could take a page out of China’s playbook and African countries should start focusing on industrial development that creates new niches for African manufactured goods. Tied to this is the development of regional markets for exporting numerous unique goods that are indigenous to Africa, such as marula- and baobabbased products. The same resources/raw materials that enabled China’s massive infrastructure development over the past three decades should now be used to fuel Africa’s infrastructure development. All the pieces of the puzzle to transform Africa and make it self-reliant are within our reach. The public and private sector must continue working together to create an enabling environment for increased local content and local investment.

Sustainable landscapes

The industrialisation of developed nations and recently that of China has put the world’s ecosystem under immense pressure. Because considerations for environmentally friendly practices have been overlooked for centuries, global warming and climate change have become big topics as they directly affect how developing nations will industrialise. Africa must do better. Our industrialisation must not come at a cost to our environment. Efforts to accelerate Africa’s industrialisation cannot be allowed to affect our ecology and that of the world. Granted, going green and industrialising responsibly will increase the cost of Africa’s development but the future benefits far outweigh the current investment costs. It is also an opportunity for Africans to develop innovative solutions for a green industrial revolution where manufacturing and processing hubs will utilise alternative solar and wind energy and other technologies for production. It is the responsibility of corporates to adopt the principles of sustainable landscapes and governments must ensure that policies are in place to enforce implementation. Currently, the most successful

businesses in Africa are those that are getting involved with their communities and becoming part of the local ecosystem. Africa needs companies that understand that the traditional model of corporate social responsibility is insufficient. The continent needs corporates which have interests and efforts on sustainability that go ‘beyond the factory fence’. This is important especially in cases of businesses in critical sectors such as mining, which is the leading GDP contributor to the economies of many African countries. Its impact on the environment includes erosion, formation of sinkholes, loss of biodiversity and contamination of soil, groundwater and surface water by chemicals from mining processes. At the NBF we are working on an exciting new initiative with partners in the mining sector who are developing a long-term sustainability plan that ensures that the harmful effects of mining are reduced and that the economic welfare of mining communities is sustained beyond the life cycle of the mine itself. Because Africa’s industrialisation comes at a time where environmental concerns are as important as corporate bottom lines, companies must cultivate a real interest in managing the continent’s natural resources. For example, heavy water users must be responsible for managing the water resources in the country in which they operate. This has been the model for the Strategic Water Partnership Network (SWPN), which has brought together government and corporates to implement projects that safeguard water resources in South Africa to address a 17 percent water gap anticipated by 2030. Sustainability must become the new benchmark for how business success is measured using continuously evolving standards, such as those of the Global Reporting Initiative, specifically because of the importance it places on sustainability reporting. That is the sort of mind-set African governments and businesses should have during this industrialisation process. As it is time for Africa to industrialise, it is the continent’s responsibility to present a modern global model for sustainable industrialisation.

Conclusion

We have to realise that co-operation and collaboration make the pooling of resources easier. The NBF’s entire business model has been built on being that neutral bridge between multiple stakeholders. As we celebrate 10 years of operations this year, I am proud to say that through various projects where we have successfully mobilised different partners to act towards common goals and deliver tangible results, we have become known as a trusted neutral facilitator and partner to governments, business and civil society, helping these sectors to work together to achieve the NEPAD vision for Africa. Finally, on behalf of the NBF, I would like to congratulate Chad’s Moussa Faki Mahamat for being elected the fifth chairperson of the African Union Commission (AUC). As the NBF, we pledge to work with him and support his vision for Africa. Through our existing MoU’s with the AUC, the NEPAD Agency and the SADC Secretariat, we will continue our collaborative efforts to deliver the AU Agenda for 2063 and create the Africa we want. www.nepad.org

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Globalisation,

protectionism and Africa Perspective from NEPAD Business Foundation chairman Stanley Subramoney discusses the pros and cons of the global economy.

he world has changed dramatically in the period between the publication of the 2016 annual NEPAD Yearbook and this current issue. Long-praised sentiments such as globalisation, free trade and job outsourcing are quickly becoming less popular as rhetoric on protectionism and nationalism takes centre stage. At its best, globalisation is meant, simultaneously, to grow economies of developed and developing nations through increased trade and mutual benefit. The reality, however, is not as clear cut, largely as a result of how the concept has evolved over the past four centuries. Naturally, as Africans, our perspective on the subject will always be coloured by how Africa has been affected by globalisation and what increased protectionism will mean for our continent’s future.

Africa has benefited from globalisation

I believe that globalisation and its sub-elements of free trade and job outsourcing have been good for the world, more so for Africa. In the past 30 years, Africa’s development has accelerated due to an increase in international investments focused on mining infrastructure, facilitating better global trade. In that same period, Africa gained access to richer markets to which it could sell products and resources and this helped increase employment levels in many African countries. Also, with the rise of China, global competition allowed the continent to access cheap imports that were affordable for most of its local markets. Globalisation has led to specialisation in developing nations, making China the manufacturing floor of the world and India the global services centre, while even African countries have in their own way gained niche specialisations based on what they can manufacture and export. Among the world’s top 10 exporters of crude oil are Nigeria and Angola; leading in tin exports are Rwanda, Nigeria and the Democratic Republic of Congo; South Africa and Zimbabwe are in the top three of the world’s platinum producers; and the continent also has niches in the export of coffee from Ethiopia and Uganda as well as uranium from Namibia. Our productivity has been increasing steadily because we have been able to take advantage of global breakthroughs in modern technology. The African Union (AU), specifically NEPAD, has based its strategy on how to partner with the global community to boost local industrial capacity and stimulate sustainable economic development in Africa. The ongoing reinforcement of the global village philosophy has resulted in the continuous mingling of distant cultures. At this moment, educators around the world are seeing value in having students learn Mandarin in order to better prepare them for engaging with Asia’s growing economies. It is my view that such measures not only improve the prospects of students as they become global citizens but also increase humanity’s tolerance for cultural differences, enabling us to forge stronger international bonds with each other.

The ongoing reinforcement of the global village philosophy has resulted in the continuous mingling of distant cultures. www.nepadbusinessfoundation.org

THE OFFICIAL NEPAD YEARBOOK 2017

Fixing what is broken

For all its effectiveness, globalisation has some deficiencies, the negative aspects of which may have given rise to protectionism around the world. Even Africa has been presented with serious challenges related to globalisation, which range from unfair dealmaking that has destroyed local enterprises to ecological and labour practice issues. Regardless of these setbacks, it remains my opinion that given enough time and mutual interest among all participants, globalisation can be fine-tuned to become more beneficial to all members of society, especially in developing nations. Collectively, we have to work together to address the failings of the current system because for all the good it has done in bringing us closer together, it has not been as inclusive as it could have been. The reason for Brexit and the election of President Donald Trump is that there is a growing majority of people in those nations who are beginning to feel that their interests are not being met by the status quo. Factory workers in the US and Europe blamed China and migrants from developing nations for stealing jobs. In China’s case, it was because the country had a vast pool of people willing to work for a fraction of what their Western counterparts were earning. With the now rising labour cost in China, how will the world deal with Africa becoming the next production floor? The world requires solutions that minimise the negative effects of a commerce-driven, unchecked and unbalanced global economic system. Governments have to re-examine policies that make it advantageous for multinationals to outsource manufacturing jobs to countries like China and Mexico and services jobs to countries like India. These policies have allowed Western businesses to focus on the home-based control of intellectual property and brands at the cost of the loss of local blue collar jobs. Over time, this has resulted in a situation where even though the Western economies did well from the profits made by their corporates, the gains did not trickle down to the average citizen. The compromises we develop going forward will determine how we are to thrive as a global community. Policies such as America’s Smoot-Hawley Tariff Act of 1930 demonstrated that aggressive protectionist policies can do more harm than good because other nations have the ability to retaliate. Imagine the impact on global trade if countries with the combined economic size of

America and China begin to retaliate against each other’s trade policies. Currently, economic problems in one part of the world (specifically in the developed world) become everyone’s problem. This is another aspect of globalisation we will have to tackle. We have to find ways to insulate fragile economies from the shocks of larger economies. The 2008 financial crisis which started in the United States wiped away over 34 million jobs and billions off balance sheets worldwide with ripple effects on Africa’s export income as most developed countries went into recession. Globalisation should have been and still can be the solution to poverty, hunger and war. Perhaps the world needs to go through a protectionist phase in order to restructure a new form of globalisation that works for more people and aligns with current populist views.

The lesson to learn from populist views around the world is that any progress and economic development that does not benefit ordinary citizens is likely to fail in the long run. Africa’s strategy for the future

The question for us today is what will we do if the world shifts towards protectionism? The answer is simple. Africa’s position as well as its overall agenda will not change. Infrastructure development is still critical, our economies need to grow and the standards of living for most Africans need to rise to match global averages. The only change is that there is an increasing urgency to execute the strategies and frameworks of the AU as defined by NEPAD and the AU’s Africa Agenda 2063. The buffer that used to cushion many African economies may soon fall away as most developed nations look more inwardly for sustainable economic growth as opposed to offshore investments. According to the International Monetary Fund, the annual growth in volume of world trade between 2009 and 2016 fell to 3%, half the 6% rate from 1980 to 2008. China’s breakneck industrialisation is finally

slowing down and world trade is shifting to a decidedly lower trajectory at a time where political resistance to globalisation has only intensified. If America’s pulling out of the Trans-Pacific Partnership (TTP) is a precursor of things to come, then Africa has to decide how it will sustain economic development in this new environment. Economists speculate that the steady drop in global GDP and world exports is a result of the fast pace at which developing nations are growing. As much as this is a challenge, the solution is within reach. Developing nations have the potential to reenergise global growth if they begin to sell amongst each other. For Africa that means increased intra-African trade. Even at an international level, more African countries should follow South Africa’s example and seek out strong strategic partnerships such as BRICS, which combines the five major emerging economies of Brazil, Russia, India, China and South Africa. With investors likely to reduce their positions in emerging markets, the playing field for local investors may finally tilt in their favour. At the NBF, our focus during this period is to increase local content in Africa’s investment and industrialisation in order to generate jobs and economic growth by beneficiation and processing of raw materials into value-added goods. The lesson to learn from populist views around the world is that any progress and economic development that does not benefit ordinary citizens is likely to fail in the long run. Both government and business have to work together to ensure that Africa’s economic growth is both inclusive and sustainable. Shared financial interest among African countries should make for better co-operation between our governments and the private sector. Whilst the world is making a decision on globalisation versus protectionism, Africa should be solidifying its position on the basis of the frameworks of NEPAD and the AU’s Africa Agenda 2063. Within Africa, our policies should focus on free trade so as to increase intraAfrican trade. It is possible that the lifeline the global economy is looking for will have to come from emerging markets and developing nations. They have the potential to grow and to become large consumers of global products. It is time for Africa to take its rightful position in global affairs. In the midst of this volatile environment, let Africa emerge as the powerhouse we have long believed it to be. www.nepad.org

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Overturning the prevailing narrative Perspective from World Economic Forum head of Africa and executive committee member. Elsie Kanza gives her views on Africans driving the momentum for their transformation. There seems to be an increasing focus on a protectionist agenda by some of the world’s largest economies. How does this affect Africa’s overall growth strategy, specifically with regards to the industries that were targeting Africa as the next production floor of the world? True, in the recent past there was a wave of expectation that manufacturing opportunities shifting out of China due to rising labour costs, in particular, would shift to African countries with comparatively lower labour costs and preferential trade agreements with western Europe and the United States. With the exception of countries like Ethiopia, which had a deliberate comprehensive and holistic strategy to attract such industry investors, the reality has fallen short of the dream. Instead, we see the relocation of factories to neighbouring Asian countries. The primary reasons that are cited for the lower attractiveness of Africa include high infrastructure costs – especially energy

technology by enabling Africa’s artisans, like the jua kali sector in Kenya, to boost productivity and incomes by accessing technology on a pay-as-you-go basis without the need to own the technological equipment. There is a growing sense that the longheld notion that globalisation was good for every economy is coming apart. What are your views on the matter and how can African nations capitalise on the shifts in global perspectives? Given the number of outstanding negotiations on regional and global trade agreements, I beg to differ that there has been a long-held notion that globalisation is good for every economy. I think that there is a general agreement that trade is beneficial to all, while recognising that balancing tradeoffs between winners and losers is easier said than done. My personal view is that a united, economically integrated Africa is beneficial,

“Fundamentally, it is time for the prevailing narrative of a Rich Continent with Poor People to be overturned.” – low labour productivity and a relatively difficult environment for doing business. Concurrently, new technologies are disrupting manufacturing at an unprecedented rate and globally we now talk about Industry 4.0 driven by disruptions such as distributed manufacturing, additive manufacturing, robotics and the internet of things. In addition, with widespread access to social media, Africa’s youth are not aspiring to toil on the production floor, believing that such jobs will not assure them of the middleclass lifestyle that they desire. This begs the question of how we can design building blocks to shape the future of industry development step-by-step. One key opportunity is that new technologies like 3D printers have the ability to democratise www.nepadbusinessfoundation.org

particularly for landlocked countries. With the global northern countries increasingly looking inwards at their economies, this is a good time for African countries to facilitate trade between themselves. Why is it cheaper to fly to Europe for the same distance as a flight between two African countries? Why is it cheaper to transport goods across the Atlantic from America to Africa than from an African port to a neighbouring landlocked country? Why is Africa, with the largest arable land mass in the world, a net importer of food amounting to more than US$35 billion per annum? Fundamentally, it is time for the prevailing narrative of a Rich Continent with Poor People to be overturned. For centuries, Africa has been a gateway for trade between the Indian and Atlantic oceans and this offers unparalleled

opportunities for developing the future of the logistics industry globally by leveraging new technological solutions. This calls for a reframing of African ecosystems. For example, with the increased push for localisation, local can be defined as continental, or on the basis of industrial corridors, rather than national based on current sovereign borders. For Africa to reach its full potential, what are the priorities on which the continent should be focused and why? According to the World Economic Forum’s Global Competitiveness Report, sub-Saharan Africa’s greatest weaknesses lie in infrastructure, skills, institutions and technological readiness. As a result, Africa lags behind the rest of the world in terms of competitiveness and attractiveness for investment. That said, Africa’s greatest asset is its people. With just over a billion people now and projections adding another billion by 2050, in order for Africa to reach its full potential this talent needs to be harnessed, empowered and fully deployed. A key question with which leaders are now grappling globally and regionally is how to create models of inclusion. It is clear that the current and past growth models have been unable to deliver sustainable and inclusive growth. It is also clear that citizens are weary of current life prospects and increasingly impatient with their leaders. Cognisant that 60 percent of Africa’s youth are younger than 24 years old, it is imperative to figure out how to inspire a generation of net producers rather than consumers for the sustainability and stability of society. “Until the lion learns how to write, every story will glorify the hunter,” states a famous African proverb. Retelling the stories we tell ourselves about ourselves can transform our perception of reality and ultimately our experience of the world. Mobile technology in particular is restoring African oral tradition and providing new pathways for Africans to re-engage on their own terms, locally, regionally and globally. Poverty is not a destination and change is not incidental, so Africans need to drive the momentum for their transformation.

AFRICAN INTEREST

Be your own

champion! GraĂ§a Machel, one of Africaâ&#x20AC;&#x2122;s most respected people, calls on the continent to stop trying to emulate the rest of the world and to find our own expertise. Peta Krost Maunder reports. www.nepadbusinessfoundation.org

raça Machel calls on African leaders to stop imitating the rest of the world and create and act on their own African leadership pact. “As African leaders, wherever you are, you have a footprint that makes you distinctively different to the German, British or other leaders. This is African business and it has to be based on our own value system,” says Machel, speaking at a recent NEPAD Business Foundation dinner. She believes it is vital for all civil society, business and political leaders to gather and, rather than just devise lofty plans, decide how, when and who will implement them. “We then need to move from continental agreements and bring them home and ensure the majority of citizens take ownership of them and responsibility for them. “We need to define the responsibilities of government, private sector, unions and the others. It is not just about making demands; it is about having to deliver. Each person or group needs to define what is their responsibility to deliver and then go and do it,” she says. Any other way doesn’t work, according to Machel. She cites South Africa’s National Development Plan as one of the lofty plans that has been agreed upon and then “the implementation of it depended on who wanted to do it”. So, although there were exceptional, considered plans, she says, they were barely carried out. “We have to define, clearly, each group’s responsibility and the steps they need to take and goals to achieve in a finite time,” she says. “Once we all know what we are going to deliver, we agree, sign and establish a mechanism of accountability.”

Education

One of the top points on the agenda for a round table is skills development. “There is a huge mismatch between… the skills we need in the private sector and what our education systems are producing,” says Machel. “This is a serious task. We must reform education systems on the continent.” This, she explains is about government and the private sector clearly stating what skills are going to be needed in the next 15 years. “Millions of our young people come out of the education systems on our continent with a very, very weak knowledge base,” she says. “They don’t even know what they are expected to know and they don’t have the ability to think critically and to see for themselves how to develop themselves, their communities and the nation and to become global citizens.” Machel says African education systems are not providing the youth with the right tools and knowledge. “Our young people,

when it comes to skills, are a disaster! We invest fortunes, but what we get out of the system doesn’t serve much. We have people with diplomas, people with certificates, but they are even unable to start a business.” She insists that African leaders must take this reform seriously as a “public investment”. Machel explains that each sector needs to be clear on what skills they need, how many skilled people are needed and how they will keep updating their knowledge base. The latter is important because of the rapid pace of technological change. To the leadership of the private sector, Machel insists they stipulate their agenda and how they are going to contribute and engage government on the issue of education reform. “We need to build a proper balance between what is general and technical knowledge,” she says. “This needs to be provided by the private sector because they know best. So, put in your agenda how you‘re going to contribute and engage government seriously.”

Public sector

Machel says the public sector also requires reform. “In many of our African countries, the public sector is one of the biggest employers of people, but not all of them are productive,” she says. Machel explains that while the economy is moving and society is changing fast, the public sector doesn’t understand these dynamics and the changes required, rendering it “ineffective”.

“We need to define the responsibilities of government, private sector, unions and the others… and then go and do it.” Machel claims that after most African countries gained post-colonial independence, they didn’t take time to discuss which systems would best serve their new countries. “We adopted the public sector systems that were already in place, without critically asking how best the public institutions could serve us and which system would enable that,” she says. For this reason, she believes that in most African countries you have the people and the systems moving in parallel. “You have the so-called modern state and then you have millions of people who are running their lives as if this modern city does not exist,” she says. Machel gives the example that when people seek justice, they go to tribal chiefs, churches or internal systems, but not the law courts because these, she says, are

“irrelevant” to them. “The judiciary is too complicated and most people don’t understand the laws,” she says. “So it is clear we need to rethink the public sector to integrate African ways.”

Private sector

The private sector also needs rethinking, she says. “Our private sector, in most cases, is so busy seeing how to become global before working on how it can serve in the context of African development. Then, once we have settled the issues agreed upon by us as Africans, we can look at how we relate globally.” She says too many businesses are trying to meet the requirements of the World Economic Forum and are not concerned about building business communities on the continent. She challenges the private sector to engage in African business forums. “Make them sub-regional to be closer to home. Make them African. They need to be strong enough collectively to engage each government to reform systems,” she says. She also says it is important to steer away from focusing on the top five countries on the continent who are leading the charge economically. “If you don’t bring in all of SADC (the Southern African Development Community) with the countries working together, South Africa will be a success and so might Botswana but the whole region will be driven back by the majority. We must leave no one behind.” She says the private sector needs to invest in areas that are preventing nations from moving forward so that in a decade there will be a better reality. “So if we need to invest in nutrition because 43% of African children are stunted by lack of nutrition and will never develop their brains to their full potential, we need to do this,” she says. “As a private sector, we need to invest to make sure our people are going to be healthy, our children can learn and catch up with the complex notions of modern science and technology. It is not by chance that the only Nobel prizes awarded on this continent have been for literature and peace. We are lagging behind and if we want to catch up, we need to invest seriously in areas like education.” No matter your sector, Machel believes you have to contribute to build “a nation, which is prosperous, equitable and credible” and it is in all of our interests. “It is not about helping government, but wanting to give all our citizens a chance to live with dignity. Because of this, when we go back to the drawing board, our agenda and responsibilities have to be totally clear. And if we have a system of accountability, we will ensure nobody deviates from the pact.” www.nepad.org

Images courtesy of Getty/Gallo Images

THE OFFICIAL NEPAD YEARBOOK 2017

AFRICAN INTEREST

The scourge of child trafficking

South Africa implemented radical requirements for travelling with children in reaction to child trafficking, but many criticised this by claiming it wasnâ&#x20AC;&#x2122;t a problem. Liesl Venter finds out the truth. www.nepadbusinessfoundation.org

f society’s soul is judged by how it safeguards its children then Africa has some searching to do. While the past few years have shown major progress in the fight against child trafficking, more children are still trafficked in Africa than anywhere else in the world. According to the United Nations Office on Drugs and Crime (UNODC), the exploitation of one human being by another is the basest of crimes, yet it remains far too common with too few consequences for the perpetrators. Statistics indicate that child trafficking is increasing. “A big part of the problem is that the statistics are skewed and there has been very little to no data available on trafficking,” says Dr Monique Emser, an expert and researcher on human trafficking in southern Africa and author of several LexisNexis Human Trafficking Awareness Index reports. “You cannot fix a problem if you have no understanding of what the extent of it is. At the same time while there has been a major improvement in data collection, there is no real way of knowing if these statistics are a true reflection of what is happening on the ground.”

In Africa, more so than anywhere else in the world, the majority of trafficking involves children – a whopping 62 percent in fact. In fact, most experts are wary of statistics, as they are only an indication of cases detected and reported. The United States State Department in 2013 found that estimates, based on information provided by governments globally, showed around 40 000 victims (adults and children) were detected and reported on in a single year, but that scientists estimate that as many as 27 million men, women and children are victims of trafficking at any given time in the world. Matthew Friedman, an international human trafficking expert with over 25 years of experience as an activist, programme designer, evaluator and manager, says trafficking has been on the rise with an estimated 45 million people victims of trafficking at present. Children comprise at least a third of that figure. Out of every three child victims, two are girls and one is a boy. The global figures, as documented in reports by the United Nations Children’s Fund (UNICEF) and the UNODC, there are significant regional differences. In Africa, more so than anywhere else in the world, the majority of trafficking involves children – a whopping 62 percent in fact. In Europe and central Asia, children are vastly outnumbered www.nepad.org

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THE OFFICIAL NEPAD YEARBOOK 2017

AFRICAN INTEREST

by adults at only 18% of the total number of detected incidents while, in the Americas, children make up 31% of detected cases. According to Emser, while trafficking occurs in virtually every corner of the world, in societies both rich and poor, children in Africa are extremely vulnerable due to the ongoing challenges the continent faces, including conflict, extremism, political instability, discrimination, weak rule of law and poverty. “The continent has a host of challenges with people pushed to the end of their tether, rendering them vulnerable to exploitation as they flee these volatile situations or seek better opportunities for themselves and their families,” she says. Trafficking is an extremely complex crime, says Ytna Getachew, regional thematic specialist: counter trafficking and assisted voluntary return at the International Organization for Migration (IOM), that is not easy to police or prosecute. “Identifying human trafficking is an extremely challenging area. First and foremost, defining what is human trafficking is not necessarily an easy task. The legal definition is complex and often there is confusion about what is trafficking and what constitutes migrant smuggling,” he says.

scared, which apparently makes them perfect to use in illegal camel racing, to children of four or five having to work in the fishing industry untangling nets as their fingers are small, while child soldiers are a common sight in Africa.” According to Getachew there are numerous challenges in dealing with child trafficking. “The accepted approach is based on three Ps,” he says. “Prevention, which is primarily the responsibility of each individual country, is of course necessary, but political will to address the issue in Africa has been low. Also while almost all the countries are accredited to the international protocol to deal with trafficking, it is not harmonised across regions and the compliance levels differ extensively between countries.” Friedman says the other two Ps – protection of people who have been trafficked and prosecution of criminals – have posed just as many challenges. “All of the work done by the thousands of people working for numerous organisations and governments across the world are affecting very little change at present. Of the more than 45 million people enslaved, only 78 000 people are saved every year. Working collectively, we are addressing 0.2% of the problem of which half are in the sex industry.”

“(Sexual exploitation) is of course one of the reasons why children are trafficked but in absolute numbers far more children are trafficked for labour exploitation than any other reason.” Although the distinction between the two terms is fairly new, it is extremely important to end confusion as it does impact on policy and legal framework developments that happen at an individual country level. According to Getachew, trafficking of children is a highly lucrative industry that is often associated with sexual exploitation. “This is of course one of the reasons why children are trafficked but in absolute numbers far more children are trafficked for labour exploitation than any other reason.” According to Friedman, human trafficking is modern day slavery. “At least 75% of the people trafficked are for forced labour and of that 60% is with supply chains as we know them.” Children are increasingly being trafficked as they make for excellent slaves. “Children are less defiant, they are less able to run away from the horrific circumstances they are in and are more readily controlled.” He says children as young as two are being trafficked on the continent. “It’s dependent on what the child is required to do. We have examples of two year olds being trafficked as they are small and light and they scream when they are www.nepadbusinessfoundation.org

He says, while attempts by governments in Africa like South Africa to introduce stricter legislation around the movement of children does to a certain extent help, it must be seen in context of how big the problem is globally. Emser agrees, saying many governments on the continent have acknowledged the crisis and have taken major steps in implementing comprehensive antitrafficking legislation. He says the reality was that children were still being moved across land borders or within countries and that to make a real difference far more needs to be done. Statistically more children are trafficked within countries on the continent than across borders. “We have to look at harmonisation of legislation on the continent, more organisations working together and gathering more information,” she says. And that is just the beginning. In Africa, most of the experts agree that reducing the vulnerability of people will already make a major difference. That includes addressing poverty and conflict situations, says Getachew. It is also important, says Friedman, that awareness of trafficking increases within societies. “We cannot just turn a blind eye to it anymore. We have to protect our children,” he says. Says Emser, “Trafficking taints an array of products and services that we consume or take for granted every day. We have to be conscious consumers, taking cognisance of where our purchases come from every single time we shop.”

Image courtesy of Shutterstock

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WP TRANSPORT

TRANSPORTING GOODS THROUGH AFRICA

amibian freight transporting company WP Transport has grown exponentially over the past 15 years, from a small fleet of just 10 trucks in 2000 to its current fleet of more than 100. It has expanded its internal infrastructure and its footprint across subSaharan Africa. Managing director Markus van der Merwe gives some insights in this question-andanswer interview. How would you rate the level of road and freight infrastructure in Namibia, and how could it be improved and/or streamlined? Namibia has well-maintained road infrastructure, which allows for efficient cross-border road transport. Border control and custom clearing is usually efficient. The major expansion and upgrade of the Walvis Bay port will contribute greatly to Namibia’s logistics infrastructure, especially with the aim of connecting foreign markets to SADC. How has your relationship with Namibian Beverages flourished over the years, and are there plans to expand that side of the business into Africa?  Coca-Cola Namibia (CCNBC) is one of WP Transport’s key clients and business partners. Over the years, we have adapted our service offering to meet their needs, especially the demanding “peak season” from September to December. Imperial Logistics bought a 60% share of the company in 2006 and, in 2014, it acquired the rest. How has this acquisition changed the company at an operations level? It has played a major role in financial management and control measures, the standardisation of processes and procedures, and the quality of service delivery as a holistic function. The combination of efficiency and fleet utilisation has improved the bottom line. What are your expansion plans into Africa, and your advice for cross-border trade? We plan to expand further into Zambia, Congo, Malawi, Botswana and Zimbabwe. For cross-border trade, I recommend strategic partnerships with suppliers and end users. I don’t recommend committing the majority of one’s resources to a singular commodity, especially if you are operating on an established corridor.

www.nepadbusinessfoundation.org

What services do you supply and over what geographic footprint? We offer freight transport on a national (30% of our business) and cross-border (70%) level. We operate through Namibia, South Africa, Angola, Zambia, Botswana, Zimbabwe and Mozambique. Who are your primary customers? CCNBC, Namibian Breweries through IML, Nestlé, Powertech, DHL Global and other retail brands. Our customers are predominantly in the fast-moving consumer goods business. What are the goals and targets for the business? First, to build strong teams within WP on the operational, administrative and technical fronts. We make a point of getting the right people in the right places. Second, we are integrating these three teams to work as one unit. Once this is in place, we can start working towards our ultimate goal: to be the best in the business. Our motto is: “We exceed the standard” – and we believe to survive in this industry, we have to do exactly that. What did you put in place to achieve these goals? We are creating an environment where the existing management and staff enjoy more accountability and increased responsibility, with focused support from top management. We are investing in the training of management and we are in the process of acquiring ISO 9001 and 18001 accreditation.

Which clients have grown within the region, and in what ways have they aided the growth of your company? CCNBC has grown substantially in Namibia over the past 10 years, enabling WP to achieve consistent and organic growth year-on-year. This made it possible for us to develop good infrastructure, people, processes and, of course, brand strength. This, in turn, has attracted other clients and strategic partners. Tutengeni Import and Export has aided our growth in Angola, Afrideca has impacted on our growth into the continent and DHL has grown our general cargo transport. What is WP Transport’s approach to people management issues? We are people-focused, we’re a family and all our staff play a vital role in the business. We place great emphasis on creating a work environment where people perform to their best ability because they want to, not because they have to. Also, we provide good basic salaries with significant incentives and training on key management skills. We also ensure our drivers go on advanced driving courses and have technical training. Contact details Portion 18, Farm Brakwater Nr 48, Windhoek, Namibia Tel: +264 (0)61 261 160 Fax: + 264 (0) 61 260 104 Email: info@wptransport.com.na www.wptransport.com

Our Mission

In to • • • • • •

our quest to exceed the standard in freight transport, WP Transport continuously strive excel in the following: t Flexible transport service offering to customer needs Safety of employees, client personnel and other road users Quality of vehicles, equipment and employees Sustainable business practices minimizing environmental impact Continuous improvement aimed at cost effective transport services

Our Fleet

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AFRICAN INTEREST

Africa’s most generous philanthropists Foreign aid is not as popular as it used to be, but Africa’s own rich and powerful have taken on the mission to help those in need on their own continent. Yazeed Kamaldien identifies a few of them.

frica’s stellar philanthropists are intent on breaking a legacy of foreign aid dependency through personal motivations that are as varied as fostering entrepreneurship and turning to God for help. Through efforts across the continent, philanthropists are challenging an entrenched narrative of parachute foreign aid agencies that may mean well, but sometimes leave behind only T-shirts with slogans that locals never wrote.

Tony Elumelu

Francois van Niekerk

A strong belief in God, meanwhile, drove South African businessman Francois van Niekerk to establish the Mergon Foundation. Van Niekerk poured his 70 percent equity in the Mertech Group (a private investment corporation he started) into the foundation. In 2010, Van Niekerk’s equity was valued at US$170m. In his recently published book, Doing Business with Purpose, Van Niekerk explains he “offered the Lord 30% of a bankrupt company” when he first failed at his start-up and later increased that amount as he became more successful. The Mergon Foundation supports social

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Tony Elumelu

Nigerian billionaire philanthropist Tony Elumelu, who started a foundation bearing his name, is among those sharing their hardwon earnings charitably. Elumelu made his money in the banking sector and has diversified into power generation. He believes ‘Africapitalism’ is the antidote to poverty. The Tony Elumelu Foundation aims to “tackle some of the problems African entrepreneurs face”, not with handouts but via support from established businessmen. Elumelu’s vision is to create an institution to “encourage more of Africa’s high-net worth individuals to give and support” fresh business talent. “Africa’s development has become somewhat of a personal mission. It is my belief that Africans should take primary responsibility for our own development – because, to be blunt, no one is going to develop Africa but us,” he says. “I also believe ‘charity’ as conventionally defined is not the best solution for our continent. Instead, we need a ‘new philanthropy’ that focuses on building the capacity of the private sector to create jobs and wealth – and that this leads to sustainable development. “It is my belief that home-grown African philanthropy should be setting the agenda

investment programmes in South Africa, Swaziland, Namibia and the United Kingdom. Van Niekerk says of its work, “We began funding projects directly ourselves, but the high volume resulted in us now supporting only specialised community organisations with an established record of effectiveness.” Mergon supports at least 53 institutions that administer an estimated 500 projects in education, HIV Aids and enterprise development. “Our focus, when selecting organisations for funding, is on the leadership of the organisation and the impact they are having. We evaluate their sustainability and what they do from year to year,” says Van Niekerk.

for the continent’s development… inspire businesses and entrepreneurs to actively play more of a role in Africa’s development. This is my vision of ‘Africapitalism’.” Apart from assisting entrepreneurs in 2013, the billionaire pledged US$2.5 million towards former US president Barack Obama’s plan to mobilise US$16 billion for electricity generation in Africa. When Obama visited various African countries in 2013, Elumelu accompanied him on a tour of a power plant in Tanzania. Elumelu also donated US$6.3m to flood victims in Nigeria in 2012. That year Forbes magazine named him among ‘Africa’s 20 Most Powerful People in 2012’.

“Instead (of charity), we need a ‘new philanthropy’ that focuses on building the capacity of the private sector to create jobs and wealth – and that this leads to sustainable development.”

Francois van Niekerk

THE OFFICIAL NEPAD YEARBOOK 2017

Mo Ibrahim

It would be impossible to talk about African philanthropists without mentioning Mo Ibrahim, the Sudanese mobile communications entrepreneur and billionaire, who currently lives in Europe. Ibrahim used his billions to set up the Mo Ibrahim Foundation, which is committed to inspiring leadership excellence on the continent. The foundation runs the Prize for Achievement in African Leadership, which awards a US$5m initial payment and a US$200 000 annual payment for life to African heads of state who deliver security, health, education and economic development to their constituents and democratically transfer power to their successors. This prize is meant to encourage African leaders to run clean governments but it has

Strive Masiyiwa

Naushad Merali

For most of Africa’s prominent philanthropists, including wealthy Kenyan businessman Naushad Merali, funding education is a priority. When Merali decided to give half of his annual earnings to charity, he and his wife Zarina launched the Zarnash Foundation to administer the funds. The foundation has funded the expansion of the Kenyatta National Hospital and annually offers scholarships to over 100 orphans and university students. It has also built the Jaffery

tellingly not been awarded since 2011. Apart from this prize, the foundation also funds a fellowship programme aimed at strengthening new African leaders. Ibrahim’s daughter Hadeel Ibrahim, who runs his foundation, offers insight into the man pushing for African’s development through its leaders. In an interview with the UK’s Guardian newspaper, Hadeel described her father as “someone who will get things done”. “No one works harder than he does. When there’s a delay at an airport, you can see him trying to work out how to improve the system,” she said. “He engages with everything around him, and he makes you smarter in the process… He believes that people who do serious things take themselves seriously. He enjoys his work and he wants everyone to enjoy it.”

Mo Ibrahim

Strive Masiyiwa

Another European-based African philanthropist is the Zimbabwean telecommunications billionaire, Strive Masiyiwa. And while he may be based in London, his philanthropic efforts help thousands of children in his home country. Through his Higher Life Foundation, Masiyiwa presently funds the education of at least 42 000 African orphans. He has also contributed to health, agriculture and other development causes in Africa. Masiyiwa’s spot in the international financial arena has long been cemented, as back in 1998 he had already been named by the World Junior Chamber of Commerce as one of the ‘10 most outstanding young leaders of the world’. When the Ebola virus spread in parts of Africa in 2014, Masiyiwa showed his leadership intuition and was among the champions driving a campaign to rally support for efforts to quell the impact of the killer virus. Masiyiwa was one of the leaders who set up the first-ever pan-African fundraising campaign known as #AfricaAgainstEbola

Solidarity Fund. This fundraised millions of US dollars from the public using text message donations, which ensured that the African Union could send aid workers from the continent to assist in Ebola-afflicted regions. Masiyiwa regularly offers inspirational messages on his official Facebook page and has almost 20 million people following his notes on entrepreneurship and transforming society. “I look for entrepreneurs all the time. The managers I value the most are those who show an entrepreneurial flare,” Masiyiwa wrote on Facebook recently. “Entrepreneurship is not just about making money. Think of an entrepreneur as someone who hungers to see transformation, and goes out to do something about it in an innovative and sustainable way.” “You should be an entrepreneur, whether or not you own the business. Every day you must go to work with the understanding that, first and foremost, you’re paid for being smart; for being someone who has ideas to innovate and find solutions to help your organisation and its customers.”

Sports Club and donated it to the public. Zarina is also a director for the Kenyan Paraplegic Organisation. She has on occasion met with Kenya’s first lady, Margaret Kenyatta, who runs a campaign from Kenya’s capital city Nairobi to prevent mother-andchild deaths. Merali, an industrialist and telephony services business owner, is publicity shy while reputedly being one of his country’s richest men. He has made it to the Forbes magazine list of Africa’s 50 Richest and has owned a long list of companies.

However, Merali reportedly told Kenyan media that it was not the pursuit of money that made him happy. “Happiness and satisfaction is not in money. It is in what you do with the money,” he said. “After all, however fat your bank account, you cannot eat more than three meals a day, put on two suits or drive in two cars at the same time.” If happiness was measured in the amount of money Africa’s philanthropists have offered up, then they would be happy a million times over. www.nepad.org

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ow AgroSciences began in the 1950s as the agricultural unit of The Dow Chemical company. In 1989, Dow entered a joint venture with the Elanco Plant Sciences business of Eli Lilly and Company to form DowElanco. In 1997, The Dow Chemical Company acquired 100 percent ownership of the joint venture and renamed it Dow AgroSciences. Today, after nearly 60 years, Dow AgroSciences is a wholly owned subsidiary of The Dow Chemical Company. Dow AgroSciences today is one of the world’s leading agricultural companies with more than 8, 000 employees worldwide. It has research and development (R&D) and manufacturing facilities in more than 40 countries and its products are sold in more than 130 countries. Dow AgroSciences is working hard to support the food production needs of the world’s growing population. The company is committed to developing agricultural solutions that make farming more profitable, productive and sustainable. The only way to achieve these aims is through innovations in crop production technology. The foundation on which this crop production technology is being built is the company’s people, innovation, growth and sustainability. Dow AgroSciences’ staff members are empowered to create solutions that have a positive impact on people’s lives and continue to reshape the agricultural world around us. The company collaborates with scientists around the globe to address the world’s need for food, feed, fuel and fibre. It is working hard to discover, develop and bring sustainable solutions to market. Innovation drives the company’s progress as one of the fastest growing agricultural www.nepadbusinessfoundation.org

businesses in the world. This innovation has given rise to the strongest product pipeline in the history of Dow AgroSciences. Through financial discipline and technological innovation, Dow AgroSciences is delivering sales growth that is outperforming the competition. The company is, however, committed to achieve this growth by minimising our environmental impact through manufacturing, packaging and shipping. Dow AgroSciences is driven to develop solutions that balance human needs with the preservation of the environment. The company strives to support industry efforts to enhance and maintain sustainable agricultural practices. Because of these solid foundations, Dow AgroSciences has received numerous awards through the years, including four US Presidential Green Chemistry Challenge Awards, 11 Agrow Awards, as well as the first prize in the Good Agricultural Practices category of the XIV Andef Awards. Recently, Dow AgroSciences also received the R&D 100 award from R&D Magazine for work done in developing our novel technology, Isoclast™ active. Dow AgroSciences is also committed to the responsible and sustainable management of its agrochemical and biotechnology products throughout their life cycles. As such, Dow AgroSciences was one of the founding members of the American Chemistry Council’s Responsible Care™ initiative, and a founding member of the plant biotechnology industry’s Excellence Through Stewardship programme. Dow AgroSciences brand names include Dithane™, Dursban™, Ariane™, Pallas™, Derby™, Tracer™, Mamba™HL, Delegate™ and Nurelle D™. Currently, the company’s

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AGRICULTURE, FOOD SECURITY AND A GREENER ENVIRONMENT

From farming

to innovation ‘Old style’ farming – where little could be controlled – has made way for a cutting-edge agricultural technology revolution to take root. Stuart Graham finds out more.

ain is falling and rivers are flowing again in many parts of southern Africa, but the legacy of the drought that wrecked farms across the region will live on for years to come. Farmers went bankrupt and communities lost precious crops and livestock, while the rising price of food has made the struggle to survive even more difficult for the poor. The soil, however, may take the longest to recover. The insects and organisms that were supposed to rejuvenate the ground perished in the heat and dryness. Slowly, swirls of dust blew across farmlands as the the land

succumbed to wind and soil erosion and turned to dust. But while the drought left a legacy of despair it also brought out the best in agricultural innovation. In Nelspruit, in the north-east of South Africa, Davley Organics has commercialised a tried and trusted method that backyard, organic gardeners have relied on to revitalise their plants since the first civilisations started planting wheat and barley. Their business uses red earthworms to produce a thick black compost called vermicast, which is used to rehabilitate soil. The benefits of vermicast are enormous,

claims Nicholas Ings, the co-founder of the company. It not only ensures healthy plant growth, but saves water, reduces pest vulnerability and optimises the uptake of chemical inputs. The macadamia nut industry is the largest customer for Davley Organics, which charges US$7.50 for a 40-litre bag of vermicast that can service 20 trees. “Commercial farming over generations has focused on trying to feed plants, but the health of a plant lies in the soil,” says Ings. “What we are trying to say is there are a lot of benefits to using organic techniques.

This is an automated, intelligent robotic system developed by the CSIR, which has the potential to improve the monitoring, production, harvesting and processing of produce.

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THE OFFICIAL NEPAD YEARBOOK 2017

“You apply the vermicast to a tree twice a year. It’s not ongoing. Look at treating the soil for the first three years. Once it is up and running, it is sustainable.” For centuries, Africa’s farmers have been at the mercy of the weather, never knowing when a drought or a flood will arrive. Today, however, big data is increasingly helping scientists to predict, accurately, when the next cumulonimbus clouds will roll in or when the next hail storm will break, allowing farmers to plan ahead and take pre-emptive measures. Scientists and engineers at South Africa’s Council for Scientific and Industrial Research (CSIR) believe the development of technology and the use of data in farming is vital in ensuring food security.

droughts and floods. The project focuses on, among others, legume diversification, agro forestry, mulching and animal manure use. One of the participants, Forbes Moyo, 62, from the Kawanda village in Malawi, has been conducting his own agro-ecological research since he started growing pigeon peas, a perennial legume shrub, in 2012. In 2014, his field was so impressive that researchers from the project, who happened to be in the area, asked how he was doing it. Moyo says he has done a lot of work trying to manage the red and black beetles that eat pigeon peas. He kills the beetles by hand, he says, before experimenting with cutting back the

The data provided (from the sensor-drive robot) will help farmers in the early identification of anomalies and potential hazards, allowing them to manage factors that could potentially cost millions in yield loss. One of the institute’s most recent projects, a sensor-driven robot, has been configured to estimate the yield of grapes in vineyards and to monitor plant growth and canopy health. The data provided will help farmers in the early identification of anomalies and potential hazards, allowing them to manage factors that could potentially cost millions in yield loss. The harsh South African climate and landscape have in the past prevented advanced robotic technologies of this nature from being used. However, the researchers developed a platform that was durable by ensuring that it had more than the required weight-carrying capacity and energy to drive the machinery. The robot is able to navigate autonomously through the vineyard, using data-sensor fusion techniques developed by the CSIR to combine the data from the different sensors. Using the CSIR-designed data-fusion algorithm, it is also able to perform path planning, obstacle avoidance and lane following. The robot development is part of a three-year programme to evaluate and demonstrate robotics, automation and sensors in viticulture. The robot, the CSIR says, has significant potential to improve the monitoring, production, harvesting and processing of produce. But as data and robots debut on Africa’s farms, scientists are finding there is no replacement for the real-life lessons to be learned from the continent’s small-scale farmers. The Soils, Food and Healthy Communities project in Malawi, driven by the Canadian government, encourages Malawian farmers to share their local knowledge with each other as a way of improving food security in the country, which frequently suffers

pigeon pea at different times of the year. He then buries the pigeon pea residue. His family loves eating the peas. Moyo will conduct further experiments to try to reduce the problems of insect pests in pigeon peas, and will share his results with others. The food shortages across southern Africa, since the start of the drought, have resulted in calls for more home-owners to grow their own crops so that they can feed themselves. University of Stellenbosch agriculture graduate Gary Burgess founded the agritech company Cibio as a way of generating a sustainable food-growing culture, saying the practice is important, not only for food security, but for physical health. Food is not merely fuel but a cornerstone of our lives with its roots in individual

The robotic system’s sensors have been configured to estimate grape yield and to monitor plant growth and canopy health.

confidence of having fresh, healthy, nutritional food at our fingertips when we want it.” Cibio provides food production technologies that bring healthy, sustainable growing back into the home, says Burgess. “We at Cibio believe it is time to become aware of our individual footprints and the role we play in sustainability,” he says. “We encourage the appreciation of growing your own herbs and veggies and having the convenience of having it available immediately.” Calestous Juma, the director of the science, technology and globalisation project at The Harvard Kennedy School, says Africans will be able to feed themselves “in a generation” and help contribute to global food security despite their history of persistent food shortages. Advances in science, technology and engineering are offering new tools needed to promote sustainable agriculture, he says. “Efforts to create regional markets will provide new incentives for agricultural production and trade,” says Juma. “A new generation of African leaders is helping the continent focus on long-term economic transformation.” Agriculture will need to be viewed as a knowledge-based entrepreneurial activity in order to sustain African economic prosperity.

The food shortages across southern Africa, since the start of the drought, have resulted in calls for more home-owners to grow their own crops so that they can feed themselves. cultures, experiences and religious rituals, says Burgess. “Unfortunately our lifestyle today has become one of convenience, with time-old traditions being replaced by instant, nutrientdeficient foods,” he says. “We need to replace our current fast-food mindset with one of convenient healthy food. Smaller individual systems that incorporate high-producing technologies such as aquaponics and hydroponics can be brought into the home and become part of our daily lives and routines. “This offers us the convenience and

“Significant efforts” will be required to modernise the continent’s economy through the application of science and technology in agriculture says Juma. The benefits will be many, he says, as smart investments in farming will have a multiplier effect across economies. Droughts, floods and the food insecurity that comes with them will happen for perpetuity. It may be the meeting of the old and new – the lessons shared by innovative small farmers like Moyo and the spread of technology – that will alleviate their effects and ensure that plants keep growing across Africa. www.nepad.org

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AGRICULTURE, FOOD SECURITY AND A GREENER ENVIRONMENT

Green charcoal to the rescue in DRC The EcoMakala project has not just protected the Virunga National Park from devastation, it has boosted the lives of thousands of farmers. Christian Mpassi tackles this phenomenon.

Images courtesy of EcoMakala

he eastern part of the Democratic Republic of Congo (DRC), known for its beautiful natural landscapes, was hit socially and ecologically by the armed conflicts that have plagued the region over the last two decades, causing devastation and deforestation. The influx of people fleeing violence to the cities has exacerbated the pressure on the forests. As much as 80 percent of the wood and charcoal supply to Goma – the main town in the area with over one million inhabitants – has been illegally sourced from the Virunga

Trees planted by farmers in the EcoMakala project

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National Park. This is the oldest and most precious national park in Africa with its variety of landscapes and wildlife. To limit the deforestation, the World Wildlife Fund’s DRC branch has set up an ambitious reforestation project called EcoMakala, with substantial international funding in 2007. Makala is the Swahili word for charcoal. The EcoMakala project involves developing tree plantations for charcoal over an area of 10 600 hectares outside the Virunga National Park in a bid to preserve

the park’s natural environment. These new trees are then used to create ‘green’ charcoal, which is sold at a profit, benefiting the entire community. In 2007, EcoMakala started planting trees in the five territories surrounding Virunga – Masisi, Nyiragongo, Rutshuru, Lubero and Beni – and began introducing efficient wood stoves in the urban areas around the park. These stoves consume half the charcoal that the older stoves used. Efficient cooking stoves and tree planting therefore combine their effects in fighting deforestation.

THE OFFICIAL NEPAD YEARBOOK 2017

However, far from just being an ecological project, this is one that has significantly transformed the lives of 9 360 small-holding farmers who were making, at best, a meagre income from crops like beans, soybeans, potatoes and sweet potatoes before EcoMakala. “I have been able to buy a motorcycle, a solar panel and a piece of land because of my involvement with EcoMakala,” says Joseph Matata, a farmer from Mighobwe village, 160km from Goma. “Also, the income that I get allows me to ensure the schooling of my five children. This project has done so much for me and my family.” EcoMakala provides the small landowners with financial and technical support to establish their plantations and funds are channelled through local farmer-planters’ associations. These associations are paid to install nurseries, grow seedlings and distribute them to the farmers.

The EcoMakala team

“Thanks to the co-operatives set up with WWF-DRC support, (farmers) can sell their legal charcoal for prices competitive with illegal charcoal from Virunga and they now have additional and long-term revenues for a better future in the communities.” The farmers get money in installments for planting seedlings, growing trees and maintaining the plantations. They can choose what trees to grow, provided they have the potential to produce charcoal, like eucalyptus, black wattle and silky oak. EcoMakala’s field foresters visit each site to check its suitability, give advice on species

selection and monitor the plantations as they are established. The project ensures that the farmerplanters associations’ members are trained in setting up nurseries, producing seedlings, preparing fields and planting, as well as in plantation management and sustainable harvesting. The associations also receive

quality seeds and polyethylene seedling bags, as well as US$250 per hectare for reforestation. The EcoMakala project co-ordinators train farmers or charcoal makers in more efficient charcoal production techniques, offering a 15 to 20% return. While the quantity of charcoal being produced since the start of EcoMakala was excellent, the producers are using less than half the wood used in more traditional production methods. Even farmers who initially did not join the process realised that the production of charcoal from planted trees was a commercially viable business. The farmers were guided in developing co-operatives to sell their charcoal at a profit and support them with marketing and transportation. Those running the co-operatives

Plantation work

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AGRICULTURE, FOOD SECURITY AND A GREENER ENVIRONMENT

were given training in general management, business plans and harvest development. There were some initial doubts raised among farmers in the beginning. Farmers didn’t believe the trees to be planted would produce firewood and charcoal. They also didn’t believe that the seeds would produce trees and others feared the strategy of those behind the project was to annex their fields to the Virunga National Park. They soon realised they could rely on EcoMakala. To ensure that the farmers who became part of the project did keep their land, EcoMakala had to ensure the land to be replanted truly belonged to the farmer. So, the settling of the farmers’ land rights was the starting point to pre-empt potential risk of partial or total eviction. It went a long way in helping establish the basis for the work to be done. For this, the farmer had to show proof of the title deeds of the land to be reforested. Also, the customary chief had to testify to the land belonging to the farmer concerned. Gervais Munyororo, co-ordinator of the farmers and breeders support programme for local development, says, “We are very satisfied with this project as local farmers are benefiting from a new source of income. Thanks to the co-operatives set up with

“I have been able to buy a motorcycle, a solar panel and a piece of land because of my involvement with EcoMakala. Also, the income that I get allows me to ensure the schooling of my five children. This project has done so much for me and my family.” WWF DRC support, they can sell their legal charcoal for prices competitive with illegal charcoal from Virunga and they now have additional and long-term revenues for a better future in the communities.” To continue maximising the production of charcoal outside Virunga, WWF DRC has negotiated with many other local landowners

in the region and convinced them to plant trees for charcoal on their coffee and cocoa plantations since more than 20 000 hectares of charcoal tree plantations are still required to meet the needs of the Goma population. “The destruction of the forest in the national park of Virunga for charcoal production has effectively been decreased with the implementation of the EcoMakala project,” says Ami Muhima, board chairman of the Naturalists Organisation for Environmental Defence. In 2013, EcoMakala received an award from the UK-based Ashden organisation that supports leaders in sustainable energy and, in 2016, the Energy Globe Awards from Austrian-based Energy Globe Foundation that rewards innovative projects promoting best environmental practices. The project is in its second phase, which ends this year. A third phase is expected for an additional five-year period to expand reforestation in other areas and consolidate exploitation and marketing of wood. Christian Mpassi is the communications officer for WWF-DRC.

The tree nursery at the EcoMakala project

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Images courtesy of EcoMakala

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AGRICULTURE, FOOD SECURITY AND A GREENER ENVIRONMENT

An answer to the

water crisis A South African civil engineer has invented a water-saving solution that could have a huge impact on agricultural irrigation for years to come, Vicki Shaw writes.

he impact of the drought in southern Africa over the last two years will have repercussions for years to come and, because of this, there is a dire need for water-saving solutions. South African civil engineer Dr Nico Benadé invented such a solution that has shown a saving of 927 891m3 of water a week. Benadé’s solution, called the Water Administration System (WAS), was initially developed in 1990 as a water management tool for irrigation schemes to manage water usage, distribution and accounts. The first version was implemented at the Loskop Government Water Scheme (GWS). Although it is only now being recognised for what it can do, it can potentially provide a sustainable solution for a serious problem. In 2015, the average rainfall was the lowest since 1904 and, together with the growing impacts of climate change, South Africa has experienced one of the worst droughts in history. In the backdrop of this crisis, the largest water consumers in the country, such as agriculture, mining, power generators and municipalities, face difficult choices around water consumption and use. Around 62 percent of South Africa’s water is used for agriculture nationally and, with the increasing competition between existing user sectors, the available water cannot meet the demand under current water use practices and operating conditions.

“I can finally say that I have a financially viable business which makes a huge difference in terms of water savings throughout South Africa.” www.nepadbusinessfoundation.org

The need for a sustainable solution

The agricultural sector therefore needs various ways to manage their use of this precious resource. Benadé’s innovation is one such solution. While he initially worked as a junior civil engineer at the Department of Water and Sanitation (DWS) in 1985, he was later seconded as a full-time researcher on a Water Research Commission (WRC) project. The project set out to develop a computer model to simulate the flow of water in canals and rivers, in order to save water on irrigation schemes that deliver water on demand. The project received international recognition and was eventually used by local and international universities as a training tool in computational hydraulics. However, it proved not to be the solution for minimising water losses for irrigation schemes operating on the demand system and distributing water through canal networks. In 1989, Benadé applied to the WRC to carry out additional research into finding such a solution and the results of this work gave birth to the WAS. The WAS is unique in that it is an integrated system including the water allocations, water use, water distribution and billing information. The WAS, together with robust logging equipment, improves the monitoring and measurement of water releases, which can result in the saving of significant volumes of water. Each irrigation scheme is responsible for the management and monitoring of the water resource available to that scheme. In each case, all the water orders are collected, water losses (seepage and evaporation) calculated and then water releases are scheduled according to the orders received for that week. Without the use of the WAS, a manual system is used to manage these processes, where orders are collected by water bailiffs on a weekly basis and captured into a spreadsheet. The bailiffs are required

to calculate the losses (evaporation and seepage) that will take place over the length of the canal as well as the lag time for water to reach its destination at the given flow rate. This will inform the water releases required in terms of volumes and times to be released from the storage dams so that only the obligatory amounts of water required by the scheme are released. However, if the release of water is not managed properly (i.e., the operator opens the sluices too early or closes them too late), significant volumes of water can be lost. The sustainability of the scheme is therefore at risk as well as placing strain on the overall availability of water for the country. There is often no effective monitoring system to measure the actual releases against the orders placed, and the use of spreadsheets to capture orders and manage releases introduces the risk of human error and the potential for manipulation when reporting to the DWS.

SWPN and the WAS

Benadé approached the DWS to take ownership of the system and to roll it out to all irrigation schemes. The DWS chose not to take ownership of the WAS as they were developing their own in-house system. At the time, a couple of irrigation schemes were using the WAS, and Benadé identified the opportunity to create a business from

his research and registered NB Systems in 1997. The business has grown organically over time and has demonstrated great successes in terms of water savings in agriculture. “I can finally say that I have a financially viable business which makes a huge difference in terms of water savings throughout South Africa,” says an enthusiastic Benadé. However, due to the complex procurement policies of the DWS, the installation of the WAS at a number of irrigation schemes proved a challenge. In 2015, the Strategic Water Partners Network’s Agricultural Supply Chain (ASC) working group identified the implementation of the WAS as a possible solution to assist in addressing the 17% gap between water supply and demand in the country by 2030. The SWPN secured funding for the installation of the WAS Water Release Module at four large irrigation schemes: Vaalharts Water Use Association (WUA), Orange-Riet WUA, Hartbeespoort Irrigation Board (west canal) and Sand-Vet WUA. The core function of the Water Release Module is to minimise water losses and to simplify the water release calculations. The irrigation schemes are now able to track their measured water losses and, over time, a reduction in overall water losses in the scheme will be achieved and recorded. www.nepad.org

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AGRICULTURE, FOOD SECURITY AND A GREENER ENVIRONMENT

The figure below illustrates how the WAS Water Release Module functions.

Demonstrated successes of the WAS

The benefits of the installation of the WAS Water Release Module recorded to date are: • Demonstrated water savings of 927 891 m3 per week in Phase 1. • Improved monitoring of actual releases and, in certain cases, monitoring is now in place where there was previously no data recorded. • A single, standard platform using the DWS methodology for reporting – saving significant time for the irrigation schemes when submitting reports to the DWS. • The use of the Cello loggers and the Zednet platform to monitor and capture live data that is imported into the WAS. • Recently developed website, where all schemes and the DWS can track real-time water releases and improvements in water management. The success of Phase 1 resulted in the roll-out of the WAS Water Release Module to a further six irrigation schemes: • Orange-Riet Water Use Association (WUA) • Impala Water WUA • Loskop Irrigation Board (left and right bank) • Lower Olifants River WUA • Hartbeespoort Irrigation Board (east canal) • Nzhelele Government Water Scheme (GWS)

Around 62 percent of South Africa’s water is used for agriculture nationally and, with the increasing competition between existing user sectors, the available water cannot meet the demand under current water use practices and operating conditions. Future of the WAS

The successful implementation of the WAS Water Release Module through the SWPN has attracted the attention of a number of parties and there is significant interest in the installation of the WAS and associated measuring tools to achieve further water savings in the agricultural sector. Given the ongoing need for economic growth and the scarcity of water as a necessary resource, the WAS is a welcome solution to assist in securing this resource, and therefore the economic future of South Africa. Vicki Shaw is the acting Strategic Water Partners Network programme manager.

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African countries square up

for ivory trade battle The heated debate over the continent’s ivory trade is ongoing, but are we any closer to finding agreement between countries? Dr Colman O’Criodain tackles this question.

he recent Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) conference was the scene of bitter debates over the ivory trade. The 17th CITES conference, held in Johannesburg late last year, was not the first time this had been debated. Everyone agrees that African elephants are in trouble, given that about 20 000 elephants are poached annually. Although last year was the first year there was a continental decline in poaching numbers in decades, the arguments centred on whether or not the international ivory trade was the cause of the crisis. Supporters of a trade ban blamed the crisis on the 2008 one-off sale of ivory stockpiles from four southern African countries to China and Japan; the only legal trade event to have taken place in the last www.nepadbusinessfoundation.org

decade. One commentator went so far as to describe this sale as “shameful”. For their part, South Africa, Namibia and Zimbabwe tabled documents ahead of the conference that effectively accused the CITES member countries of bad faith in failing to adhere to a commitment to agree to a more orderly process for decisions on future ivory sales. The debate reflected deeper philosophical divisions about how best to achieve conservation. Namibia, South Africa and Zimbabwe, in particular, defended the sustainable use model, which incorporates practices such as trophy hunting to fund conservation and benefit local communities. Countries, like Kenya, bitterly opposed such practices. In such a climate, the prospects for a constructive debate, and for reasoned consideration of what was best for elephants, were dim.

THE OFFICIAL NEPAD YEARBOOK 2017

Ivory trade already banned

One sad irony of this situation is that ivory trade is, in fact, already banned under CITES. It is true that the elephant populations of Botswana, Namibia, South Africa and Zimbabwe are listed on Appendix II of CITES, which would normally allow regulated commercial trade. However, in the case of African elephant, the listing is circumscribed in such a way as to exclude the commercial ivory trade; in effect, the only commercial trade that is allowed is in elephant leather and hair. Otherwise, the rules for those populations are broadly similar to those applying for all other African (and Asian) elephant populations. These are listed on Appendix I, which outlaws all commercial trade.

The case for the ban

Supporters of the ban made the case that a continent-wide Appendix I listing was essential as a sign of recognition by CITES of the gravity of the situation. They cited an informal paper from Princeton and Berkeley universities that supported the hypothesis that the 2008 one-off sale had sparked the crisis. The Appendix I listing, they argued, would counter the signal effect of that sale, sending a counter-signal that ivory trade was unacceptable, and thus suppressing demand. Some supporters of the measure cited the example of the decision in 1989 to list the entire African elephant population on Appendix I. That decision, they argued, was followed by a sharp drop in poaching rates1.

Namibia, South Africa and Zimbabwe defended the sustainable use model, which incorporates practices such as trophy hunting to fund conservation and benefit local communities. Countries, like Kenya, bitterly opposed such practices. The case against the ban

Far from supporting the Appendix I listing, Zimbabwe and Namibia, supported by South Africa, argued for the right to resume ivory trade. They disputed the conclusion that the 2008 sale caused the poaching crisis, and they cited peer-reviewed studies that supported this view and attributed the crisis to rising demand in China, coupled with corruption in the countries where poaching is most prevalent. The two countries argued that their elephant populations were stable, and that only ivory derived from natural mortality or the culling of problem animals would be traded.

the species, or the consumer countries – or both – has been a major contributing factor. Moreover, the vast bulk of elephant poaching takes place in countries where populations have remained on Appendix I since 1989. The previous CITES CoP, in 2013, initiated a process to identify range, transit and consumer countries that were contributing to illegal trade, whether through legislative gaps, weak enforcement or a simple lack of political will. The majority of such countries in Africa, including Kenya, were Appendix I countries, but were also supporters of the Appendix I listing proposal. The WWF also questioned the comparison with the situation in 1989, because China was not a significant consumer market at that time. More importantly, it is plain that the poachers and traffickers are able to circumvent the current ban, so it is not clear how an Appendix I listing would make any difference. Nevertheless, while the 2008 sale may not have caused the poaching crisis it didn’t collapse the illegal market either, as its supporters had predicted. The WWF felt it had good reason, therefore, to be precautionary, and to question closely the merits of further trade proposals, especially since poorly regulated trade could make matters worse. Moreover, there are only two consumer countries which, in recent decades, have sought leave to purchase ivory: China and Japan. China had already signalled its intention before the CoP to end its domestic ivory trade (a decision it subsequently confirmed in law), while demand in Japan is declining. It is hard, therefore, to see how ivory trade can take place in the foreseeable future on terms that are acceptable to potential selling countries, while meeting the legitimate concerns of conservationists. In the light of these facts, it was regrettable that the media coverage of CITES tended to oversimplify the issues around elephant conservation to the question of whether or not to trade ivory. As previously indicated, the underlying causes of the crisis lie in the range, transit and consumer countries which are not taking adequate steps to prevent poaching and illegal trade. Some of these countries require resources and capacity to address their shortcomings. However, where political will is lacking, the international community must be prepared to consider more robust responses, including trade sanctions. We should not allow hypothetical debates on future ivory trade to detract from these core issues. Dr Colman O’Criodain is the wildlife policy manager at WWF. 1

It was amended in 1997 and 2000 to exclude the four southern African countries mentioned above.

The outcome

The Conference of the Parties (CoP) to CITES decided to maintain the status quo, rejecting both the proposed Appendix I listing and the bids by Namibia and Zimbabwe to resume trade. Despite the protests of South Africa, Namibia and Zimbabwe, they also agreed to cease discussions on a decision-making mechanism to consider future ivory trade proposals.

The response of WWF

Images courtesy of WWF/Martin Harvey

As far as the debates over trade were concerned, the World Wildlife Fund (WWF) was satisfied with the outcome. However, it was concerned that this debate detracted attention from the underlying causes of the poaching crisis. Firstly, the WWF agreed with the southern African countries, despite the Berkeley-Princeton study, that the evidence linking the 2008 sale with the current poaching crisis was weak. In this regard, southern African rhinos have been at the centre of an escalating poaching crisis since 2007, despite the fact that all rhinos have been listed on Appendix I since 1977. There are numerous other instances of poaching or illegal harvesting associated with Appendix I species, including tigers. In all cases, corruption in the range countries of www.nepad.org

AGRICULTURE, FOOD SECURITY AND A GREENER ENVIRONMENT

Rescuing savannah elephants

Cameroon, Chad and Central African Republic were helpless when their elephant population was virtually wiped out by poaching. Things have changed and there has been a successful effort to conserve the region’s elephants, writes Fidelis Pegue Manga.

tanding at the entrance of Bouba N’Djida National Park in the north region of Cameroon, Dim Fongouda recalls the many times he saw herds of elephants trudging through the migratory corridors that link protected areas in Chad and Cameroon. “This used to be a superhighway for the migration of elephants, but now it is difficult to find any,” said Fongouda, who resides in Garoua, the capital of the north region of Cameroon. Fongouda recalls the heavily armed poachers riding into the park on camels and killing over 300 elephants between January and March 2012, resulting in the corridor becoming eerie and deserted. But now things are changing since the African Development Bank (AfDB) began funding elephant conservation, or specifically, the Project for the Conservation of Biodiversity in Central Africa-Safeguarding Elephants in Central Africa (PCBAC-SEAC).

The elephants in northern Cameroon, Chad and Central African Republic (CAR) are now much safer. PCBAC-SEAC was a direct response to the Bouba N’Djida massacre and the resurgence of ivory trafficking in the region. The massacre first prompted conservationists from the three countries to gather in Yaounde in 2013, during which they adopted an emergency anti-poaching plan. Since then, the World Wildlife Fund (WWF) has trained wildlife law enforcement officers on intelligence gathering and how to investigate wildlife crimes. They were

Fongouda recalls the heavily armed poachers riding into the park on camels and killing over 300 elephants between January and March 2012. www.nepadbusinessfoundation.org

taught how to write reports on the arrests of poachers and judicial procedures. “Rangers have been trained on the use of geographic information systems (GIS) and cyber-tracker devices used for data collection and production of maps. These tools are used to improve efficiencies in anti-poaching patrols and documentation of wildlife crimes,” says Djibrila Hessana, WWF technical co-ordinator for the PCBACSEAC. “There is a general decline in the pressure on elephants, partly due to the increase in the number of patrols, arrests and sensitisation of local

THE OFFICIAL NEPAD YEARBOOK 2017 Elephants have been radio-collared to better monitor their movement and activities in the zone. “Today we are able to monitor their movement between the different protected areas thanks to the satellite collars,” says Hessana. “This – coupled with the engagement of traditional leaders and the local elite to help protect the corridor – will definitely contribute to the stabilisation of the elephant population in this region.” The project has also supported the forestry and wildlife ministry in CAR to create and run a national co-ordination unit to fight against wildlife crime. The project assisted the CAR government to draft a new procedure code for the protection of wildlife and protected areas. Should the AfDB sustain its support, there is a good chance that the elephant population of the three countries will recover and stabilise, thereby bringing back the muchneeded smiles on the faces of local people like Fongouda. This project has been run under the auspices of a memorandum of understanding signed in 2011 between the WWF and the AfDB. The main objectives of the partnership have been to influence Africa’s development and socio-economic agenda so

“There is a general decline in the pressure on elephants, partly due to the increase in the number of patrols, arrests and sensitisation of local people against wildlife crime.” as to ensure positive impact on sustainable development and green economy/green growth. The partnership’s primary areas of collaboration include developing win-win partnerships with emerging economies and strengthening south-south co-operation; catalysing knowledge sharing and knowledge products for green growth and sustainable development; and collaborating on energy and water resource management, climate change and food security. Fidelis Pegue Manga is WWF-Cameroon’s senior communication officer.

An elephant is treated by a heroic team of medics after it was ruthlessly shot with a poacher’s poisoned arrow.

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Image courtesy of GALLO IMAGES/GETTY IMAGES/ Victoria Peckett & Philip Ladmor

people against wildlife crime,” Hessana says. The PCBAC-SEAC project has succeeded in mobilising various stakeholders, including wildlife officers, members of the judiciary and the media, in a campaign to protect the remaining savannah elephants. “Over 225 wildlife law enforcement and customs officers, 95 journalists and a total of 50 traditional and religious leaders, local administrative and elected officials have been either sensitised or trained on wildlife crime and the threats on elephants,” Hessana says. Given the importance of elephant migratory corridors linking protected areas in Chad, Cameroon and CAR, the governments of Chad and Cameroon commissioned a study that identified, described and characterised the corridors and proposed a management plan to safeguard them. The study identified 22 elephant migratory corridors between Chad, Cameroon and CAR. It revealed that part of the corridor has been invaded by cattle herdsmen in search of grazing land and also artisanal gold miners who have settled inside Bouba N’Djida and Sena Oura national parks. It recommended that the governments of Cameroon and Chad take immediate measures to dislodge the artisanal gold miners.

AGRICULTURE, FOOD SECURITY AND A GREENER ENVIRONMENT

Turning the tide

on flooding

There has been horrific recurrent flooding in Uganda caused mainly by bad catchment area management but the rural community is adopting better approaches to address this dilemma, reports Eddy Oketcho.

Flooding huts in Uganda

he Nyamwamba river in the Kasese District of western Uganda, close to the border with the Democratic Republic of Congo (DRC), burst its banks in July 2015. This was the fourth time this had happened in just over three years. Several lives were lost and property worth hundreds of thousands of dollars was destroyed, according to local media reports. The causes of the recurrent floods have been attributed mostly to river siltation, www.nepadbusinessfoundation.org

unsustainable human activity and poor agricultural practices. The people living close to the river and streams in Kasese unwittingly played a key role in the Nyamwamba flooding. Their unregulated cutting down of trees, farming too close to the river banks, and lack of soil and water conservation structures are responsible for the siltation. This behaviour is what experts call poor catchment management practice.

People-problem, people-solution

Kooli Augustine, the Kasese District local government environment officer, agrees that the extent of the damage resulting from flooding is mostly due to the consequences of poor catchment management practices in the district. â&#x20AC;&#x153;There have been wildfires because of charcoal burning that has degraded catchment areas, trees have been uprooted on river banks and this has led to constant and

Image courtesy of DanChurchAid, ACT International

THE OFFICIAL NEPAD YEARBOOK 2017

violent flooding that sweeps away homes and has killed a number of people. Flooding also causes so much damage to infrastructure, such as roads and bridges being swept away by the water,” Augustine says. As part of an effort to develop a lasting solution to the recurrent flooding, the Kasese District local government, in partnerships with private sector companies and civil society players like the World Wildlife Fund (WWF), is working to address the drivers of environmental degradation. They aim to conserve the environment for both the people of the district and its rich biodiversity.

several other development projects, like hydropower, in the district. Some of the rivers in the district, like Nyamwamba and Mubuku, which experience rampant flooding have high hydropower generation potential that could contribute significantly to the national grid. The local communities have provided land and are participating in the implementation of the catchment management activities. They are also acting as change agents, by encouraging and sensitising fellow farmers to take up sustainable land management practices and by being model farmers from whom others can learn.

Nature-based enterprises like apiary, fish farming and growing fruit trees as alternative livelihood options are encouraged rather than their previous unsustainable practices that have had a negative impact on the environment. Kasese District boasts rich eco-systems with a wide coverage of protected areas that host important animal and plant species; a United Nations Educational, Scientific and Cultural Organisation (UNESCO) world heritage site; the Rwenzori Mountains National Park and sensitive water catchment areas like lakes and rivers, most of which pour their waters into Lake Victoria, the largest freshwater lake in Africa and the second largest in the world. In addition, the district is also important because it is located within the Albertine Rift, which is one of WWF’s global priority places within the Great Rift Valley of Africa. Albertine Rift, located in east and central Africa, has rich biodiversity and commands the presence of over 70 percent of Uganda’s protected areas. And while the flooding is a massive problem, it is not the region’s only threat. Other major issues emanate from oil and gas development, other human activities and a high population growth rate of 3.03%, according to the 2015 population census.

The communities are being trained to implement sustainable land management practices, like plantation establishment and management, agroforestry, river bank stabilisation and management, and soil and water conservation techniques. Nature-based enterprises like apiary, fish farming and growing fruit trees as alternative livelihood options are encouraged rather than their previous unsustainable practices that have had a negative impact on the environment.

Bright flood-free future

These initiatives have led to the restoration of degraded land and river banks and the establishment of soil and water conservation structures to reduce soil erosion and surface water run-off in the catchment. Ultimately, these efforts should improve the quality and quantity of the river water flow. Farmers have reported increased soil fertility and enhanced productivity and revenue following the introduction of soil and water conservation techniques and the promotion of nature-based enterprises. Despite the significant damage already done over the years, with the current interventions of various players like WWF and partners, the district authorities are optimistic that total restoration can be realised. In addition, they also believe that there is a need for communities to be sensitised constantly about good practices and to attract private sector players for potential financing. By January 2017, Kasese had not experienced any new cases of flooding since 2015. “There is still a great deal to be done and, based on lessons learnt during previous experiences, they will continue scaling up efforts to restore the integrity of the catchment,” says Ibrahim Mutebi, renewable energy manager of WWF Uganda. “We will also disseminate our experiences and lessons to other stakeholders in the country.” Eddy Oketcho is WWF-Uganda’s communication officer.

WWF Uganda has been implementing several projects in Kasese to address the issues around poor catchment area management that exacerbate degradation and put people and nature at high risk of flooding. The multi-stakeholder approach has led to joint efforts by all key stakeholders in the restoration of the most heavily degraded areas. The hope is that these initiatives will improve downstream quality and quantity of water, sustain water flow and prevent heavy levels of siltation that interfere with

Flooding in Uganda

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Image courtesy of Jane Some Irin

Interventions in Kasese

AGRICULTURE, FOOD SECURITY AND A GREENER ENVIRONMENT

The sustainable blue economy:

a foundation for development Looking out to sea, we aren’t usually concerned about how much money countries can make from the ocean. Marine environments, however, can be valuable in enriching economies, writes Dr David Obura.

he living assets and resources of the western Indian Ocean, comprising the economic zones of 10 countries – Comoros, France, Kenya, Madagascar, Mauritius, Mozambique, Seychelles, Somalia, South Africa and Tanzania – produce US$20.8 billion in goods and services every year. This output from the sea falls between the gross domestic product (GDP) of Tanzania (US$49bn) and Mozambique (US$16bn), the 3rd and 4th largest economies of the region. On a continental scale, the western Indian Ocean output falls between the 16th and 17th out of 52 countries, which is between Uganda and Gabon.

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THE OFFICIAL NEPAD YEARBOOK 2017 A new report, Reviving the Western Indian Ocean Economy: Actions for a Sustainable Future, led by the World Wildlife Fund, The Boston Consulting Group (BCG) and CORDIO East Africa, has found that the value of living assets that produce this return is conservatively estimated to be US$333.8bn. These assets support some 60 million people living in the coastal zones of the 10 countries; one quarter of the national populations.

Economic growth in the last 50 years has eroded the productive assets of the ocean, and continuing in this vein will accelerate the decline. However, these assets, and the economic activity they support, are at risk from growing demand and pressures. The fisheries, coastal development, climate change and trade are pushing the fish stocks, habitats and coastal ecosystems into decline. At the same time, these living assets are of prime importance in supporting an economic boom that the region is likely to experience in coming decades. This phase of intense economic activity could lift millions out of poverty, or alternatively, undermine and impoverish the livelihoods and wellbeing of tens of millions of people who depend on functioning ecosystems. Many economic activities in this region in recent decades have damaged the ocean’s productive natural assets, and continuing in this vein will accelerate the decline. Strategic transformation of economic practices to those of a sustainable pathway is the core of the African Union’s Agenda 2063, and implementing this with an oceans focus is at the heart of the African Integrated Marine Strategy for 2050 and beyond. A focus on sustainability and meeting economic, social and environmental objectives holistically can raise the productivity and value of ocean assets, and the contribution of the ocean to many of the 17 Sustainable Development Goals (SDGs) that countries have committed to achieve by 2030. The report provides a blueprint on how to achieve this future, beginning with securing and restoring the natural productivity and functioning of ocean assets, then extending across multiple sectors including fisheries and aquaculture, energy and climate, integrated planning and social development. At the highest levels, public-private partnerships between countries and the corporate sector could drive such sustainable wealth creation. If tough choices and decisions are made now, there is still a chance to forge a path towards the SDGs in 2030, and a prosperous Africa in 2050 and beyond. These choices are distilled into seven actions in the report, each linked to an

SDG. These actions are adaptable to a country’s national goals and strategies for implementing the SDGs, and key aspects of these are summarised below. The first action is to secure, and restore where possible, the natural assets that are the foundations of productivity. The key tools for securing these assets are effective management to minimise and reverse negative environmental impacts of all activities, both direct and indirect, as well as protection of sufficient areas to ensure the regenerative capacity of resource stocks, habitats and ecosystems. The current global target, enshrined in Target 14.2 of the SDGs, is that at least 10 percent of coastal and marine areas be protected.

The fifth action calls for integrated planning and management across the entire ocean space under national jurisdiction. To start this process, countries should implement aligned strategic environmental and social assessments and capacity building for marine planning. While focused on national frameworks as the basis for legislation and implementation, key trans-national issues and locations need to be considered. The sixth action focuses on social aspects of development. With the coastal population of this area set to grow to 100 million by 2030, it is critical to improve issues related to health, education, equity and gender. Two indicators can be identified as keystone targets that will deliver cascading benefits across

Ensuring a sustainable future starts with securing and enhancing the natural productivity and functioning of ocean assets… extending to fisheries and aquaculture, energy and climate, integrated planning and social development. The second action focuses on providing for food security, through supporting ‘green growth’ in small-scale and industrial fisheries, and marine aquaculture. Many countries already recognise these in national policies and legislation, but need to identify immediate actions to implement them locally. The third action looks to the imperative to secure coastal economies to climate threats, while at the same time looking to leapfrog to 21st century economies based on carbon-neutral energy sources. With so many direct and indirect benefits already supporting national coastal economics, following ecosystem-based approaches to build climate resilience and reduce exposure to climate-related hazards is a core imperative to reducing poverty and future suffering. The fourth and seventh actions focus on the importance of inclusiveness and partnerships. Sustainable wealth creation and opportunity should be accessible to all, which can be achieved by internalising the sustainability aspirations of the SDGs and other conventions into national legislation and regulations.

all others: increasing the gender equality of women and girls in all aspects – including employment, education, judicial and health sectors; and increasing access to and quality of reproductive health services to all. The potential for the countries of the region to achieve a sustainable future and prosper from a healthy western Indian Ocean is high. However, this will require committed and visionary leadership, and the implementation of a multitude of interconnected and mutually reinforcing actions at multiple scales. To succeed, leadership will need to come from many directions – of greatest relevance in this article are the national and business sectors – working within countries, co-operating across countries under regional and continental frameworks, and fostering home-grown innovation to generate solutions to the challenges faced in the region. Dr David Obura, a founding director and coral biologist at Coastal Oceans Research and Development in the Indian Ocean (CORDIO), is the lead author of the Reviving the Western Indian Ocean Economy: Actions for a Sustainable Future report.

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Helping the gorillas

helps the people too While gorillas continue to face many threats across central Africa, the birth of twin western gorillas offers renewed hope for the conservation of the species and its habitat, writes Rose Thuo.

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THE OFFICIAL NEPAD YEARBOOK 2017

t was a very happy first birthday to a pair of exceptional twins in February. There was no birthday cake, but there certainly was a celebration because Inganda and Inguka are the first twins born to habituated gorillas in Dzanga Sangha, Central African Republic (CAR).

Since 2000, several gorilla families have been habituated and studied successfully in the Dzanga Sangha Protected Areas (DSPA). The Primate Habituation Programme that habituates gorillas for tourism and research is co-managed by the World Wildlife Fund (WWF) and the CAR government.

“These are the first twins ever recorded in Dzanga Sangha and their birth is an incredible moment for everyone who has worked so hard to habituate and conserve these gorillas over the past 16 years.” Inganda and Inguka are part of a young developing gorilla family of four headed by the silverback patriarch, Makumba. He lives in Bai Hokou and last year Malui, his ‘wife’, gave birth to the twins, which was a rare phenomenon. “These are the first twins ever recorded in Dzanga Sangha and their birth is an incredible moment for everyone who has worked so hard to habituate and conserve these gorillas over the past 16 years,” says David Greer, WWF African Great Apes Programme leader. Greer, who has worked in Dzanga Sangha for over eight years, says: “These tiny twins are a sign of success in Dzanga Sangha, but gorillas continue to face serious threats across central Africa and their future is far from secure. Because of this, WWF is working with governments and partners throughout the region to protect the gorillas and their forest habitat.” Although multiple sets of twins have been recorded for eastern gorillas, it is rare among western gorillas. These two delightful one year olds are both active, agile and healthy. Tembo, their big nine-year-old brother, enjoys interacting with the twins. On several occasions, he has been seen to take one of the twins from mommy Malui while she is resting and try to play with it. Each time, Malui wakes up quickly, and immediately and protectively scoops the little one away from big brother. The DSPA is one of the regions in central Africa that has been home to the Baka community for centuries. The Baka people,

who live off the land, hunting and gathering, provide a wealth of knowledge of the natural habitat, which has helped conservationists study the gorillas. One of the Baka’s traditions is naming newborn gorillas. They hold naming celebrations among themselves, while still respecting the gorillas’ privacy. The Baka of Bai Hokou gave the twins their names. Inganda – the smaller of the two – is named after a forest shrub, the leaves of which gorillas eat. The twins’ mother also used the leaves as a cushion to give birth to them. Inguka is also named after a forest shrub eaten by the gorillas. However, they mostly eat from this shrub during the last weeks of the dry season, depending more on the leaves than its fruit. Malui fed on these leaves a lot when she was heavily pregnant. The habituation programme is part of a long-term project funded by WWF Germany, WWF Netherlands and the CAR government. Gorilla habituation is a common study through which conservationists gather the information necessary to ensure the life of the species. It also provides an opportunity for the country’s tourism industry to grow, while protecting the animals from their natural predators. Gorillas are strong yet delicate animals that are prone to poaching, disease and increasing habitat loss due to human development.

Gorillas are strong yet delicate animals that are prone to poaching, disease and increasing habitat loss due to human development. The habituation programme does not only help the gorillas. It is the major source of employment for the local people. It plays an important role in the DSPA’s management strategy by generating significant revenue and strengthening a vital link with the community. The project employs over 80 eco-guards for continuous area surveillance and actively supports the sustainable use of natural resources. Rose Thuo is the director of communications and marketing for WWF regional office for Africa.

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GAUTENG GROWTH & DEVELOPMENT AGENCY

LET THE GGDA EXPAND YOUR VISION OF GAUTENG’S ECONOMY

he International Monetary Fund (IMF) states that South Africa is the largest economy in Africa and accounts for a $301 billion contribution to Africa’s Gross Domestic Product (GDP), with the Gauteng Province as the leading contributor to the country’s economy. Experts predict that African markets stand to become the fastest growing and most pivotal in the world over the next 20 years. Never has it been so essential to focus on intra-African trade for it to gain momentum. The Gauteng Growth and Development Agency (GGDA) recently hosted an Exporters’ Breakfast attended by various existing and potential export traders from across sectors such as manufacturing, services and distributors. The purpose was to discuss the state of Gauteng’s export industry. A survey was conducted and the data showed insightful patterns, such as: • More businesses are beginning to open up to trade opportunities, and this is aided by the fact that more businesses are wanting to play on a global scale as there is greater opportunity for growth; another factor could be the saturation of certain markets for particular types of services. • Lack of funding is seen as the greatest limitation to businesses penetrating the export market. Also interesting is that respondents felt that the lack of information about exporting was considered a further impediment. • The attendees noted that sourcing financial advice and/or financing tends to be cumbersome as there are many requirements which seem unattainable to small businesses.

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Almost 50% of attendees felt that Brexit will have no impact on the Gauteng export market, whilst 60% felt that the current political climate in the United States would have a negative impact. These results are interesting if one is to look at aspects such as the US walking out of the Trans-Pacific Partnership and the agitation of Mexico by proposing the building of a wall along the US-Mexico border. These events could be seen as positive for us due to the opportunities that might develop. For example, there is the likelihood that Mexico could retaliate and the Asian countries will also respond with their own protective policies towards the US. This could open export opportunities in Mexico and the US, as well as in the Asian countries, arising from trade war between the trio of partners. The pertinent question is whether Gauteng is in a position to exploit the emerging export opportunities that arise. This is dependent on our ability to export to countries and regions that the former trade partners used to. Brexit, on the other hand, has created mostly uncertainty in global economic and political standings. The main opportunities here lie in the chance for other countries to renegotiate their bilateral treaties with both the EU and Britain. Another opportunity lies in certain goods that were once barred from being exported to the bloc, can now be placed in the trade negotiations agenda with both the EU and UK separately. The attendees also noted that the resurging xenophobic attacks drown the benefits that could be attained from intraAfrican trade, which emphasises the need for a long-term solution for this resurgence. The main challenges in export development

lie in the subdued global growth and fragile financial systems. 2016 was the 3rd year in a row when global trade had grown at a slower pace than global GDP growth with both rates below 3%. Unfortunately, with such a bleak economic environment, countries have become protective and enacted antiimport policies. There are various challenges on the continent – high tariffs, multiple languages and cultures, poor transportation infrastructure, and regulatory environments, which make it expensive to do business. However, we do need to consistently think broader than the current circumstances as there are countless opportunities for the Gauteng Province for trade. The Gauteng Growth and Development Agency is the business partner perfectly positioned to assist in growing export businesses through providing services such as: • Facilitating strategic infrastructure projects • Site identification and evaluation • Export development and facilitation • Facilitating local and foreign retention • Business permits and visas facilitation • Project appraisal • Sector economic data provision Inward and outward investment promotion missions Source: Xinhua (August 12, 2016) S. Africa overtakes Nigeria as Africa’s largest economy

Contact Details Gauteng Growth and Development Agency 124 Main Street, Marshalltown Johannesburg, 2000 Tel: +27 (0)11 085 2400 Website: www.ggda.co.za

REGIONAL INFRASTRUCTURE AND DEVELOPMENT

Nuclear – is it the answer? Some believe that the only solution to the continent’s power crisis is nuclear, while others believe it would be the worst. Liesl Venter unpacks this issue.

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t least two-thirds of sub-Saharan Africa is facing an electricity crisis. The International Energy Agency estimates that more than 620 million people in the region – equalling two-thirds of the population – live without electricity. The average electricity consumption per capita is not even enough to power a single 50-watt lightbulb continuously. Any chance of changing this status quo is dependent on huge investments – a whopping US$ 40.8 billion per annum to be precise. It’s a near impossible achievement but it highlights a crucial element of the energy debate – African countries have no room for error when choosing power sources. Yet what source is best for Africa’s base load power remains highly contested. Coal is environmentally unfriendly, while gas and hydro are dependent on a resource not always readily available. The use of solid biomass (fuel produced from organic material) outweighs the benefits of all other fuels combined. Most experts agree that renewables are not ideal for base load, leaving only one other option – nuclear. “Nuclear is not just an option for African power generation. It is a necessity,” says nuclear expert Dr Kelvin Kemm, CEO of Nuclear Africa. “I would go further to say that there is no other alternative for many countries on the continent offering a reliable and stable energy supply such as nuclear offers.” According to Kemm nuclear is however often dogged by controversy with claims of it being dangerous or unsafe, neither of which are true, he says. “We often hear anti-nuclear lobbyists refer to the lessons learned about nuclear from Fukushima,” says Kemm referring to the incident in 2011 when the Japanese nuclear plant was hit by a tsunami. “The only lesson we learnt from that was that nuclear power is safer than anyone ever imagined. Not a single person was killed by radiation, not a single private property damaged by radiation. In fact there have been no long-term after-effects at all.” According to Kemm, at least 20 African countries have indicated they are actively looking at nuclear energy as part of their electricity planning models. “Of that, at least 12 countries have indicated they are going to go ahead with it.” Currently South Africa is the only country in Africa to operate a nuclear power station. The subject of much contention and

controversy, the government has indicated it plans to construct a fleet of nuclear power plants to address energy constraints in the country. In Egypt, nuclear has been given the goahead after the announcement in mid-2016 that the Russian nuclear giant Rosatom had accepted a tender to build a new station with a capacity of 4 800 megawatts. This came shortly after Russia announced it was lending the country $25 billion to finance and operate a nuclear power plant. Other countries looking into nuclear include Tunisia, Libya, Algeria, Morocco, Sudan, Nigeria, Ghana, Senegal, Kenya, Uganda, Tanzania, Zambia and Namibia. “In many of these countries, nuclear laws are being prepared and the regulatory environment established to allow for nuclear,” says Kemm. Not everyone is convinced that nuclear is the best possible option for Africa. Johan Muller, programme manager: energy and environment at consulting firm Frost & Sullivan, says there are several alternatives that are less costly and complex while also being far more suitable to the African environment. These include solar, gas and hydro.

Energy expert and author of a study into the cost of nuclear energy Chris Yelland agrees with Muller, saying not only is nuclear far too costly for most African countries, there is simply just not enough demand. “One would need to run a nuclear reactor flat out for 24 hours a day to get reasonably priced electricity out of it,” he explains. At the same time, Africa has a dubious track record when it comes to mega projects and building a nuclear power plant is about as mega as it comes. “The solution to the African energy crisis does not lie in one single solution,” says Yelland. “It’s not a case of nuclear or hydro or coal or gas or renewables but rather a mix of it all. No country in the world runs its energy off one technology source and neither should Africa.” Investments into nuclear, however, are large and would leave very little capital for expenditure on other projects. Africa, on the other hand, has abundant solar, hydro and gas resources, coupled with wind and geothermal in East Africa. “The more sustainable answer would be to tap into these technologies first, supplemented by the existing coal reserves

The average electricity consumption per capita is not even enough to power a single 50-watt lightbulb continuously. “Also from a regulation, technology suitability, economics of scale and off-taker point of view, the implementation of nuclear is complex.” Muller says another major challenge for Africa in terms of nuclear is financing. “The South African ambitions are a good example of this where they want to roll out a nuclear programme but have no balance sheet to fund the programme. The decision ends up being a political decision, rather than a technologybased decision.” Another good example is Namibia – a country that holds about seven percent of the world’s uranium reserves. Facing severe power supply challenges, the country has committed to a policy position of supplying its own electricity from nuclear power. “Namibia has (fewer) citizens than the greater Cape Town metropolitan area and their power needs can be supplied for in totality by one big coal plant as found in South Africa. The same principle applies to Tanzania, Kenya and the like. The scale is simply just not there to justify a nuclear programme,” says Muller. “If newer technology enables a more modular approach and if the economies are set to rapidly expand, resulting in a higher demand for power, then of course the situation could change.”

and stations,” says Muller. “If there is still a gap, then develop nuclear programmes and ensure that the programme adheres to global safety and regulatory standards.” Kemm disagrees, saying the development of small pebble bed reactors allows African countries diversity and the ability to generate power where they need it most. “Also, nuclear fuel is incredibly small in volume. Koeberg uses one truckload of fuel a year. If it were coal, it would require six train loads of coal a day. From a fuel storage point of view there is no doubt that nuclear makes more sense.” He says that, while solar and wind are being heralded as solutions, the reality remained that being dependent on the weather for power was never ideal. “Too many countries in Africa are dependent on hydro and the impact of the drought has been severe. It proves that weather-controlled solutions are not ideal.” ZB Kotze of Top Quartile, a South Africanbased energy consulting firm, points out that deciding on power supply requires a thorough energy needs assessment to be conducted along with an assessment of available resources. “Establishing a costeffective solution is highly dependent of these respective resources.”

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THE OFFICIAL NEPAD YEARBOOK 2017

ECIC Mandate The Export Credit Insurance Corporation SOC LTD (ECIC) is the official Export credit agency (ECA) of

South African government. The corporation derives its mandate from the Export Credit and Foreign

Investments Insurance Act (1957, as amended). ECIC operates under the auspices of the DTI

and was established in 2001 with a mandate of

facilitating and encouraging South African export

trade by underwriting bank loans and investments outside South African borders.

PARTNERING WITH COMMUNITIES FOR SOCIO-ECONOMIC GROWTH AND SUSTAINABLE DEVELOPMENT

Socio-Economic Development Commitment The ECIC through its commitment to Socio-Economic Development initiatives extends support through partnerships with community based organisations and small business enterprises to provide developmental interventions in key focus areas: • Education • Skills Development • Community Development • Enterprise Development and • Supplier Development

REGIONAL INFRASTRUCTURE AND DEVELOPMENT

Cities of the future There is much talk about creating smart cities in Africa, but what impact can they have on the existing overpopulation, poverty and desperation? Stuart Graham reports.

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wo schoolboys rest their elbows on a window of a dented, rusting Kenya Railways train as it edges through the sun-baked shacks of the Kibera slum. Among the thousands upon thousands of mud-walled homes, the boys may have seen a woman carrying a bucket of water on her head, children playing in a puddle of filthy water and a vendor eking out a living by cutting keys. The British colonial administration wanted to keep Nairobi as a home for Europeans. The outskirts of the city, like Kibera, once a forested hillside a short drive away, was where the rural migrant workers lived. The settlement grew rapidly after independence in 1963 as people converged on the city for a better life. But the government has always classified Kibera as an informal urban settlement and basic services like running water, toilets and electricity were never provided. Slowly but surely it turned into Africa’s largest slum, inhabited by hundreds of thousands of people. Like most overpopulated slums, there are frequent rape and assault cases in Kibera. Up to eight people live in each shack. The lack of a sewage system creates perfect conditions for the spread of disease. Hope of escaping such poverty is dim. Most people in Kibera earn less than one US dollar a day, while education is largely nonexistent. The situation in Kibera is repeated in cities around Africa. Paul Collier, professor of economics and public policy at the Blavatnik School of Government, Oxford University, says to date

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African urbanisation has been “dysfunctional”. A successful city provides the physical conditions in which ordinary workers can be productive and ordinary households can live in decent surroundings, he says. “No African city has yet achieved this combination and many are generating conditions that are so inadequate that the majority of their

Massive public and private investment in vast and dense networks of roads and households will create the conditions for a productive workforce. inhabitants can neither be productive, nor lead decent lives.” Rapid population growth and the consequent reduction in land per person has offset “the modest pace of productivity” enhancement from investment and innovation, says Collier. Consequently, poor people have moved to cities even though there are few prospects of work. “Such households do not have the accumulated savings to make significant investments in housing, and so their default option is to build shacks,” says Collier. Urban sprawl has generated cities like Dar es Salaam, where the limited road network has been overwhelmed by the rise in population. As the edge of the city grows further

from the centre, connectivity progressively deteriorates for new arrivals who settle on the fringes, explains Collier. “As the incomes of new arrivals living at the edge of the city progressively decline, people become willing to accept higherdensity living in order to live near the centre.” Only massive public and private investment in vast and dense networks of roads and households will create the conditions for a productive workforce. As a city becomes more productive, more firms and households will locate within it. As this happens, the value of land will appreciate according to the connectivity that each provides. Some 60km to the south-east of Kibera, graders rip up the ground of what was once a ranch and fill trucks with mounds of red earth. The Kenyan government hopes this new area, which will be the site of Konza Techno City, will be the new face of the country, “a globally competitive and prosperous Silicon Savannah”. John Tanui, the chief executive of the Konza Technopolis Development Authority, says Konza’s mission is to improve the quality of life for Kenyans by transforming employment markets, enhancing social

THE OFFICIAL NEPAD YEARBOOK 2017

“The techno city is set to foster innovation and start-ups by playing host to a number of research labs and incubation centres staffed by Kenyan innovators and entrepreneurs.” The problem with smart cities is that the associated economic growth rarely trickles down to the poor. “Rwanda will grow and you will get a small elite and middle class who have access to new gated suburban villages and office parks, but the vast majority cannot benefit from that,” she says. “And so you get a country with increasing inequalities. Nothing can be more socially and politically destabilising than growing inequality.”

Smart city features Lagos

• In Nigeria, the Lagos State government hopes Eko Atlantic will become west Africa’s new financial centre. Seen as Africa’s answer to Dubai, the 10km2 multibillion-dollar residential and business development has foundations built on sand dredged from the ocean floor. • Eko Atlantic is billed by the developers as a “sustainable city, clean and energy efficient with minimal carbon emissions”. • Upon completion, the new island anticipates at least 250 000 residents and a daily flow of 150 000 commuters. • The business district will feature a spectacular central, sixlane boulevard and the Eko Mall, a luxury outlet for retail and commercial use.

Accra

• Two modern cities are under construction in Ghana: Appolonia near Accra and King City in Takoradi. • The government conceived the idea of the two satellite cities to “decongest the cities of Accra-Tema, Takoradi and Kumasi and also provide decent, but affordable accommodation to the working class”, according to the website, Modern Ghana. • The Appolonia City of Light project, situated 40km from Accra, will provide accommodation for 88 000 people, with 30 000 day visitors anticipated. • It will be a mixed-use development comprising residential properties, light industrial facilities, retail and other commercial centres, as well as schools, healthcare facilities, parks and other social infrastructure. The project is the single-largest private urban development project in Ghana. King City, 10km from Takoradi Harbour, will accommodate 98 000 people.

Nairobi

• Konza Techno City in Kenya is centred on education, life sciences, telecommunications and business process outsourcing. • The US$9 billion technopolis is envisaged to be a hub for the ICT sector, which is projected to contribute as much as 8% to the GDP in 2017. • The project, which will include a university, a central business district (CBD), a residential area with schools and parks, will deliver almost 100 000 jobs by 2030. • The CBD will be easily accessible to all residents and workers by public transport, walking, cycling and by car. It will comprise offices, shops, a market, a district hospital, hotels, restaurants and entertainment facilities.

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infrastructure and securing good governance. When complete, the city will feature a central business district, a university campus with capacity for 1 500 students, a residential community of 185 000 people, and parks and wildlife, he says. “The techno city is set to foster innovation and start-ups by playing host to a number of research labs and incubation centres staffed by Kenyan innovators and entrepreneurs,” says Tanui. A project on the other side of Africa aims to do something similar. The Great Wall of Lagos is 8km long and 8.5m above sea level, running through what not long ago was a piece of the Atlantic Ocean off the coast of Victoria Island adjacent to the capital. On the reclaimed land behind the wall, builders are digging, hammering and drilling on Eko Atlantic, the Nigerian smart city project that builders say will one day match Manhattan’s skyscraper district. While Nigeria’s overall housing shortage is estimated to be a staggering 17 million, the Eko Atlantic developers aim to provide homes to at least 250 000 of the capital city’s residents. The government hopes the development will encourage investors to use Lagos as a gateway to west Africa’s lucrative emerging markets. Many African governments have looked to Rwanda for inspiration, as it develops a master plan for its capital, Kigali. New buildings are rapidly replacing outdated ones. Dirt roads have been tarred and widened around the city. Urban settlements are now within easy reach of the countryside. Wifi is free in many areas across the capital, which has high-speed public transport and is becoming a prime international conference destination. Rwanda’s development has won international awards, but critics say the rapid development of Kigali into a smart city has failed to take the country’s demographic and economic challenges into account and that the upgrades are purely for the cream of the crop. Vanessa Watson, an urban planning professor at the University of Cape Town, says in a BBC interview that “urban fantasies” have taken root across Africa since 2008, when the property development sector started looking for new areas to conquer after the economic downturn. Amazing visions have emerged on property developer websites with African cities that look like Dubai, Shanghai and Singapore, she says. “I think it is linked: the economic downturn to the property development industry,” says Watson. “Property developers have done Asia. They have done China. Africa is virgin land, ready for the taking. The scary thing about these visions is that these are ideas from somewhere else.” Cities across sub-Saharan Africa are growing rapidly at about 3.3 percent a year, but these populations are largely poor, she says. “They are not the kind of people who could ever hope to live in glassboxed towers, with manicured gardens and boulevards. The vision is completely different from the reality of African cities.”

REGIONAL INFRASTRUCTURE AND DEVELOPMENT

Water

diplomacy The Lesotho Highlands Water Project is just one of a number of bodies of water that has the potential to be a transboundary pathway to co-operation and peace between countries, writes Lesley Wentworth.

n the rugged, mountainous kingdom of Lesotho lies one of Africa’s most complex infrastructure projects – the Lesotho Highlands Water Project (LHWP). This body of water forms one of the continent’s most impressive transboundary water projects that provides Gauteng – South Africa’s economic hub – with about half of its water needs. Lesotho is completely contained within South Africa, and the Drakensberg mountains in north-eastern Lesotho are the source of the Orange-Senqu River. The Orange River basin extends over four countries: Lesotho, South Africa, Botswana and Namibia. The recent regional drought is affecting many of the countries in the Southern African Development Community (SADC) region, including Lesotho. The levels of the LHWP’s two major dams – the Katse and Mohale Dams – have fallen for several years. This is a result of the El Niño climate phenomenon, which has reduced rainfall and associated water availability in the region, leading to crop failures, food shortage and waning fish and livestock populations. Lesotho has a population of around two million who consume only a fraction of the water available to the country. It is a mostly rural country with around 57 percent of its people living in poverty. With very few other resources to export, including textiles and trout, the water project provides a considerable opportunity for the kingdom’s revenue. The multi-billion rand LHWP, phases 1A and 1B of the project which were

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implemented between 1987 and 2008, is a remarkable feat of engineering. The project uses a series of gravity tunnels and dams to divert the river from its natural flow (towards Aliwal North in the Eastern Cape) to the Gauteng Province 570km away.

Transnational conflicts over ‘white gold’

The bilateral contract between Lesotho and South Africa is one of 276 transboundary water (lake or river) basins that cover nearly 50% of the Earth’s land surface and account for an estimated 60% of global freshwater flow. Worldwide there have been tensions over water, also known as ‘white gold’, highlighting its economic value and lifegiving importance. Over one billion people lack access to an adequate water supply and over two billion lack access to sanitation. According to the World Health Organisation (WHO), unsafe water and unsatisfactory sanitation are estimated to account for nearly 10% of the global burden of disease and about 6.5% of deaths.

Water shortages and water pollution are problems for both developed and developing countries and political boundaries must often be set aside in order to ensure the sustainable supply of this precious resource for citizens. Sovereign borders exert major influence on water policies, often leading to impractical and unpredictable water management systems. These pose a serious threat to security, where international organisations, in particular United Nations agencies, like WHO and the UN Educational, Scientific and Cultural Organisation (UNESCO), have united to tackle issues on water and sanitation. In the Middle East, there are welldocumented disputes over the TigrisEuphrates River basin by Turkey, Syria, Iraq, Iran and Kuwait. Another case in point is Ethiopia which has a long-standing plan to build the Grand Renaissance Dam on the Nile River, which provides water to 11 African countries. Ethiopia, Sudan and Egypt in particular are affected by negotiations towards a Nile River agreement. Some 40 million Egyptian farmers could be affected should

Lesotho is a mostly rural country with around 57% of its people living in poverty. With very few other resources to export, including textiles and trout, the water project provides a considerable opportunity for the kingdom’s revenue.

THE OFFICIAL NEPAD YEARBOOK 2017

the river flow be halted, as the Nile is the only source of water to this desert country. Fortunately, transboundary projects do not only generate conflict. They can also be pathways to peace, regional co-operation and stable growth. In this regard, water diplomacy can mitigate or manage conflicts between countries by negotiating arrangements on the distribution and management of shared water resources. It takes ongoing cooperation to develop reasonable, sustainable and peaceful solutions to water management processes, while emphasising the regional co-operation agenda. This resonates in the case of the LHWP, where the diplomatic relationship between Lesotho and South Africa improved significantly when the newly democratic South Africa became a member of the SADC economic community in the 1990s. Water diplomacy can initiate a dialogue with multiple stakeholders, including the public sector (local, provincial and national); private operators; development financiers and international co-operating partners, as well as affected communities. Here, the views of experts in hydrology, environmental experts and lawyers are also critical. There is, though, the acknowledgement that national self-interest occurs in most multi-state negotiations. Negotiation often leads to compromise and invariably there are trade-offs. Water scarcity is an important security issue in SADC and the mutual interdependence of a regional project such as the LHWP calls for enhanced co-operation over shared water resources among regional partner countries to allay economic and environmental insecurities.

Lessons from Lesotho

Negotiations for the LHWP started back in the 1950s, although the treaty governing the project was signed by Lesotho and South Africaâ&#x20AC;&#x2122;s apartheid government over 30 years later. When the ANC-led government took over in the mid-1990s, an addendum to the treaty was signed considering the governance, operations and roles of the

Water diplomacy can mitigate or manage conflicts between countries by negotiating arrangements on the distribution and management of shared water resources. responsible authorities of the project. Construction was completed in 2003 and it was inaugurated in 2004. The project has resulted in the development of important infrastructure for Lesotho, including hundreds of kilometres of paved roads and communications infrastructure between villages. Lesotho reportedly receives between US$2.6-3.3 million each year from the South African government, yet there have been controversies around the use of royalties received, and there have been allegations of misappropriation of funds by key government officials. Phase II of LHWP is expected to deliver a significant increase in the amount of water supplied to South Africa from 780 million cubic metres to 1.27 billion cubic metres. Contracts in the development of Phase II of the LHWP are currently being negotiated. Delays have resulted in the envisaged project closing date being postponed from 2020 to 2025. Additional concerns have been raised that Gauteng could face severe water shortages in this period. There have been questions concerning the extent to which displaced communities were compensated for their lands and livelihoods given up as a result of the infrastructure development of Phase I. It has been recommended that in Phase II, the relocation of the communities displaced by the project should be more carefully and fully considered, and compensation policies more carefully planned and implemented. The technical aspects of Phase I were exceptional; however, it is reported that impact assessments were not conducted comprehensively and did not take into account the scenario for the recent drought. Lessons taken from Phase I that could assist in a better implementation of Phase II

include clear lines of accountability between the two governments in the project, as well as in the prioritisation of the interests of Lesotho and South Africa.

Long-term sustainability of water

Benefit-sharing arrangements in crossborder infrastructure development are complex, as the countries engaged need to balance their own needs with regional partners and their respective commitments to regional integration. Despite the many challenges in the LHWP, the post-apartheid era agreement has ushered in a more cooperative phase between the Lesotho and Swaziland governments and the respective water authorities. Undoubtedly South Africa, as the regional economic and political heavyweight, has significant leverage to defend its own agenda â&#x20AC;&#x201C; in this case the evergrowing demand for water in Gauteng. Acknowledging that the delays in implementing Phase II of the LHWP are likely to aggravate water supply shortages in Gauteng, perhaps South Africa can lead the region in a concerted, sustained programme geared towards water conservation and stewardship, including fixing leaking and badly maintained infrastructure, and reusing, repurposing and recycling water for domestic, business and industrial use throughout the SADC. It is these types of programmes which will ultimately make the difference in ensuring the sustainability of precious water resources across the continent.

Lesley Wentworth is the programme manager for the NEPAD Business Foundationâ&#x20AC;&#x2122;s Southern African Business Forum.

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ADVERTORIAL

CITY OF JOHANNESBURG

JOBURG’S PLAN TO BOOST BUSINESS TAKES OFF

he City of Joburg’s Department of Economic Development has launched a forward-thinking ninepoint plan to boost investment in Johannesburg city, with a view to attaining the target of 5% economic growth and a reduction of unemployment to less than 20%. The plan, initiated by executive mayor Herman Mashaba, includes rejuvenating existing buildings in the CBD; creating low-cost housing; boosting economies in urban hubs such as Soweto, Randburg and Roodepoort; and rejuvenating industrial manufacturing nodes in Marlboro, Alexandra, City Deep, Kya Sands and Linbro Park. Councillor Sharon Peetz, member of the Mayoral Committee for Economic Development , said there was a growing interest from investors in establishing businesses in the CBD, but they were hesitant because of concerns about urban decay, crime and grime. “Our task is to create an ‘enabling environment’ within which the private sector can flourish and, in partnership with the City, create jobs and economic opportunities,” she said.

‘Johannesburg must be business-friendly and propoor at the same time’ - City of Joburg’s new economic development plan

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With the implementation of the plan, the city was hoping to attract R20 billion worth of investment, she said, and to this end, “red-tape will be turned into red carpet for investors, making Johannesburg a business friendly city”. The Mayor had already created a position in his office to expedite the resolution of issues like billing problems that face developers, investors and business people, to avoid unnecessary delays. A strong focus of the plan is on expanding entrepreneurial ecosystems, reaching out to more small business and offering citywide support of SMME across the city expenditure line items, as well as developing proactive technical maintenance and service teams through artisan training programmes. A priority in the CBD is to encourage the private sector to take over existing buildings and combine their businesses with low-cost and affordable housing, skills hubs and retail premises. Marginalised areas of the city, meanwhile, like Marlboro South, City Deep and other industrial nodes in townships, will also receive a shot in the arm, as the city looks at rejuvenating these declined industrial and manufacture nodes. “Our priority is to fix what we have rather than start grand new projects. Vital industrial nodes in the city can be regenerated and brought to optimum capacity through the establishment of a business-friendly

environment,” said Clr Peetz. Tourism is included in the plan, which is to position the city as ‘Africa’s leading business tourism destination’. Statistics compiled by Joburg Tourism shows that business tourists spend five times more than those who visit the city for leisure purposes, and one of the objectives is to convince these tourists to extend their stay beyond the days of the conferences they attend, as well as encourage them to return for future visits. One of the primary areas for growth is the MICE (meetings, incentives, conferences and events) market. A series of global and Africa-wide events have been lined up for the remainder of 2017, and they are expected to yield more than 60 000 delegates. “The African market is a priority. Currently only 10% of African meetings, excluding government-related conferences, are hosted in South Africa. However more than half of all visits from countries such as Kenya, Malawi and Zambia are business-related, and provide Joburg with a springboard to achieve further growth,” said Clr Peetz. Contact details Jorissen Place, 66 Jorissen Street, Braamfontein Tel: (011) 703 5522 Fax: (011) 703 5265 www.joburg.org.za

ITHIKIE, ‘DANBONGA’ SIYA MAKE ADAY. R’S VISITO

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JohannesburgTourism

@joburgtourism

WINTER HOLIDAY INDULGENCE OFFERING

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3 NIGHTS STAY FOR THE PRICE OF 2 Offer valid for the time period 30 June to 24 July 2017 Wonderful day excursions and activities can be accessed from De Hoek Country Hotel as base and includes: Hot air ballooning • Horse riding • Canopy Tours • Cheese tasting at Van Gaalen • Harties Cableway • Shopping at Chameleon Village in Harties • In-Room treatments at De Hoek • Black Horse beer tasting and lunch • Maropeng • Lawn games at De Hoek • Sterkfontein Caves • Rhino & Lion Park • Hiking trails up the mountain and more! Contact us at: +27 (0)14 577 9600, reservations@dehoek.com or www.dehoek.com. Follow us on Facebook for all the latest promotions and events: /DeHoek

THE OFFICIAL NEPAD YEARBOOK 2017

Developing African

airport cities

Airports are now driving economic location just as railways did before. Helen Grange looks at the advent of the ‘aerotropolis’ in Africa.

he aerotropolis, essentially a metropolis built around a national airport, is potentially a huge catalyst for regional development, infrastructure and job creation. Two of these developments are unfolding in South Africa, spearheaded by Johannesburg’s OR Tambo and Durban’s King Shaka, with a third planned for Cape Town International Airport. The OR Tambo Aerotropolis, in Ekurhuleni east of Johannesburg, is the first of its kind on the African continent, based on notable others like Schiphol International in Amsterdam; Hong Kong International; and Hartsfield-Jackson Atlanta International in the United States. A comprehensive plan for the OR Tambo Aerotropolis was approved in December 2016, two years after its announcement, and will be developed over the next five years. About 80 aerotropolises exist around the world. These 21st century, multi-nodal ‘airport cities’ allow you to fly in, do business, stay in a hotel, shop in a full complement of retailers from electronics to furniture, enjoy a leisure experience and then fly out again without having to visit the formal city capital itself.

and office developments. This aerotropolis hinges on the PWV15 highway. Said Ismail Vadi, Gauteng MEC for roads and transport, during the May 2016 budget speech: “Apart from alleviating traffic congestion on the existing road network, it will accelerate the development of the aerotropolis and enhance the adjacent land value along the route for housing, industrial and commercial development.” The aerotropolis precinct has already seen a significant influx of freight-related businesses closer to its transport hub in the last two years. “The key to the aerotropolis development is the ability to collaborate effectively with the local municipality, government and the private sector to provide the required infrastructure and capital investment,” says Nonhlanhla Mayisela, senior manager of infrastructure and commercial development for the Airports Company South Africa (ACSA), which runs nine major South African airports and is spearheading the three aerotropolis developments. “The intention is no longer to compete as airports, but rather to expand our boundary of

“The intention is no longer to compete as airports, but rather to expand our boundary of influence and contribute more meaningfully to the local economies where the airports are situated.” The investment in the OR Tambo Aerotropolis is estimated at R300 billion, and entails a new transport infrastructure, including a 35km north-south highway known as PWV15, a bus rapid transport (BRT) system around the airport and new Gautrain routes that will include parts of the metro such as Boksburg, and extend as far as Randburg. It has all been approved and budgeted for by the Ekurhuleni Municipality and is expected to spawn excited private sector activity with new shopping, housing

influence and contribute more meaningfully to the local economies where the airports are situated. Getting the aerotropolis right requires integrating airport planning, urban planning and business planning. Major upgrades need to be implemented, as the airport city itself is capacitated on a business case driven by passenger and cargo demand, and the infrastructure needs of property development,” she says. An aerotropolis, therefore, is a significant enabler for transport and

property development, and the creation and sustenance of new business, yielding both economic and social returns for the region and, ultimately, the country. In the emerging Durban Aerotropolis, these returns are already being made, with Tongaat Hulett’s grand plan to develop 1 000 hectares of prime beach, forest and river at the Sibaya Coast precinct into four exclusive apartment complexes, shopping centres and living areas. Rory Wilkinson, planning director at Tongaat Hulett Developments, says the development will create an estimated 30 000 permanent jobs, and a total investment value of R21.7bn will be injected into the local economy. The eThekwini Municipality is fully on board, providing the founding infrastructure and support for the development “as it sees the merit in it, with each new landholding contributing significantly to rates and taxes and increased job creation opportunities down the line”, Wilkinson adds. A feasibility study is being carried out in Cape Town to determine whether the aerotropolis strategy could also be a positive value proposition for the region. “The next step is to decide on and establish a suitable institutional framework,” says Mayisela. Aerotropolises have been evolving organically in other African cities where there is high-frequency air traffic, most notably in Nairobi, Kenya and Accra, Ghana, but if they are unplanned, the developments around international airports are spontaneous and haphazard, and can spawn traffic congestion and environmental problems. Anton Cartwright, economics researcher at the African Centre for Cities, says that although OR Tambo, at around 20 million passengers a year, doesn’t rank among the 100 busiest airports in the world, the notion of an aerotropolis is aspirational: “build it and they will come”. “We know that air travel in Africa is increasing, as is intra-African trade, so the aerotropolis hopes to tap into and contribute to this growth,” he says. www.nepad.org

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That said, a critical mass of both passengers and air services is essential to making an aerotropolis work, and Cartwright agrees it is risky. “Large infrastructure projects with big price tags are always risky and sometimes have a dangerous ‘vanity project’ element to them that clouds the financial case. We learnt this with stadiums ahead of 2010. Airports are not like stadiums, however. Airports tend to rely on a more affluent clientele – those who can afford to fly – which makes them more easily financeable than, say, sanitation projects. “Certainly what we have seen in South Africa is that private individuals are prepared to pay a lot for airport parking, for example, which generates large revenue for ACSA. This in itself provides a finance case,” he says.

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“We know that air travel in Africa is increasing, as is intra-African trade, so the aerotropolis hopes to tap into, and contribute to, this growth.” An aerotropolis is not only geared to flyers, of course. Its linkages to public transport benefit the public at large and, in the case of OR Tambo, the roll-out of BRT and Gautrain routes will provide Ekurhuleni residents with easy access to the Johannesburg CBD. “It makes the case more compelling if the public transport infrastructure at the aerotropolis encourages the middle-class car users to use public transport,” says Cartwright. Ultimately, the mobility of goods and people is good for the economy and for

societies. Africa’s economies are constrained by a lack of transport infrastructure and low, expensive mobility. A bigger airport will be good for trade, especially within Africa. But, as Cartwright points out, other interventions such as value-addition, cleaner energy, better education and investment in research and development would arguably be better still. “There is always a danger that this type of large infrastructure becomes conspicuous, and contributes to further inequality and social exclusion, something South Africa can no longer afford,” he says.

THE OFFICIAL NEPAD YEARBOOK 2016

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REGIONAL INFRASTRUCTURE AND DEVELOPMENT

Africa, the great

disruptor

Technologies are leapfrogged on the continent and harsh conditions ignite inventions, writes Tamsin Oxford.

isruption has become the key buzzword. It’s linked with terms such as digital, data, IT, cloud, innovation and development. It is also the ideal description for the African continent, where technologies are leapfrogged and harsh conditions encourage invention and disavow convention. While there are challenges in each country, there is also optimism, inspiration and plenty of opportunity. Africa is where the innovation disruption is taken to new levels as need and demand push the barriers of inventiveness and entrepreneurs step out of the so-called dust and into the global spotlight. “As Africa becomes more and more visible on the international stage, the world also seems to be opening its collective eyes to the continent’s potential,” says Marco Rosa, managing director of Formula D Interactive. Among the many factors driving transformation across Africa are connectivity and technology. Access to media channels and social media is exposing Africa to developments globally and giving them the impetus they need to create solutions which are as individual as the continent itself. One example is the development of the world’s largest concentrated solar power plant in Morocco. Powered by the Saharan sun and built to bring power to millions, the Ouarzazate solar power plant consists of four interlinked mega-plants and will make up the largest concentrated solar power plant in the world once it is completed. It is estimated that it will deliver around 580MW when the four plants have been built and will be the same size as the capital city of Rabat. According to Robbie Cheadle, associate director deal advisory of KPMG South Africa: “Corruption, poor infrastructure and onerous business conditions in fact do not scare off investors. Total foreign direct investment (FDI) inflows to Africa have increased by 20 percent in the five-year period ended 2014 and southern Africa achieved the largest increase in FDI inflows over this period. Central and east Africa followed closely behind.” The World Bank’s Ease of Doing Business surveys, the Transparency International Corruption Perception Index and the KPMG analysis have found four primary factors which influence investment into African states. These include comparatively high growth expectations compared with developed economies, politically mature governments with independent judiciaries, available land and significant mineral and other resources and increased domestic consumption.

Urban metro in Addis Ababa

In true African style, Addis Ababa has overcome challenges around infrastructure with its urban metro system. It is the first light rail system of its kind in sub-Saharan Africa and makes no small difference to the crowded and clogged roads of this rapidly growing capital city. Ethiopia is one of Africa’s top-performing economies with a growth of 10.3% from 2013-2014, a tight inflation rate and a consistently positive outlook. It is making significant strides into becoming one of the leading performers on a number of the Ease of Doing Business rankings, such as Enforcing Contracts and Dealing with Construction Permits. www.nepadbusinessfoundation.org

Bosch brews in Ethiopia

Another organisation which has recognised the potential in Africa and stuck with it since the early 20th century is Bosch. The company is looking to expand its mining and industrial solutions further into the continent and is keen to increase its brand presence in Africa. “With positive economic development underpinned by both a wealth of raw materials and by an increasingly well-educated workforce and growing middle class, Bosch sees great potential for its business in Africa,” says Landry Meya, key account manager mining Africa region. “The growing infrastructure and industry also offer good opportunities for the mining sector.” Bosch has recognised that Ethiopia, one of the largest players in the world coffee market, is exporting more than 90% of its raw commodity with the majority of profits generated outside of the country. The company has started developing public-private partnerships to enable entrepreneurs and farmers to participate actively in the industry through processing, roasting, manufacturing, packaging and even distribution. “Bosch views this initiative as crucial to the progress of the African continent both in terms of economic development and sustainability, as well as enhancing food security. It is a partnership as our business model is underpinned by creating long-term, sustainable solutions for emerging and developing markets,” adds Meya.

Multipurpose terminal in central Africa

Development in Cameroon is slightly more waterlogged. The Kribi Port Multi Operators consortium comprising nine local operators and the Necotrans Group were awarded the contract to operate and maintain a multipurpose terminal at the Kribi deep water port. It is the only one of its kind in central Africa and will potentially drive the economies of Cameroon, Chad and central Africa. The port provides employment, accessibility and much-needed transportation infrastructure to the region and plays no small role in boosting the viability of the area.

International stage

African disruption is not limited to the waterfront or mining belt. South African comedian Trevor Noah took over from Jon Stewart on Canadian broadcast television’s CTV’s The Daily Show, an achievement which rocked both his home country of South Africa and his new home of the United States. But wait, there’s more: Nigerian comedian Basketmouth has officially had a day named after him in Houston, Texas. July 17 is now named in honour of his work towards connecting communities. And in Cape Town, clothing design gurus

“As Africa becomes more and more visible on the international stage, the world also seems to be opening its collective eyes to the continent’s potential.”

THE OFFICIAL NEPAD YEARBOOK 2017

House of Monatic have been selected to manufacture clothing for fashion label, Stenströms of Sweden. “Africans are using our culture, heritage and challenges as inspiration to develop creative and innovative solutions to African problems,” concludes Rosa. “When international clients see what we can produce

as a result of the level of talent here in Africa, they’re usually somewhat surprised. They’re even more (and pleasantly) surprised when they see what we charge relative to competitors in more developed regions.” Africa losing out thanks to negative press? Hardly…

Images courtesy of Eric Lafforgue/Art in All of Us

“Africans are using our culture, heritage and challenges as inspiration to develop creative and innovative solutions to African problems.”

People waiting for the Ethiopian light rail trains in Addis Ababa

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REGIONAL INFRASTRUCTURE AND DEVELOPMENT

Water, water everywhere,

but nobody travels on it

There are numerous bodies of water on the continent where it would be much simpler and quicker to get from one place to another by crossing the waterway, but invariably that doesnâ&#x20AC;&#x2122;t happen. Dianna Games reflects on why this is.

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THE OFFICIAL NEPAD YEARBOOK 2017

Despite the potential, there is little investment in transport, infrastructure and the supply chain along the continent’s inland waterways. Politics plays a part in putting off investors. An international operator, which runs successful water transport operations in Europe, maintains that the potential political and bureaucratic problems of trying to operate a regional service on lakes bordered by several countries in Africa are a significant deterrent to investment. The significant infrastructure deficits are another issue. It is not just an issue of a lack of river ports with proper facilities, it is also about deficient infrastructure connecting inland waterways to other transport nodes. Poor management, and old and badly maintained track, rolling stock and other facilities have left railways, where they do exist, in a shoddy state. The condition of roads, too, is generally below par. Then there is a question of access. Many rivers are not navigable along their entire courses. Most are navigable only in the rainy season and transport is made difficult

by shifting sandbanks, unchecked growth of water hyacinth, which is choking up channels, and intermittent rapids. This has affected their use as a means of transport for exports. For example, because of concerns about the environment, the Mozambican government scuppered plans by global mining companies, frustrated by the lack of capacity on the country’s rail systems, to move coal along the Zambezi River to the port of Beira. Similarly, a plan by Malawi to turn the Shire and Zambezi rivers into a commercial transport link to the Indian Ocean was refused by Mozambique on the basis that the rivers were not fully navigable. A report by a German consultancy concurred, saying it would be necessary to invest US$18 million in initial dredging along the route and US$30 million a year for maintenance with yet more costs to clear vegetation from the banks. Even then, the rivers would only be navigable for up to five months a year during the rainy season. But where waterways are navigable, there are other constraints – a lack of or poorly implemented safety regulations, inadequate infrastructure at terminals and a lack of a modern fleet to provide reliable transport services. The African Union has adopted the Abuja Declaration and Plan of Action on Maritime Transport of Africa. It includes a draft of proposed actions regarding the management and development of inland waterways, regionally and bilaterally. Progress has been slow with regard to some of the projects, such as improving the navigability of the Niger River in West Africa, drawing up a framework for a 10year development plan for Lake Victoria and improving the safety of waterways in the Congo-Ubangi-Sangha basin. The Common Market for Eastern and Southern Africa (COMESA) is involved in studies with regard to the Great Lakes region and the Nile, looking at how they can contribute to deeper regional integration by opening up these significant waterways to transport and thus trade. It says the absence of reliable and costeffective north-south transportation along the Nile is a lost opportunity for regional

integration. Several reaches of the river are suitable for bulk cargo but investment in infrastructure and transport is required. The same is true of the Niger River in West Africa – the third largest on the continent after the Nile and the Congo. It is the only way to move between some of the remote areas in this region but much of the river needs expensive and ongoing dredging and water levels are too low in parts to carry large boats. For example, the large trading town of Onitsha in Nigeria along the banks of the Niger River has failed to build the

It is not just an issue of a lack of river ports with proper facilities, it is also about deficient infrastructure connecting inland waterways to other transport nodes. necessary infrastructure to make the river port, already commissioned, work. On the Congo River, old and often unsafe barges with no regular timetables move slowly up and down the waterway between the capital, Kinshasa, and the last town on the navigable part of the river at Kisangani. It can take a month to move between these centres – a distance of just over 1 000km. But there is some movement in the critical area of inland waterways. The European Union, for example, is working with the Kenyan government to build infrastructure on Lake Victoria. The two-phase project will focus on setting up a low-cost pilot freight service with limited investment in the ports and suitable vessels to handle mixed freight. Work is expected to begin in this year. A key part of the project is the construction of a modern US$220-million port in the Kenyan town of Kisumi, the country’s third-largest commercial centre. The current port is operating at just 20% of its capacity because of infrequent lake transport and lack of container port facilities, which limit the ability of businesses to use the lake.

Images courtesy of Ian Games

he MV Liemba, the ancient ferry built in Germany in 1913, may be an historical artefact but it’s a long way from being in a museum. The boat has been carrying people and cargo across one of Africa’s largest water bodies, Lake Tanganyika, for more than a century and is still the main transporter there to this day. Despite its size, Lake Tanganyika, which borders four countries – Tanzania, Burundi, Democratic Republic of Congo and Zambia – has no modern commercial service linking towns and villages along its banks. It is served by a handful of ferries with unreliable schedules, a lack of navigation, telecommunications and other modern equipment, and inadequate jetty facilities. Africa’s watercourses are significant. Lake Victoria, for example, is the biggest freshwater lake in the world. The catchment area of the lake, which borders Kenya, Uganda, Rwanda and Tanzania, includes a population of about 35 million people who contribute a significant chunk of the East African Community’s gross domestic product. The continent also has some of the largest river basins in the world, such as the Congo, Nile and Zambezi. Despite the potential, there is little investment in transport, infrastructure and the supply chain along the continent’s inland waterways. This compromises the type and scale of trade that can be conducted along these waterways.

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BOMBELA

ACHIEVING A TRANSFORMING TRANSPORT VISION THROUGH A PUBLIC PRIVATE PARTNERSHIP

hen the Bombela Concession Company was appointed by the Gauteng Provincial Government to design, build, operate, maintain and partially finance the Gautrain project, the company had a clear vision: to achieve excellence in the execution of the contract and to be recognised as a world leader in concession contract management. This could only be achieved by providing a safe, clean and reliable integrated transport system to Gautrain commuters.

A world class commuter service

Via the Bombela Operating Company, more than 60 million passengers have already travelled on the Gautrain; there have been over 380 000 individual train trips. With less than 0.5% of train trips cancelled and an average train service availability of 98.4%, the Gautrain currently ranks as one of the most reliable commuter train services in the world. The strong growth in passenger numbers often results in little to no spare capacity during the peak periods. Such success would not have been possible without exceptional and consistent service levels, developing strong credibility amongst commuters.

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A better quality of life for regular commuters

For Gautrain commuters, the service has played an instrumental role in creating a better quality of life for them. An independent study conducted by KPMG found that regular commuters save between 10 and 12 working days per year, as a result of the efficiency and speed of the Gautrain. There are now some 24 200 fewer car trips per day in the province. This translates not only into reduced traffic congestion, but also into a reduction in road accidents. The study also showed that the Gautrain is a greener alternative to car transportation, resulting in Gautrain commuters reducing their carbon footprint by approximately 52% per trip.

Significant contribution to the economy and social economic development

The overall contribution to the economy, according to the KPMG study, has been significant from construction phase through to becoming fully operational. The Gautrain construction generated a variety of economic spin-offs from a R26.5bn investment. Over a period of six years it has made an approximate

contribution of R20bn to the provincial GDP. The project further sustained 121Â 800 jobs in Gauteng between 2006 and 2012. Moreover, Bombela undertook very specific and onerous obligations in terms of social economic development. These obligations include a wide variety of aspects, including equity held by BEE (black economic empowerment) enterprises and black women, subcontracting to and procurement from BEE enterprises, subcontracting to and procurement from SMMEs, procurement of South African material, employment of historically disadvantaged individuals and people with disabilities, human resource development and many more. Not only has Bombela consistently met these obligations but it continues to do so, even now during the operating period. The Gautrain has accelerated social transformation by raising the living standards and quality of life of all people of Gauteng. One of the fundamental goals of the Gautrain was to bridge the mobility gap in the country by helping to overcome inequality and by promoting access to opportunity. Greater freedom of movement contributes to

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economic empowerment and a higher quality of life. The Bombela Concession Company, together with its operator and other key entities, has helped make this goal a reality. In connecting three key metropolitans, the Gautrain also connects people to each other as well as to opportunities across Gauteng.

Public transport is the lifeblood of the developed economies Striving for a future where not only Gauteng, but all of South Africa, is predominantly reliant on public transport is a visionary goal. It can be achieved through an integrated transport system that works to service the needs of all people. Public transport is the bloodline of any mature economy. Making the shift from private to public transport inevitably helps reduce South Africaâ&#x20AC;&#x2122;s carbon emissions rendering South Africa greener. It will make the country safer, more connected and more efficient as a nation.

Key elements for successful PPPs

The Gautrain project is a textbook case of a successful and beneficial public private partnership in the world. It has been shown

that the biggest benefit of PPPs is probably that there is a significant transfer of risk from the public sector to the private sector in terms of finance, technical development and implementation and operations. The long-term benefits and cost savings to the public sector in a PPP environment can not be underestimated. The Gautrain project demonstrates that there are three key elements that are absolutely essential to make a PPP successful. The first is a commercially sound and thorough contract or concession agreement between the relevant parties. The second is a highly skilled and capable team equipped to deliver on the mandate set out in the contract or concession agreement. Last but not least, a constructive and amicable working relationship between and amongst the relevant parties is essential. All parties should ultimately strive for the greater good of the PPP. When these factors come together dreams can be achieved. By the early 2000s Gautengâ&#x20AC;&#x2122;s heavy traffic congestion problems were having an adverse effect on the economy. Visionaries began to

advocate an efficient, reliable and safe train service that would not only service the OR Tambo International Airport, but also connect Tshwane and Johannesburg. It was the Bombela team that was tasked with turning this grand dream into a reality. Both the team and the shareholders who played a pivotal role during the construction phase, and the financial institutions supporting the project, strongly shared and believed in this dream. The goal was not only to make the dream come true; it was to exceed expectations. Today it is possible to marvel at what has been accomplished as the Gautrain connects three metropolitans in Gauteng, Tshwane, Johannesburg and Ekurhuleni. Contact Details Website: www.bombela.com

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REGIONAL INFRASTRUCTURE AND DEVELOPMENT

Partnerships solve

infrastructure backlogs

Public-private partnerships have the potential to solve sub-Saharan Africa’s profound infrastructure and service backlogs. Helen Grange looks at the status of these projects in Africa and the way forward.

Images courtesy of Shutterstock

he year 2017 is expected to mark significant progress in a number of game-changing infrastructure projects in Africa, thanks to public-private partnerships (PPPs) that were struck to push forward the continent’s viability as an economic bloc. While mistrust between business and government is an abiding constraint on development in Africa, huge strides have been made in recent years as global business/ finance bodies and African heads of state begin to harmonise their efforts to boost intra-African trade and regional integration. One of the best examples of this is South Africa’s highly successful renewable energy programme, developed by the government in association with private stakeholders and

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international advisers, and now regarded as a model for other developing countries. Another is the North-South Corridor Rail Project, connecting South Africa to Tanzania and Malawi via Botswana, Mozambique, Zambia and Zimbabwe. This is a five-year, multi-modal (road, rail and ports) project that involves the co-operation of eight African countries, and is underpinned by the tripartite agreement between the Common Market for Eastern and Southern Africa (COMESA), Eastern African Community

(EAC) and Southern African Development Community (SADC). The intention is to speed up the flow of traded goods and reduce the transactional costs of cross-border trade. Despite operational challenges, progress on it has been “good and steady”, according to the Infrastructure Consortium for Africa, with mechanisms put in place to improve donor co-ordination and co-operation. Other infrastructure projects gaining momentum include the construction of a

“The record of PPPs in Africa is mixed, the process is complex, and governments should not expect PPPs to be a ‘magic bullet’.”

THE OFFICIAL NEPAD YEARBOOK 2017

new railway linking Mozambique’s coalfields to the coast, a PPP between international development companies and the stateowned ports and railways company, Portos e Caminhos de Ferro de Moçambique; the East Africa Railway Masterplan linking Mombasa to other major East African cities, being built by the China Road and Bridge Corporation and managed by the East Africa Community, an intergovernmental organisation of six partner states; and the Maputo Corridor road project connecting South Africa’s northern provinces to Maputo, rated by the African Development Bank report as the “most successful regional interconnection initiative in sub-Saharan Africa”. African governments and big business have also synergised efforts to preserve precious water resources in the publicprivate-civil society collaboration called the Strategic Water Partners Network-South Africa (SWPN-SA). The SWPN-SA is addressing water efficiency and leakage reduction in municipal water distribution systems, effluent and wastewater management, as well as in agriculture and its supply chain, and is seen by the World Economic Forum as the gold standard of successful PPPs around the world in the water space. Simultaneously up north, 2017 is the scheduled completion year for the Grand Ethiopian Renaissance Dam, started in April 2011 and financed by Ethiopian government bonds and private donations, with the Italian

company Salini Costruttori as the main contractor. All these PPPs are unfolding with varying degrees of success. As SA Institute of International Affairs researcher Peter Farlam noted in his NEPAD series titled Assessing Public-Private Partnerships in Africa, “The record of PPPs in Africa is mixed, the process is complex, and governments should not expect PPPs to be a ‘magic bullet’.” The common feature in the most successful PPPs in Africa, however, is the public sector’s willingness to facilitate their private-sector partners. South Africa’s renewable energy programme stands out because, as Dr Martyn Davies, MD of Emerging Markets & Africa, points out, “The government has liberalised this sector, and allowed private capital to play and invest in it.” Dianna Games, chief executive of the Africa@Work consultancy, concurs, saying, “Various elements need to be in place, primarily a willingness of policymakers to take into account private-sector needs when formulating policy in key sectors where they need to attract capital. “A government that is responsive to investor needs, in terms of making it easy to invest and conduct operations, is attractive to investors. A good example of this is Rwanda, which has seen high growth rates and rapid development despite its landlocked status and lack of competitive natural advantages,” she says.

“Multinationals might start scaling back and even disinvesting, so now is the time for local business in Africa to innovate and expand in order to create new markets, and for governments to facilitate this where it is possible.”

The correct regulatory framework needs to be augmented by efficient networking forums for all the stakeholders, and this is the function of bodies like the African Union and the Continental Business Network (CBN), a NEPAD initiative providing an infrastructure advisory platform for African heads of state to discuss policy, investment risk ratings, project structuring and existing constraints on infrastructure development in Africa. In May this year, the Africa Investor’s African Infrastructure Developers Summit takes place in South Africa, to identify further practical steps that can be taken to accelerate the implementation and financing of infrastructure investment on the continent. “Donors and international financial institutions like the World Bank play an important role in infrastructure delivery in Africa, as their involvement in project delivery provides comfort and security for investors who tend to have concerns about working with governments in Africa,” says Games. Developments in the rest of the world – the Trump administration’s antipathy towards foreign trade deals and the negative impact of ‘Brexit’ on foreign trade and investment – also mean that the imperative for Africa to stimulate growth has never been more pressing, comments Terrence Mutuswa, stakeholder relations officer at NEPAD Business Foundation. “Multinationals might start scaling back and even disinvesting, so now is the time for local business in Africa to innovate and expand in order to create new markets, and for governments to facilitate this where it is possible,” he says. Companies invested in long-term projects in Africa, meanwhile, need continuing assurance that their stakes are safe, and that risks are managed. As Games concludes, “These companies will welcome any political initiatives to improve transparency and introduce new rules, as long as they are fairly and efficiently applied.” Experts agree that PPPs are crucial to advancing economies on the continent as revenue is generated, jobs are created and the region as a whole gains ground as a globally competitive entity. The key African infrastructure projects currently under way are the cornerstones of this objective, thus their progress will be watched closely during 2017.

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CLASSIC REVIVALS

MODELLERS AND CLASSIC REVIVALS: GROWING FROM A SMALL FAMILY BUSINESS TO A BIG FAMILY BUSINESS

odellers produces exquisite custom-made wood furniture of any description, design and volume. It caters for private clients, corporates such as banks and churches, and hospitality projects such as casinos and hotels, as well as interior designers and procurement companies who buy furniture directly from the factory. Various turnkey projects mainly to private clients, incorporating a full interior design and supply service, are handled through the Classic Revivals showrooms. The story behind these ventures is a truly remarkable one of adventure, dedication to craftsmanship and a steadfast commitment to excellence. Atilio and Agostino Rech grew up in the small village of Lentia in the heart of Italy. Both their grandfather and father were cabinetmakers, from whom they learnt classic furniture manufacturing skills.

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Wanting to spread their wings, they arrived in 1953 in South Africa with a small suitcase and 10 pounds. As soon as they set up their factory, they started to train apprentices. To develop master craftsmen, they needed to share their intellectual capital and devote time to imparting their manufacturing skills to local people. Fortunately, they discovered in their first apprentices a hunger for learning and an optimism for a better life, together with great natural ability and skill. Modellers has trained countless skilled craftsmen over the years; indeed, it has produced the majority of top handmade furniture manufacture craftsmen in South Africa. It is a process that cannot be hurried: to grow from sandpaper man to skilled master cabinetmaker takes 20 years. The training ensures an understanding of the process from start to finish: drawings,

machining cutters, cabinetmaking, hand woodcarving, hardware fitting, spraying, colouring and polishing, and special finishes such as gold leaf application, antiquing and gold tooling of desk tops. Apprenticeships continue today, as Modellers recognises its huge responsibility not to let this craft fade away. It is up to this generation of skilled master craftsmen to imbue the next generation with the love and skill required to manufacture these unique products. Without this commitment, there will be no more first-time design of exclusive once-off furniture of a specific size, shape and polished finish. Passionately protecting and nurturing this craft has not prevented the Rech family from keeping abreast of changing times. To survive the onslaught of modern design trends, such as plastic moulded carvings and furniture of mass production, the company has accepted

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the need to make changes and adapt to new styles. This adaptation is reflected as the name Classic Revivals suggests, that the Classics have undergone a “Revival” into the modern era. The current generation of brothers in the business (Fino and Franco Rech) have shown themselves to be true modern day “Renaissance” men who expend their boundless energy in pursuit of providing their clientele with excellence. They are now major manufacturers of contemporary and modern furniture. Loyalty is a recurring theme in the story of this family. Relying on word-of-mouth marketing, they have had clients who have supported them from the days of their first small garage factory until today. They are proud of the numerous repeat projects they receive from the same companies such as Tsogo Sun and FNB, and from private clients like the CEO of Italtile. They have also being appointed preferred supplier to numerous prestigious companies and clients in Africa. The company has gone from making a dining table a month in 1953 to furnishing huge hotels in Dubai and banks and churches in Africa in 2017. The Rech family is quick to recognise that Modellers is what it is today because of the workers who have diligently and loyally given the majority of their waking hours over the last 60 years to make the company unique in its manufacturing excellence. As Astrid Rech, MD, puts it, “every worker is my brother and together we survive because we care for the company and we have pride in our product… Modellers workers, from the sandpaper man to cabinet man, are the cornerstones and the foundation of all successes achieved.” The company foreman, now 65 years old, started as an apprentice at the age of 16. The business can be said to have steadily grown from a small family business to a big family business. Astrid Rech is clear in summing up the family ethos: enormous design talent is matched with volume manufacturing capability, a service-orientated attitude that

delivers a product of quality and beauty on time. She continues: “being humble is a tremendous attribute in the service industry. We need to retain an impeccable reputation for punctuality together with a professional, yet personal, hands-on manner in which we conduct our business. This is paramount to the future of the business. That, together with our human and corporate responsibilities of continuing to share knowledge and teach Africans the unique craft of handmade furniture”. There are challenges. The weakening of the rand has affected raw material costs of wood, paint and hardware. Fortunately, this has been offset by the ZAR-dollar rate which has favoured Modellers pricing making the company highly competitive in the furniture export market internationally. A brand new factory has just been built and is equipped with the latest woodworking machinery to complement the master African-born cabinetmakers. Looking to the future, Astrid Rech says, “We are born and bred Africans! We want

to stay on this continent and help to grace it with elegance and style. Modellers strives to introduce the interior connoisseurs of Africa to the art of mixing rich and unique European culture with the ease and soul of modern African living. The African continent is one the fastest growing economies in the world. We have an excellent product that has stood the test of time and we are confident in our ability to serve our customers by providing a superlative, timeless interior to complement their needs and lifestyles”. Contact details Cape Town Showroom 34 Napier Street, De Waterkant, Cape Town Tel: +27 (0)21 421 6327 Cell: 083 399 8822 Email: capetown@classicrevivals.co.za Johannesburg Showroom Corner 7th Ave 1st Ave West, Parktown North, Johannesburg Tel: +27 (0)11 327 1099 Cell: 083 700 3407 Email: info@classicrevivals.co.za

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HUMAN DEVELOPMENT AND CAPACITY BUILDING

Youth unemployment:

The other side of the coin

Youth unemployment is perhaps the biggest challenge facing Africa today. The issue is consistently raised at policy discussions from Nairobi to Ouagadougou, from Cairo to Cape Town. While there are inspiring examples of governments that are confronting the issue courageously, it is yet to transition fully from a talking point to systematic action. Fred Swaniker considers who is responsible for getting our young people into work and what they should be doing.

t its height, the European debt crisis triggered an interesting discussion of a ‘lost generation’ in Europe. Many young Europeans were out of work, with little hope of finding any in the near future. There was a real prospect of European youth experiencing poverty that their parents had never known. They were stuck in what reports characterised as an ‘intergenerational inequality’ born of poor economic policies, high levels of government debt and slowing levels of investment in education or research. In Africa, the reality of a lost generation is hardly a distant prospect. It is already a reality that needs to be rolled back urgently. Its effects are already very obvious, from restive youths in most major African cities. In the last year, the university student riots in South Africa were a stark reminder of this fact. Though tamer and somewhat different from the Arab spring, what is common is the fact of a frustrated youth that is disillusioned with the status quo. More alarmingly, many of these youths have nothing to lose. This trend is set to continue. Africa is and will remain the world’s youngest continent for decades to come. At present, 40 percent of the continent’s inhabitants are 14 years old or younger, while 34% are currently between the ages of 25 and 29. By 2030, the bulk of the world’s workforce will live in Africa. If this workforce is unoccupied with meaningful employment, then we will be sitting on a time bomb. There is, however, another uplifting scenario that is within our reach – one in which this youth bulge could actually be an advantage for the continent. The median age in Germany is around 45. In Japan, it is 46. In Africa, this figure sits at a youthful 20 years. As the former are confronting aging populations, Africa has a young and vibrant one that could replenish the world’s labour force. The powerful implication is that Africa is hosting the globe’s future workforce, one of the most critical factors for global growth in the 21st century. Can Africa convert this potential into a real opportunity?

Africa needs hundreds of thousands of young people like Mahmud Johnson who will then employ the one billion who will need jobs by 2050. www.nepadbusinessfoundation.org

Three actions need to convert the benefits of a youthful population into a massive force for growth. We need to invest in educating and equipping the youth with the skills and mindsets to make them highly productive entrepreneurs or employees. According to a 2014 PricewaterhouseCoopers report, ‘The Talent Challenge’, “The gap between the skills of the current workforce and the skills businesses need to achieve their growth plans is widening. Despite rising business confidence equating to more jobs, organisations are struggling to find the right people to fill these positions.” Annually, around 10 million Africans are graduating to unemployment. A 2015 report from the International Labour Organisation (ILO) notes that in sub-Saharan Africa, three in five young workers (approximately 61.4%) lack the skills expected to make them productive on the job. Closing the gap means providing education that equips our youth with real-world skills before they enter the job market and this has to begin in the lecture halls or the classrooms of this continent. A new form of education that prioritises 21st century skills like critical thinking, data-driven decision-making, entrepreneurial leadership, impactful communication and project management instead of an over-emphasis on academic theory must be implemented in our schools and universities. In 2015, the Educate! Project in Uganda found that 64% of students who received entrepreneurial skills training went on to found their own businesses after the programme, with 44% of them employing at least one other person. Scaling up such training would mean expanding entrepreneurial education across the board – allowing students to come into contact with an environment that encourages innovative thinking and supports them in realising their entrepreneurial dreams. When this is done, the results can be remarkable. For example, in Liberia, Mahmud Johnson, began J-Palm shortly after graduating from university. J-Palm provides machinery and other farming implements to the country’s smallholder oil palm producers to help them grow their crop. After harvest, Johnson’s business then buys the oils and the seeds from the farmers and transforms them into cosmetic and clean energy products for export. Africa needs hundreds of thousands of young people like Mahmud who will then employ the one billion who will need jobs by 2050. At the African Leadership University (ALU), which I founded in

THE OFFICIAL NEPAD YEARBOOK 2017

Fred Swaniker

Africa is at a crossroads. It can either finally grasp that its true wealth lies in its youth and not in its gold, oil or diamonds. Or it can ignore its youth and deal with lost opportunities forever. 2013, we have taken an explicit approach to developing the skills that employers need in the 21st century – collaboration, communication, problem-solving, critical thinking, leadership and entrepreneurship – to prepare our graduates for the workforce of tomorrow. Skills training in class is insufficient without practice. Our students are given the opportunity to put these skills to work immediately with a mandatory internship of four months every year during their degree. We are partnering with companies like IBM, McKinsey, Bain, Coca-Cola, Swiss Re, Standard Bank and Colgate-Palmolive, as well as many smalland medium-sized enterprises (SMEs) and government organisations across Africa to give our students this mandatory work experience. Critical to our approach is not only to prepare top-notch employee talent, but to transform our youth into highly impactful entrepreneurs. Every ALU student is given an entrepreneurial education which

is taught in class and then fostered through our student venture programme. In ALU’s entrepreneurship programme, students are given the opportunity to start their own businesses with support and advice from faculty and mentors. This is but one example of the type of educational institution that can turn the tide and convert our youth ‘problem’ into our youth ‘opportunity’. Africa is at a crossroads. It can either finally grasp that its true wealth lies in its youth and not in its gold, oil or diamonds. Or it can ignore its youth and deal with lost opportunities forever. There has never been a better opportunity to convert a whole generation into a productive force until now. New technologies, the right policies and innovations in education, like the models we’re using at ALU, can rapidly turn what could be a massive burden into one of the greatest sources of global economic growth in the 21st century. The challenge is ours to change mindsets and create policy frameworks that can lead to transformative change. That is a responsibility for citizens, leaders, every business and every government in Africa. The time is now.

Fred Swaniker is the founder and chairman of the African Leadership University (ALU), founder of the African Leadership Academy, as well as the African Leadership Network, which is an annual gathering of the continent’s top leaders across business, civil society and government.

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HUMAN DEVELOPMENT AND CAPACITY BUILDING

Not just any

education…

Image courtesy of Shutterstock Image courtesy of Shutterstock

Youth don’t just want skills, they want university degrees because they believe nothing else will get them a good job. Liesl Venter digs deep into the impact of this myth. www.nepadbusinessfoundation.org

THE OFFICIAL NEPAD YEARBOOK 2017

ne would be hard-pressed to find a continent where the importance and role of education in developing the socio-economic dynamics of countries is so obvious. Understandably, most governments on this continent have focused on spreading the simple message of hope to an impoverished and downtrodden people. Educate and you affect change. This is a message that has been taken to heart so much so that Africa now faces another challenge – the hunger of its youth for degrees rather than skills.

priority in any African country.” The work associated with tradesmen to this day is often perceived in Africa to be inferior and menial, and is even associated with slavery. “It’s therefore not a simple debate of degrees-versus-skills,” explains Shaikh. “There are very deeply entrenched beliefs about what it means to have a degree versus what it means to have a skill. At the same time, Africa has to deal with added perceptions that its vocational training is of low quality, adding even more to the dilemma.”

“A lot of it has to do with perceptions of status and also stigma stemming from the past where tradesmen were regarded as inferior.” At the heart of it all lies the quest for employment. Africa’s people want jobs. “It’s easy to understand why young people today believe that universities and degrees hold the key to being employed,” says Ahmed Shaikh, managing director of Regent Business School. “The unemployment rate for university degrees in fields such as medicine and engineering is estimated at around 0.4 percent while it is slightly higher at 3% for anyone sporting an accounting or financial degree.” There is no denying that the possibility of finding work with a degree in hand is higher than without. But that does not mean any old degree will suffice. “The scenario is bleak if we do not manage to affect change on the continent,” says Dr Catherine Robertson, a research associate at Stellenbosch University and technical and vocational education and training expert. “Unemployment, especially of people with generic degrees, will grow.” It’s a complex and difficult road, plagued with emotion and heavy burdens of the past. “Countries in Africa will have to consolidate their positions and policies to ensure the availability of a highly skilled and technically qualified human resource base if they want to succeed,” says education expert Professor Dhiru Soni. Overcoming the degree-versus-skills debate will play a central role in their ability to do so. “A lot of it has to do with perceptions of status and also stigma stemming from the past where tradesmen were regarded as inferior,” explains Robertson. Soni expands saying that the legacy of colonialism is also deeply etched into every aspect of the African education system. “Without going into a detailed account of the colonial history, suffice it to say that colonial powers did not require a skilled labour force and education was never a

Says Robertson, “The perception is that the only way to get yourself out of the pit of despondency owing to poverty or unemployment, is to have a university qualification because that is how you become the boss. A university degree elevates you to a level which not only ensures a well-paid job, but one that is highly respected.” Changing these perceptions has to start at school level, says Professor Liezel Frick from the Centre for Higher and Adult Education at Stellenbosch University. “However, societal change does not happen overnight. There is also not one single solution that can be applied across the continent. The realities between the different African countries are vastly different in terms of economic and educational resources and systems,” she says. It is, however, time to rethink education on the continent altogether. “Maybe we need to ask: should we educate for African needs per se, given the

having a trade does not mean you are lesser to anyone with a degree.” Adds Shaikh, “The ability to achieve this major change in perception will require real policy changes from governments around education and also major investments into vocational training centres to bring them up to standard.” Even more so, governments will have to look towards educational systems of the very countries that previously colonised them and which they are trying to rid themselves of. This does not mean that African curriculums should not be decolonised. “It is about looking at best practice the world over and developing policies and practices for Africa,” says Shaikh. Most experts agree that Germany offers a fantastic example to African countries. “Policy, strategy and education have all banded together to train skills that are needed in the economy resulting in a comparatively low unemployment rate,” says Robertson. “We cannot, however, transplant their sophisticated first-world system into Africa, but we can learn from it.” It starts, says Soni, with proper strategic planning and foresight at country level. “Not everyone has to go to university and not everyone should go to university. We should be guiding young people long before they reach the end of their school years into what vocational avenue suits them best.” But, says Soni, it’s not a one-dimensional dashboard. “Africa needs to invest in university degrees as well. At present we are only responsible for 1% of the global research output in the world. Scientific research carried out at universities is just as important a contributor to economic development. We have to push degrees as much as we push skills.” Developing an education system for sustained economic recovery and inclusive

“The perception is that the only way to get yourself out of the pit of despondence owing to poverty or unemployment, is to have a university qualification because that is how you become the boss.” global mobility of young people? And what are the so-called African needs? Is there such a thing? What people need in South Africa is very different to that which is needed in South Sudan,” says Frick. The experts agree that addressing the dire need for skills in Africa requires a major paradigm shift which includes changing the perception about trade in general. “It will require elevating the status of the tradesmen again,” says Robertson. “It is a simple message that has to start with children at school level already and is that

growth of the continent will require some drastic changes to the current status quo – not an easy endeavour taking the continent’s history into consideration. A complete reconsideration of curricular issues, steering children into very specific vocational avenues at a very young age, and aligning education with what industry wants and needs are ultimately what must happen, explains Shaikh. “It is about grasping the real situation on the ground and delivering people who are employable.” www.nepad.org

ECONOMIC PERFORMANCE

Images courtesy of Shutterstock

n finance and economics, we are familiar with the concept of movements or trends that overshoot the mark. As a result of this, what we call a ‘correction’ has to take place. The same phenomenon is observed in natural sciences. The displacement of an object or system from its position of equilibrium always results in overcompensation or overcorrection when movement towards a new equilibrium takes place. With this in mind, we should not be surprised that there is a rise in protectionism around the world. Globalisation overshot the mark and now correction is taking place. Society is a complex organism. Perpetual social changes that are part of the advancement of humanity will always affect socio-economic strata differentially. These different effects create tensions within society. To relieve or ameliorate these tensions, corrections have to be made to the pace, magnitude or direction of the changes. In democratic societies, these processes find expression in the electoral process. This is precisely what happened with Brexit and the recent presidential elections in the United States. Neither the world nor world trade is broken. What is clear and should be obvious is that globalisation has created certain tension between different socio-economic strata. It should be easy to agree that the elites have benefited from globalisation more than the other socio-economic classes, such as the middle classes that rely largely on ‘returns’ from their labour in comparison to the elites who look to returns from their capital. In the three categories of global movement, capital moves the easiest and is www.nepadbusinessfoundation.org

largely welcome at its destination or recipient country. It can, however, also be interpreted as the export of jobs from the country it originates, as US President Donald Trump is doing in the case of Mexico and the US. On the other hand, the movement of labour, goods and services provokes all sorts of frictions that give rise to competitive tension between nations. Expatriates are interpreted as people taking jobs that would have been filled by nationals. Imported goods and services are seen to be displacing locally manufactured goods and services provided by domestic providers. It is the impact of globalisation in this manner that results in the clamour for correction. Because of the asymmetry in accountability between national politics and the effects of globalisation, it is inevitable that the corrections will take place. Perceived from a purely economic lens, the corrections being asked for amount to protectionism. The nature of corrections, unfortunately, is that they in turn tend to overcompensate for the original imbalance. I expect the same thing will happen in Africa. What impacts can we expect on African economies from this correction to globalisation? The correction will be around three main issues: the movement of goods and services or international trade, the movement of people and the movement of capital. Let us start with an examination of what

happens with respect to the movement of capital to African countries, in other words foreign direct investment (FDI). The export of jobs argument tends to arise when companies from a particular jurisdiction move to a low labour cost country and manufacture goods for exporting back to the jurisdiction of domicile of the investing company. In the case of Africa this is hardly ever the case. Companies tend to invest in Africa to produce goods for sale within the African continent. The only exceptions are the motor industry in South Africa and a few cases of European investments in North Africa. Therefore, I would expect that, for as long as the returns on capital invested remain attractive, the movement of FDI into Africa would not be greatly affected by this call for a correction to globalisation. In the area of exports of goods and services, Africa tends to export inputs rather than finished goods except in food. The risk here arises from the redirection of trade from markets that get closed elsewhere. This was the case with European poultry when the Russian market closed in retaliation to the imposition of sanctions. The poultry that Europe was selling to Russia suddenly found its way to Africa and in the process almost killed the South African poultry industry. Arguably in such cases, South Africa should have been able to move and replace the European exports into Russia. But, again, as

As the world retreats from current levels of globalisation, Africa should work on ways of increasing the level of intra-African transactions.

THE OFFICIAL NEPAD YEARBOOK 2017

interests. Africa should, therefore, urgently come up with counter measures. As we all know, the level of intra-African business is very low and languishes at about 12 percent. As the world retreats from current levels of globalisation, Africa should work on ways of increasing the level of intraAfrican transactions. What we at the Mandela Institute for Development Studies (MINDS) advocate is the development of intra-African transactions on the basis of shared value chains. This is a way of making sure that purchasing power is developed among the countries involved and so the resultant trade can be sustained easily. The example that comes to mind is the European Airbus project where the

component manufacturing is spread right through Europe. In the area of investment and development of necessary infrastructure, African countries could mobilise their considerable pension funds to create a very significant investment fund. As far as tourism is concerned, it is just a question of removing the very restrictive visa requirements that exist against each otherâ&#x20AC;&#x2122;s citizens. A level of protectionism is inevitable as a correction to how globalisation has delivered inequitable benefits to different social classes. The results of this correction will tend to go against African interests. With careful planning, however, Africa can take advantage of this development to increase the level of intra-African business transactions from tourism and investment through to trade. If tackled in this manner, the whole experience of corrections in globalisation could deliver a net positive result to Africa.

Image courtesy of Shutterstock

this case illustrates well, this kind of switch does not work easily, especially given that South Africa was starting from the position of a net importer of chicken. The movement of people has also been affected by concerns about security, especially movement from the Muslim world. In cases where the people barred really meant to go and cause harm, Africa needs to watch that those ill-intentioned individuals do not find a way of harming western interests on African soil. If this were to happen it would have a dire impact on the African tourism industry. Whatever changes take place in adjustments or corrections to globalisation, one thing we can be certain of is that these corrections will be moves against African

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ECONOMIC PERFORMANCE

Mauritius:

The island nation that is meeting the world halfway Mauritius is so much more than the perfect holiday destination. Professor Lyal White explains that it is an economy to emulate in a number of ways.

any know Mauritius as a holiday destination with its idyllic, palm tree-lined white sandy beaches, clear calm waters and luxury hotels. However, in recent years Mauritius has proven to be much more than just a tropical island paradise. Using its unique geographic location and island status to emulate successful city states and service hubs like Hong Kong, Singapore and Panama, Mauritius has developed from a low-income, sugar-based agrarian economy to a diversified middle-income economy in less than five decades. With growing financial, tourism and industrial sectors, Mauritius holds great promise in connecting Africa to the world. Located less than 2 000 kilometres from the south-eastern coast of Africa in the middle of the Indian Ocean, Mauritius is just 2 040km2 in size and home to 1.35 million people. Once considered to have little prospect for development by Nobel Laureate Professor James Meade given the disadvantages associated with being a tiny, remote island limited in natural resources and having a colonial past, today the country boasts a per capita income 10 times the African average at US$10 000. It was also ranked as the most competitive country in Africa by the World Economic Forum’s Global Competitiveness Report in 2016.

Port Louis Harbour

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Several factors have played a crucial role in Mauritius’s emergence. First, a rich and diverse cultural history has given the island a unique foundation and advantage. Mauritius has no indigenous population. The island’s ethnic mix is a result of more than two centuries of European colonialism and labour migration. While Mauritius was known to Arab and Malay sailors as early as the 10th century, it was only first explored at the beginning of the 16th century by the

In 1810, during the Napoleonic Wars, the British took over Mauritius. The island reinforced its strategic position within the Indian Ocean as a naval base and subsequently as an air station, playing a significant role during World War II for anti-submarine operations. Mauritius gained independence from the United Kingdom in 1968. While other African countries have struggled to overcome their colonial legacy, Mauritius has used its colourful history and

Once considered to have little prospect for development… today the country boasts a per capita income 10 times the African average at US$10 000. Portuguese. In 1598, the Dutch settled on the island and subsequently named it in honour of Prince Maurits van Nassau of the Netherlands. In 1715, the French took over, turning Mauritius into a strategic naval base to oversee growing Indian Ocean trade. The French were also responsible for creating Mauritius’s sugar-based economy which relied on slave labour from east African countries as well as Madagascar, Mozambique and India.

cultural diversity – especially its French and British occupation and south Asian influences – to build its competitive advantage. Not only does the population speak several languages – including French, English and Hindi, but it has a hybrid legal system positioning it well to do business in various African markets across the Anglophone-Francophone spectrum, which has proven to be a serious challenge for many companies still struggling to overcome cultural distance in new markets.

THE OFFICIAL NEPAD YEARBOOK 2017 Positioning itself as the ‘island prepared to meet the world halfway’, it also offers a springboard for Asian companies seeking access to growing African markets. Second, Mauritius has been characterised by political stability since independence with an active democracy boasting regular free elections, and a government that is committed to planned economic diversification and global connectedness through trade and investment. With very few natural resources, the Mauritian government has long recognised that people are its most valuable resource. A healthy and educated workforce has been the underlying principle in government policy since the early 1970s. Mauritius has invested heavily in the social welfare of its citizens and provides free universal education and healthcare. The results are evident today. Mauritius has achieved a more equitable income distribution, with inequality (as measured by the Gini coefficient) falling from 45.7 to 38.9 between 1980 and 2006 – a challenge eluding most countries in Africa and the emerging world. Life expectancy has also increased markedly, infant mortality rates have lowered and Mauritians have enjoyed a clear improvement in infrastructure in recent years. As a result it now ranks 63 out of 188 countries on the United Nations Human Development Index (HDI), the highest on the continent. Third, sustained economic growth, similar to that of the Asian Tigers, has proven crucial. Over the course of three decades, from 1977 to 2008, Mauritius averaged a 4.6 percent gross domestic product (GDP) growth rate, well above the 2.9% average across subSaharan Africa. This provided a foundation for economic advancement, industrialisation and, ultimately, a service-based economy, meeting the essentials of broad-based development. Government has supported this growth through significant investment in infrastructure, enabling a more open and connected economy. This includes a new airport (opened in 2013); a double-lane highway which extends across the island; a cyber-city equipped for world-class services

Mauritius Commercial Bank, Cyber City

Port Louis Harbour

in Ebene, south of the capital Port Louis; export processing zones; and the upgraded extension of the harbour container terminal to accommodate more container traffic. The Mauritian government also established the Mauritius-Africa Fund in 2014 to position Mauritius as an investment hub into Africa in an effort to encourage direct investment by local firms into the continent. The government has committed MUR500m (almost US$14m) over a fiveyear period to provide equity funding for investment into African projects.

Mauritius’s economy is currently driven by sugar production, tourism, textiles and apparel and financial services, with expansion under way in the areas of fish processing, ICT, hospitality and property development. With a significant focus on becoming a financial services hub, the island nation has attracted over US$1 billion in investment in the banking sector, and is home to more than 32 000 offshore entities, looking to take advantage of the country’s favourable tax rates. Agriculture, which made up nearly a third of the economy just 30 years ago, now www.nepad.org

ECONOMIC PERFORMANCE

City district, Mauritius

accounts for around 4% of GDP. Industry and services have grown substantially to 22.3%, and 73.7% respectively. Looking ahead, however, Mauritius faces several challenges in achieving further economic progress and its goal of becoming a high-income country by 2020. Major hurdles include low levels of privatesector investment in the country, an ageing population and the tumultuous global economic environment – particularly in the aftermath of ‘Brexit’ which is likely to impact on Mauritius’s sugar, textile and tourism sectors. Mauritius has strong economic ties to Europe where lacklustre growth has impacted on investment flows, demand for exports as well as the number of tourists, particularly from France. Tourism is a key source of foreign currency and employment for Mauritius, contributing over 8% to GDP.

Mauritius has achieved what few other subSaharan African countries have been able to since independence, especially sustained economic progress and a reduction in inequality. Socially, gender inequality remains high with a large gender wage gap and persistently low female participation in the workforce. Environmentally, the island is at great risk to climate change and rising water levels. Ultimately, Mauritius has achieved what few other sub-Saharan African countries have been able to since independence, especially sustained economic progress and a reduction in inequality. While the island is at the mercy of the vagaries of global markets, Mauritius has proved its commitment to achieving real growth and development, and is set to continue to build on its unique cultural and geographic attributes, in conjunction with the unwavering commitment of government. As Ashok Kumar Aubeeluck, the head of economic research at the Bank of Mauritius put it, “The only difference between Singapore and Mauritius is that they had oil, and we had sugar.” Mauritius certainly does provide instructive lessons for other African economies seeking to improve their competitive performance through structured reforms and careful planning.

City centre, Mauritius

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Prof Lyal White is director of the Centre for Dynamic Markets at the University of Pretoria’s Gordon Institute of Business Science.

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ECONOMIC PERFORMANCE

Time to bank Africa Until recently, the only banks on the continent that ventured out of their own country were from South Africa. But this has changed as other African banks have begun to expand their influence, writes Suresh Chaytoo.

frica’s economic growth and the performance of its banking sector are inextricably linked. As the fortunes of many countries on the continent rise and fall, so do the achievements of the banks. But in the last decade, Africa has transformed its banking sector at an exponential rate, playing a pivotal role in enhancing the continent’s attractiveness as an investment destination. There has been a growing trend for Africa’s banking groups to extend their franchises beyond their own borders, with about 15 of them already present in countries outside of their home jurisdictions. For the first time, the once-indigenous local players are actively and effectively competing against foreign banks, as well as the more dominant South African banks. With competition growing, efficiency and innovation has thrived, making the African banking space www.nepadbusinessfoundation.org

First Bank, Nigeria

an exciting prospect for the future. Regionalisation has become a prominent part of African banks’ strategies as these historically local players continue their ongoing search for growth to diversify their earnings as competition increases in their home markets. Obviously Africa’s high-growth economies are an attraction, but one of the key drivers of banks’ regional expansion is linked to their clients’ business spreading across the continent. The banks follow their clients to the areas where trade is prevalent, simultaneously addressing their own growth strategies. Building local knowledge and expertise is important and forms the foundation of any bank’s expansion plan. Consequently, proximity to a bank’s home country is a key competitive advantage, as banks are usually more familiar with their neighbours than

with countries further afield. A good example of successful regionalisation is the robust expansion of Kenyan banks like KCB, CBA, Equity Bank and Co-Op Bank into east Africa (South Sudan, Tanzania, Uganda, Burundi and Rwanda). In South Sudan, banks like KCB, for example, have had ‘first mover’ advantage and are now among the biggest banking groups in the country. Also contributing to bank regionalisation is the growth of regional trading hubs between the port cities of Mombasa and Dar es Salaam and landlocked countries like Uganda and Rwanda, opening up opportunities for banking products and services. However, banks are also moving further afield to take advantage of high-growth markets. There has been a rapid expansion of the Nigerian banks UBA, First Bank and

Image courtesy of Bloomberg

THE OFFICIAL NEPAD YEARBOOK 2017 other regions. Often banksâ&#x20AC;&#x2122; first initiatives in a new country are trade related, but in order to compete with local players, they need to diversify to gain a deposit base and build traction in their earnings. This inevitably means a move into the retail segment, but growth in retail banking presents a two-pronged challenge. Firstly, a branch network is expensive. In Mozambique, for example, a single branch costs in the region of US$1 million to establish. Secondly, a growing retail base often leads to higher bad debts. So, banks need to be prepared for retail space attracting higher non-performing loans than the corporate space. Getting

With time, regional expansion will become more difficult and expensive for new entrants that do not have an existing presence in African markets. prices has hurt earnings in recent months, with higher bad debts and increased costs associated with regulatory capital and cash reserve requirements. While most banks understand that this is about a long-term strategy, the risks of regional development cannot be ignored. Unexpected regulatory changes within a country can be swift and lead to a significant change in the economic landscape, something for which banks need to be prepared. Banks have to assess the credit risk and asset diversification as they expand into

the correct balance between corporate, investment and retail banking is the key to success for African banks expanding across the continent. But so far, banks are benefitting from their expansion into Africa, with earnings growing steadily and franchises being built across the continent. A core theme emerging as part of this recipe for success is the successful integration of local talent with home country expertise. With time, regional expansion will become more difficult and expensive for

new entrants that do not have an existing presence in African markets. That is, unless they are prepared to pay a handsome premium to acquire a regional banking franchise. For those which have already taken the risk, itâ&#x20AC;&#x2122;s an exciting time. The development and expansion of African banks should mean they will soon be able to compete with other global players, if they are not doing so already. South African banks were at first eager to capture their share of the African wallet beyond the comfort of the SADC states. However, over the last five years the expansion by the major banking players has slowed with a far more cautious approach. This can be attributed to a number of factors, including restrictions imposed on capital and tighter regulatory requirements. Commercial South African banks have also needed to think long and hard about their right to win in certain markets and the respective return on effort. This view has seen investment in specific areas of the market, rather than trying to take on major players in the retail and commercial space. Having said that, the banks that continue to invest in their present markets throughout the economic cycle are likely to reap longterm rewards of regional integration and technological innovation generated by their own diversification strategy. Suresh Chaytoo is the sector director of Banks and DFIs for Rand Merchant Bank.

An Oromia International Bank ATM in Ethiopia

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Ecobank into Africa and they now have an extensive presence on the continent. Moroccan banks have also taken the lead in taking up stakes in several west African banks, creating scalable franchises. While there may not be natural trade flows or client expansion into these new markets, banks looked at avenues to diversify their funding base, taking advantage of earnings from high-growth sectors in growing countries. This is a long-term strategy as growth is usually much slower but intrinsic value is built in these franchises, along with a brand and relationships. The fall in commodity

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TRADE AND INVESTMENT

Will free trade agreements save intra-regional trade? With so many regional integration groups on the continent, Peter Draper tackles the question of why the continent is lagging behind on intraAfrican exports, which could potentially be a huge money spinner.

loser economic integration is frequently advocated for the African continent, and enthusiastically endorsed by politicians and business people alike. There is no shortage of corresponding integration schemes, generally dubbed ‘Regional Economic Communities’ (RECs). There are 14 in all. Many countries are members of two RECs and some, like Swaziland, are even members of three such groups. If enthusiasm was a guide, all should be well on the regional economic integration front in Africa. But it isn’t. Compared to other regions of the world, intra-Africa exports, at approximately 18 percent of total exports, lag considerably. By contrast, intra-European Union exports are around two-thirds of total exports, whereas east Asian and North American levels hover around the 50% mark. Why is this the case? Should we be concerned about it? And will Continental Free Trade Agreements (CFTAs) fix the ‘problem’?

The main reason intraAfrican trade levels are low is because African economies are structurally linked into the global economy as providers of raw materials. The short answer is, because African economies typically do not produce much beyond commodities, those commodities are typically exported out of the continent to the developed world, China and a few other dynamic emerging economies such as South Korea. Contrast this pattern of trade with that centred on China; the ‘workshop of the world’. This is where final assembly of mostly labour-intensive, low-wage, manufactured goods takes place, typically for export to third markets, and particularly, developed www.nepadbusinessfoundation.org

countries. At the top end of manufacturing value chains, developed countries such as Japan, Germany and the US, dominate, with their firms being the ‘bosses’ of value chain governance across the spectrum of goods production. Those value chains are spread out across the world, incorporating China and select production centres, with co-ordination taking place at corporate headquarters.

In this broad picture, African economies do feature, but mostly at the origin of many value chains. In other words, they supply the raw materials – agriculture and minerals – which are then transformed into intermediate products in more technologically advanced economies. They are subsequently shipped around the world to feed the production of parts and components, for final assembly in

THE OFFICIAL NEPAD YEARBOOK 2017

emergence of regional value chains centred on select economies. South Africa, with its comparatively diversified economic base, looms particularly large in this story, which explains the dominance of South African companies in the intra-African investment story. But regional ‘champions’, to use the Boston Consulting Group’s terminology, from the other hubs are increasingly part of the picture. As intra-African investments grow, so regional value chains will spread, and trade will commensurately increase. The third point is that a number of African economies are specialising in various niches of the services sector. South African telecommunications companies, Kenyan information technology start-ups, and Nigerian banks come to mind, for example. Rebasing the Nigerian GDP level relied substantially on measuring this sector, and largely explains why that economy was briefly considered the largest in Africa.

So, is a CFTA the logical part of the solution to this ‘problem’? All countries in the African economy are engaged in the process to establish this agreement, with the possible exception of Morocco, which is not an African Union member but has expressed interest. However, a free trade agreement on this scale (in terms of number of countries involved) was always going to be politically challenging. And it has proved to be so. At the heart of the problem are differing visions regarding the role that free trade and investment should play in development strategy. Some countries subscribe to a ‘facilitative view’ of cross-border value chains, whereby trade and investment access should be liberalised and regulatory environments strengthened in order to allow companies to move goods, services and people across borders while ensuring their investments are protected. Others subscribe to a ‘restrictive view’, and advocate limited openings in

At the top end of manufacturing value chains, developed countries such as Japan, Germany and the US, dominate, with their firms being the ‘bosses’ of value chain governance across the spectrum of goods production. However, services trade is notoriously difficult to measure. Who knows, for example, how much digital trade Kenyan IT companies are responsible for? Nonetheless, there is considerable intra-African services trade, and as regional value chains extend their reach so the services on which many of them depend will also grow and cross borders.

Should we be concerned?

It is clear that we do not need to be unduly concerned. The main reason intra-African trade levels are low is because African economies are structurally linked into the global economy as providers of raw materials. The positive developing stories are not being properly told, and are difficult to measure. However, there is no room for complacency. Governments, working with the private sector, can and should do much more to promote intra-African trade and investment. Reports continue to highlight the generally dismal environments for conducting business, relative to emerging market peers. Poor governance more generally remains a major disincentive in the way of building knowledge-intensive industries that would move countries up the value chain. And individual markets remain small and fragmented, in light of which enlarging the market would allow for economies of scale to justify larger investments in productive capacity.

order to protect domestic firms and workers, while obliging foreign companies to make more commitments to their markets using devices such as local content policies or looser intellectual property rights (IPR) protections. Consequently, negotiations are stalled on the ‘modalities’, or level of ambition, that should govern the CFTA. At the time of writing it is not clear how services liberalisation would be managed, owing to the same ideological differences visible in the goods negotiations, and so how ambitious the ensuing agreement would be. Nor does it seem likely that ‘behind the border’ regulations such as IPR will form part of the final mix. Overall it is possible to conclude the CFTA although it may take much longer than the timelines announced by politicians. But given the differing perspectives on the place of trade liberalisation in development strategy, it is likely that the agreement will not be ambitious. Therefore, and taking account of the structural factors that inhibit formal African trade integration, its impact on recorded trade levels is likely to be felt at the margin. Peter Draper is the managing director of TUTWA Consulting Group, which specialises in policy and regulatory analysis, international business expansion and corporate public affairs advisory in southern African emerging markets.

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China or other select locations. Exports of commodities consequently dominate African trade statistics, and so we should not be surprised to find that recorded levels of intraAfrican trade are low. There are three mitigating factors in this structural dynamic, none of which is captured adequately by official statistics. Firstly, a substantial amount of unrecorded, informal trade takes place across some African borders. Since the trade is informal – mirroring the central role that informal commerce plays within many African economies – it is not possible to capture its extent in official statistics. However, it is unlikely that African production drives this informal trade. Rather, much of it is based on imported products, or products manufactured in the regional production hubs, like South Africa, Kenya, Egypt and Nigeria. The existence of these hubs, or gateways, points to the second factor, which is the

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he Export Credit Insurance Corporation of South Africa (ECIC) was established 15 years ago in July 2001 when it was given the mandate of filling a market gap through the provision of medium to long-term export credit and investment guarantees by underwriting bank loans for political and commercial risk insurance cover, on behalf of the South African government. Our mission is to provide export credit and investment insurance solutions in support of South African capital goods and services by applying best practice risk management principles. The short-term transaction market was amply catered for, but medium to long-term export transactions still had a need for a dedicated export credit agency, hence the formation of the ECIC. Acting as a catalyst for private investment, the ECIC steps in where commercial lenders are either unwilling to or unable to accept long-term risks. While the ECIC is part of a broader government policy, it remains an independent limited liability company, but with the government as its sole shareholder. The institution is enabled under the amended Export Credit and Foreign Investments Insurance Act of 1957. Along with the ECIC’s major shareholder – the Department of Trade and Industry – the ECIC makes use of market research tools and specialised business development units to create new insurance products that support government’s export promotion objectives. The revised performance bond insurance product, which was launched in 2016, is one such example.

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Currently, the ECIC is working on covering credit lines and return of plant equipment. It also continues to be a catalyst for increased lending capacity by financial institutions by entering into agreements with other export credit agencies (ECAs). In this way, it creates a framework for both reand co-insurance. To this end, it has adopted a comprehensive plan of action aimed at actualising co-operation programmes for mutual benefit in conjunction with, among others, BRICs ECAs, Afreximbank and African Trade Insurance. Most African markets are considered as unchartered territories with challenging business environments. Thus, the business strategies foreign investors apply elsewhere in the world cannot be used in the continent. Accordingly, the business approach to the continent by financiers and project sponsors will have to be informed by a comprehensive understanding of individual country and regional dynamics. The ECIC excels in this regard by virtue of its presence and proximity to most African markets. Through its credit enhancement and risk mitigation facilities the ECIC enables South African exports and outward investments. Access to competitively priced export credit creates the ability for local contractors to bulk up and compete more effectively in foreign markets. With the ECIC in support of such transactions, the South African export market is enabled and contractors are becoming more credible. This has a far-reaching impact on fostering a stronger economy and drives domestic job creation, contributions to fixed capital formation and the GDP, as well as the generation of fiscal revenue.

The ECIC is also able to price African risk more competitively, given its knowledge of the African market. The ECIC addresses obstacles through facilitation and by aiding in the release of funding required for infrastructure, which is of particular concern to global organisations seeking a presence in Africa. Export credit is imperative, considering capital exports are long-dated assets. It is customary for firms to finance such exports with bank debt for cash flow management purposes. Export credit financing is therefore an important and key aspect of international trade. The ECIC is committed to sustainable business through innovative solutions, operational and service excellence, business development and strategic partnerships. In enabling frontier markets to optimise production, the ECIC is effectively motivating a positive socio-economic impact. Contact details Export Credit Insurance Corporation of South Africa SOC Ltd Block C7 & C8 Eco Origins Office Park, 349 Witch Hazel Avenue, Highveld Ext 79, Centurion, 0157, South Africa Tel: +27 (0)12 471 3800 Fax: +27 86 681 2672 E-mail: info@ecic.co.za Web: www.ecic.co.za

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TRADE AND INVESTMENT

Foreign funds

can support industrialisation Foreign direct investment offers an opportunity for countries to develop their industrial potential so as to benefit from exporting finished goods rather than simply raw materials, writes Lesley Wentworth.

Images courtesy of Shutterstock

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THE OFFICIAL NEPAD YEARBOOK 2017

ith the world reducing government rules and restrictions in the 1990s, developing countries adopted reforms to attract foreign direct investment (FDI). In fact, in the wake of the economic and financial crises during the 1980s, countries seeking assistance from the International Monetary Fund (IMF) and the World Bank were forced to undertake liberalisation reforms. As part of countries’ broader reform agenda, a variety of incentives was offered to foreign investors, including fiscal and financial incentives, land donations and complementary investments in infrastructure and human capital. This shift towards FDI was prompted, in part, by disappointment with the progress in import-substitution (IS) strategies, especially given the excessive reliance on tariff and non-tariff barriers to support domestically driven industrialisation. Industrialisation, adopted by many developing countries between the 1950s and 1980s, was successful in promoting local procurement through import restrictions and local content policies. However, the domestic preoccupation did not allow access to technological and modernisation transfers that foreign innovator companies typically bring. In addition, upstream and downstream linkages were inefficient, economies of scale remained unrealised, and advancement of technical and managerial skills was slow. In the modern global economy, industrial policy is crucial to achieving internationally competitive industries. Industrial policy relates not only to economic growth, but also to the structural transformation of the economy. National industrial policy, in this context, should focus on playing to the advantage of the country’s location advantages and promoting the expansion of (foreign) multinational corporations’ (MNCs’) activities. They should do this while strengthening the capacity of domestic firms to absorb the

technology and knowledge spillovers, allowing them to connect to global value chains where MNCs are already established.

Industrialisation in SADC

The Southern African Development Community (SADC) Industrialisation Strategy and Roadmap of 2015 aligns with national, regional and continental priorities for modern industrialisation, skills and technology development, financial strengthening and deeper regional integration. This strategy is anchored on economic and technological transformation; improving competitive advantage; and combining regional integration, industrial development and economic prosperity.

In the modern global economy, industrial policy is crucial to achieving internationally competitive industries. However, without a marked increase and diversification of capital, investment in infrastructure, upgrading and modernising of production, and high-tech skills, development will not occur in SADC – and industrialisation will remain a pipe dream. Existing investment in the region falls well short of what is needed to drive structural transformation. SADC member states need to increase their savings and investment rates to the levels of Asian and Latin American peers, and put more effort into pro-savings policies. According to the African Capacity Report, sub-Saharan savings and investment figures are among the lowest of all regions (see Figure 2.3). Targeting high-quality, diversified and sustainable FDI can help in acquiring the benefits of productive international financial inflows.

Figure 2.3 Source - http://www.acbf-pact.org/sites/default/files/ACR_2015_11_2015_Web_v2.pdf, Page 43

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TRADE AND INVESTMENT

SADC’s evolving FDI framework

In SADC, there is increasing scrutiny of FDI transactions to ensure that investments lead to sustainable development. This is an attempt to improve peoples’ livelihoods while balancing the social, environmental and economic aspects of investment projects. Governments are more cautious about attracting the “right kind of FDI” as economic benefits for the host economy are not always guaranteed. Spillovers from foreign to domestic firms depend largely on the domestic firms’ ability to respond successfully to new entrants, absorb new technology and compete with new firms. Success is determined by local characteristics such as levels of human capital, the development of local financial markets and the country’s overall institutional capacity. With regard to attracting “the right kind of FDI”, SADC has been able to consult and learn from the Policy Framework for Sustainable Development (PFSD) of the UN Conference on Trade and Development (UNCTAD). The framework aims to align investment policies with broad socio-economic development goals and promote the integration of investment policies into development strategies. In 2012, a SADC model bilateral investment treaty (BIT) was drafted by experts from the International Institute for Sustainable Development, among others, and was proposed to SADC countries.

Protection for investors versus right to regulate

The SADC Investment Policy Framework (IPF) is a systematic and harmonised approach to investment policy review and implementation. It focuses on four components of the Organisation of Economic Co-operation and Development (OECD) Policy Framework for Investment: i) investment policies; ii) investor protection; iii) tax incentives; and iv) infrastructure development. The SADC Protocol on Finance and Investment (FIP), which aims to harmonise financial and investment policy in SADC member states, entered into force in August 2010. The FIP’s Annex No. 1 includes a BIT-type instrument classifying the general principles regulating foreign investment, such as fair and equitable treatment and prohibitions on expropriation. Several countries within the SADC Free Trade Area have started to overtake the regional investment regime developments by passing their own investment legislation. South Africa, Angola and Namibia have moved away from FIPA’s investor-state dispute resolution, and taken their lead from the newer SADC Model BIT. This suggests that the right for governments to regulate at the national level now has greater precedence.

There is resistance from private investors against the new trend towards greater government regulation, as overregulation is so often a possibility. www.nepadbusinessfoundation.org

The new form of domestic investment legislation echoes the international trend back towards state-to-state dispute mechanisms and away from investor-state dispute settlement (ISDS). This means that foreign investors have to go via their home country governments to bring an investment dispute against the host government. ISDS mechanisms are thought to promote greater FDI flows by providing comfort for investors in case of (potentially) expropriatory effects of government actions. However, ISDS has suffered serious criticism from legal experts and international organisations for some of the following reasons: • ISDS cases are often found to overrule domestic courts and domestic law. • ISDS arbitrators have been seen as more ‘self-interested’ than ‘independent’ without the necessary local context or understanding. • Often ISDS proceedings are conducted confidentially, without public knowledge, despite important public interest concerns that these disputes often address. • The legal fees for investor-state lawsuits alone can drain the treasury, while corporations’ ability to sue the government can jeopardise public finances. National governments are thus reclaiming the policy and regulatory space to safeguard legitimate public policy goals, including addressing issues around public health, the environment, the possibility of job losses, threats to national security and ensuring financial sector stability.

Balancing government regulation and investor protection

There is resistance from private investors against the new trend towards greater government regulation, as over-regulation is so often a possibility. Bureaucratic and commercial self-interest on the part of government can often come into conflict with the public interest. There needs to be recognition that FDI promotion by government is in response to the public interest needs for spillovers from these investments – including employment creation, tax income, technology transfers and increased domestic economic competitiveness. Without this competitiveness, SADC’s regional economy will not transform to create value-addition in the resource sectors, nor increase manufacturing capacity. A practical solution to the investment protection-investment promotion impasse is a greater focus on investment climate issues in SADC. This has already been recognised by SADC member states in the SADC IPF. With support from the OECD and UNCTAD, the SADC drafting committee has taken an holistic approach to investment policy reform in the region. SADC is concentrating on attracting sustainable investment in all productive sectors, enhancing institutional governance and increasing the effectiveness of legal property protection and the judiciary. This important investment framework should link with the value-chain development and strengthening under the SADC Industrialisation Strategy. Skills development and enhancing processing and manufacturing capacities in the region must be emphasised to realise the goal of higher-value exports for greatervalue revenues for SADC economies.

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TRADE AND INVESTMENT

Connecting the countries and people Cross-country trade and communication depend on transportation and there has never been enough on this continent. Dianna Games looks at the new developments to facilitate this.

s Africa looks for funding to build infrastructure across the continent, the focus remains on transport corridors to facilitate the movement of people and goods, particularly between landlocked countries and the sea. The model has been successful in enabling infrastructure to be developed along key routes, most of them existing transport corridors where funding has focused on the improvement of ageing roads, bridges and railway networks, and closing infrastructure gaps to improve transport turnaround times and efficiency.

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There are about 12 corridor projects in east and southern Africa and multiple corridors in west Africa. They are all in different stages of development and progress and, despite the potential, hard and soft infrastructure is taking time to be put into place. Projects along the North-South Corridor,

one of the continentâ&#x20AC;&#x2122;s busiest trade routes linking the Democratic Republic of Congo (DRC) and Tanzania to the port of Durban in South Africa, are progressing slowly. But trade within this corridor, as in others, is still beset by issues such as high fuel costs inland, many unnecessary roadblocks and long waiting times at border posts. In east Africa, the northern and central

THE OFFICIAL NEPAD YEARBOOK 2017

corridors are the backbone of efforts to improve trade and investment in the region. The 2 000km Northern Transport Corridor in east Africa, extending from the port of Mombasa in Kenya to Uganda, Rwanda, Burundi, eastern DRC and South Sudan, is the busiest corridor in east Africa, handling the bulk of the region’s local and international trade. Trade facilitation and investment in infrastructure has addressed some of the issues along the corridors, with longer opening hours of road borders, a reduction in time-wasting weigh bridges and improved efficiencies at the port in Mombasa paying dividends. The authorities are also investing in nontransport infrastructure. A shortcoming of Africa’s transport arteries is a lack of facilities along the corridors for truck drivers in particular, but all travellers in general. South Africa is a leader in this regard, with its world-class toll-road system

not only delivering safe roads through regular infrastructure maintenance but also providing commercial services along the routes. Now, the Northern Corridor Transit and Transport Co-ordination Authority in east Africa has launched a US$70 million project to erect roadside stations in five countries along the length of the roadway. The stations will provide accommodation, restaurant and supermarket facilities, ICT and banking services, health services, off-road truck stops, service stations and vehicle repair facilities. The project will not only address cargo safety and other challenges, but it will unlock opportunities for investors and employment among local communities along the routes. Rail has been mooted as a game-changer for Africa’s trade, given that most exports are heavy commodities that are not suitable for road haulage. In 2015, the value of rail projects – planned, mooted or under way – across Africa was estimated at US$495 billion, according to Transport World Africa magazine. However, rail transport remains a challenge not just because of inadequate infrastructure but also because of poor service delivery, long turnaround times and a lack of co-operation between authorities across borders, all of which make rail an expensive option for cargo. As a result, less than 15 percent of all freight is carried by rail. Funding is also an issue. For example, the long-planned US$15bn Trans Kalahari Railway project is on hold pending private sector participation in the funding of the project, which will link Botswana’s coal fields with the Walvis Bay port. But other projects are under way or completed. The 756km Ethiopia-Djibouti Railway began operations in 2016, with funding, management and technical support from China. The US$1.9bn rehabilitation of the Benguela Railway on the Lobito Corridor linking the port of Lobito on the Atlantic Ocean to the DRC border, was completed in 2015 and private sector investment in the NorthWest Railway in Zambia, which will link the Copperbelt to the Bengeula line, has finally revived the moribund project. This will provide a new western route to the sea for landlocked commodity producers. And work on the new 472km standardgauge line from Mombasa port to Nairobi is almost complete, with the first trains expected to begin operations in 2017. While new and improved road, rail and port infrastructure is key to making transport corridors work, there are many

other components that need to be in place for optimal use and these seem to be elusive. Long delays at key border posts are still a problem. This is caused by a myriad of issues such as equipment failure, congestion caused by a lack of holding areas for trucks, skills, corruption, a lack of political will to harmonise and modernise systems, and sometimes just the sheer volume of trucks plying major trade routes. In mid-2016, delays at Beit Bridge – the key border crossing between South Africa and its hinterland – averaged 12 hours, according to Globaltrack. The same applied to Chirundu, between Zimbabwe and Zambia, despite the existence of a one-stop border post. At Kasembulesa, between the DRC and Zambia, waiting times to cross into Zambia averaged a massive 23 hours while trucks waiting to cross the Zambezi River at Kazangula from Zambia into Botswana waited for 49 hours. There are still many other non-tariff barriers that remain despite extensive efforts by regional blocs and trade facilitators to eradicate them.

Rail transport remains a challenge not just because of inadequate infrastructure but also because of poor service delivery, long turnaround times and a lack of co-operation between authorities across borders. On the Central Corridor in east Africa, travellers to the DRC from Tanzania and Uganda still need visas and they don’t come cheap at US$100 per visa. This is despite the fact that the three countries, along with Rwanda and Burundi, belong to the Economic Community of the Great Lakes Countries – a bloc designed to promote economic cooperation among member states. In 2016, the DRC said it would halve the cost of the visa to US$50 – but it did not offer to remove the requirement. Although the situation is improving, there is a long way to go to improve efficiencies, access and trading conditions. With transport costs accounting for about 30% of the value of goods being traded in Africa, making transport corridors work optimally is the only way to increase intra-African trade.

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Image courtesy of WIN-Initiative

Trade within (these corridors) is still beset by issues such as high fuel costs inland, many unnecessary roadblocks and long waiting times at border posts.

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GOVERNANCE, SECURITY AND DEMOCRACY

A tale of the two

continents of Africa Is the future of business in Africa on the rise or not? Rivaj Parbhu looks at this complex issue from both sides. www.nepadbusinessfoundation.org

probable. This analysis is based on much of the usual evidence; the extraordinarily rapid urbanisation rate and that by 2034 the continent will host a larger working age population than China or India. The continentâ&#x20AC;&#x2122;s wealth of resources remains a key asset and if commodity prices remain cyclical then an upturn in prices could unlock new revenue streams for governments and corporates alike. In addition to the fundamentals, there are the success stories. Nigeria has become the biggest market for Irish brewer Guinness, bigger even than Ireland itself. Whitey Basson, the CEO of South African retailer Shoprite, has famously stated that in 2013 he sold more MoĂŤt & Chandon champagne out of his seven stores in Nigeria than the more than 600 in South Africa. Global brands such as Uber, Unilever and Yum Foods have invested heavily and successfully on African growth strategies. Outside of direct corporate activity, the private equity market continues to perform well and celebrate notable successes. The African Private Equity and Venture Capital Association (AVCA) has reported that in the period between 2010 and 2015, more than $21 billion has flowed into the continent through private equity and venture capital deals. In fact, a common complaint for many who work on deal-making on the continent is not the risk of doing business but rather insufficient, viable, sizeable targets.

A glass half empty

So, if the fundamentals are still the same and there are clear examples of success, why do so many adopt a pessimistic opinion on African expansion projects? Simply put, there are also numerous cases of companies that have failed dismally and at great cost. For every successful business expansion and large capital investment there is equally, an easily found example of a failure. Ignoring the failures can come at great financial cost. Mistakes can also take a heavier toll in terms of manpower, reputation and time. Security and political risks are not insubstantial and a crisis can arise, seemingly out of the blue, for the uninitiated or inexperienced. This mixed bag of success and failure makes it imperative that we question why some succeed and others fail.

A common complaint for many who work on deal-making on the continent is not the risk of doing business but rather insufficient, viable, sizeable targets. A new approach

here is an old African proverb that says that if you close your eyes to facts, you will surely learn through accidents. Yet, opinion on economic progress on the African continent remains polarised. It is either the best of times or the worst of times, depending on who you speak to and many who adopt these polarised views are closing their eyes to the facts. The fact is that doing business in Africa is both potentially richly rewarding and deeply complex. While seemingly obvious, the polarity of opinion among thought leaders seems to suggest that this contrasting concept does not sit easily.

A glass half full

The fundamental promise of the African continent remains unchanged. The recent McKinsey report, Realizing the Potential of Africaâ&#x20AC;&#x2122;s Economies, points out that growth is not just possible but

The first, and arguably most important, attribute of a successful entrant into an African market is an acknowledgement that the methods of doing business that served companies well in the past will be tested and probably found wanting. Home country lessons only carry new entrants so far before the unique challenges of the new markets take their toll. Pricing models, supply chain methodologies, financing mechanics and a host of activities proven in developed markets fail to survive first contact with African challenges. Acknowledgement that there is a need to be flexible and pragmatic creates a good foundation for any new venture or transaction. This approach allows for rapid decision-making which is essential in the fluid and dynamic markets that characterise the developing world.

Market prioritisation

Time and effort spent in identifying the correct target market is a more complex exercise for any transaction on the continent. In alternative locations the choice of first entry point is mainly driven by the market fit with products or services. www.nepad.org

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GOVERNANCE, SECURITY AND DEMOCRACY African political and security risk should be factored into investment decisions.

When a transactional opportunity presents itself on the continent it is practical to look not just at the merits of the transaction but also the macro factors including economics, security, transport and cost of living. In addition, soft factors such as the comfort of staff and the availability of flights can play an important role in long-term success.

Reputational due diligence

The ability to understand, meaningfully, the reputation and history of parties when identifying and selecting targets for acquisition or partnership has proven to be a clear area of deficiency in many failed African expansion plans. Traditional approaches to due diligence are often limited to reviews of a target’s financial health, contractual liabilities and legal position. This has been shown to be inadequate. The due diligence approaches taken by many companies have let them down in extraordinarily expensive ways. In acquiring a business in Africa, a clear dose of pragmatism is required. Executives and key staff, like in any other complex jurisdiction, may not always be the fine, upstanding citizens that they first appear to be. Regulators and government officials may not always remain consistent in terms of policy and taxation regulations. Over and above this, persistent security instability, political

If there is one lesson that we can all take from a turbulent 2016, it surely must be that the only certainty is uncertainty. succession dynamics and shifting political alliances can create pressure on otherwise stable business relationships. When operating in new jurisdictions, factors such as these can appear both overwhelming and opaque, leading to poor business performance, a breakdown in trust with local partners and, ultimately, a failed business. Issues of fraud and corruption add an additional layer to an already complex recipe. The solutions to these issues lie in the groundwork that is laid prior to a transaction. Reputational due diligence enquiries provide relevant, privileged insight into the parties involved in your transaction. These reports fill gaps in knowledge and enable investors to adjust positions at the negotiating table to enhance returns and avoid bad decisions. Deal-makers should look to cover companies and individuals, and reputational due diligence teams can support both deals and potential recruitment of local staff into key positions in target companies. In effect, these reports allow parties in a deal to have close knowledge of the relevant people or companies, but without disclosing that interest to the market.

Timing

Sometimes the key to a successful investment lies in timing, rather than location. Many governments on the continent are pursuing reformist agendas and are working actively to encourage foreign direct investment. Constant monitoring of potential targets can provide key insight into future trends and events, which may create a more fertile timing for new ventures or the flow of capital into existing ventures. Over and above legislative changes, the activities of local competitors that www.nepadbusinessfoundation.org

have operated in these markets for generations can also be used as indicators of shifting dynamics. Timing can sometimes feel out of the control of management teams. While this is sometimes the case, it can also be a process that can be managed with good use of research and insight.

Balancing risk and opportunity

If there is one lesson that we can all take from a turbulent 2016, it surely must be that the only certainty is uncertainty. Risk is the new normal and all of us should be not just willing but prepared to operate in this new normal. More so than any other continent, doing business in Africa requires insight before investment. Superficial understanding of people and events can often belie the complexity below the surface. This preparation incurs expenses before the first dollar of capital is invested, which can be difficult for a management team to justify. However, perhaps the questions we have been asking of the “Africa rising” narrative are incorrect. Perhaps instead of companies expecting a prosperity wave similar to an Asian tsunami, we are faced with an African rising tide. A rising tide that will gradually unlock all this potential and in the face of this potentially new normal, the approach that corporates take in doing deals in Africa must change. Taking care at the outset and investing in a detailed understanding of transacting in complex markets may well add an often-unwelcome cost to doing business. There are, however, many examples of the cost of not doing so. Rivaj Parbhu is Control Risks’ senior consultant for southern Africa. Control Risks specialises in helping organisations manage political, integrity and security risks in complex and hostile environments.

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Overcoming the

damages of

colonialism African countries defeated colonialism, but how did they manage their institutions once the Europeans left? Peter Fabricius finds out.

frica has struggled mightily since independence started on the continent some 60 years ago to overcome the immense deficit in development inherited from the departing colonial powers. The biggest obstacle in tackling this problem has been bad governance, ranging from brutal dictatorships to military coups and unnecessary wars, the rigging of elections and the looting of state resources. Such disastrous governments have come to epitomise Africa in the eyes of the world. But not all countries have been disasters. Some have been governing consistently well since independence, while others started badly but are now catching up. The annual Ibrahim Index of African Governance (IIAG) assesses all 54 African countries in four broad categories: safety and rule of law, sustainable economic opportunity, participation and human rights, and human development. Seven states are inspected here, all ranking in the IIAG’s top 10, and representing different regions to give a good overall picture of governance. Botswana deserves a special place in any African pantheon of good governance. The latest IIAG, covering 2015, ranked it second with 73.7 percent. Dr Greg Mills, head of the Brenthurst Foundation, notes in his book Why States Recover that at independence from Britain in 1966, “Botswana was one of the least developed and poorest nations in the world”, with a per capita income of just over US$70, just 10 kilometres of tar roads, fewer than 50 university graduates and little else besides.” By 2015, it had a gross domestic product (GDP) per capita of US$6 360, higher than South Africa’s US$5 723, according to World Bank figures. The key to its success has been steady and stable development, based on consistent www.nepadbusinessfoundation.org

and peaceful democracy since independence and the government’s prudent management of its natural resources – most notably its huge diamond reserves – in the interests of all its people. While many other countries experimented disastrously with socialism, Botswana entered instead into a mutually beneficial partnership with the South African diamond corporation, De Beers, to mine its diamonds. The Indian Ocean island Mauritius tops the IIAG 2015 index with a score of 79.7%, with human development as its best category. It has also been consistently democratic, peaceful and prudent in its economic policies since independence from Britain in 1968, and more enterprising than most.

While many other countries experimented disastrously with socialism, Botswana entered instead into a mutually beneficial partnership with the South African diamond corporation, De Beers, to mine its diamonds. “Mauritius’s strong development record has reflected a remarkable ability to adapt to changing economic and financial conditions,” the International Monetary Fund (IMF) said in its latest assessment in 2015. It noted that Mauritius had transitioned successfully from dependence on sugar

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But the last putschist, Jerry Rawlings, began to reform the economy and to restore civilian multiparty democracy in the 1990s. Regular, peaceful elections and transitions from one party to another – the benchmarks of a mature democracy – have gradually become entrenched since 2000. Ghana’s “robust democratic credentials and highly rated business climate” have powered “strong and broadly inclusive growth over the past two decades”, which has graduated Ghana to lower-middle income status, the IMF said in its latest country report in 2014. It added that Ghana has outperformed its regional peers in reducing poverty and

improving social indicators. The economy wobbled a bit with the recent drop in oil prices but has kept broadly on track. Nearby Senegal, which ranked tenth in the 2015 IIAG, with a score of 60.8%, is probably the most exemplary of the Francophone countries. It has also remained peaceful and largely democratic since independence. Much of this is attributed to its legendary first president, the poet Léopold Senghor, who, despite some radical rhetoric, set his country on a moderate path, working closely with France to enable a smoother transition to independence, and appointing officials on merit, despite his famous philosophy of negritude.

Image courtesy of Tshwane Municipality/Matthew Willman

production to manufacturing and tourism and had then further diversified by creating “a vibrant financial sector – including a very large offshore industry”. The IMF said the country was now strategically reorientating away from this large offshore sector to become instead a channel of foreign investment into mainland Africa. Ghana in west Africa, which ranks eighth in the IIAG, with 63.9%, was the first sub-Saharan African country to attain independence, also from Britain, 60 years ago, but then plunged quite soon into political turbulence and consequent economic decline for a couple of decades after that, including five military coups.

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Pretoria Palace of Justice

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Senghor’s “inclination for compromise and persuasion became an integral part of Senegal’s political tradition”, Martin Meredith says in his book, The State of Africa. However, the country’s economic governance has been less satisfactory, leading to “unambitious annual GDP per capita growth of half a percent” for the past three decades, the IMF said in its 2016 staff report.

Since then Tunisia has so far successfully navigated the turbulent passage between democracy and Islamic fundamentalism, while others that were caught up in the Arab Spring, notably Egypt, have not. It now has a broad coalition government, incorporating moderate Islamists and secular liberal democrats. But it has suffered two major terror attacks which severely damaged its vital

“Mauritius’s strong development record has reflected a remarkable ability to adapt to changing economic and financial conditions.” But it noted that two consecutive years of 6% annual growth under President Macky Sall’s “Plan Sénégal Emergent” (PSE) suggested Senegal was starting to get onto the high road of seven to eight percent growth which it needed to stay on for some two decades to achieve its goal of emerging market status by 2035. Tunisia, which ranked seventh in the 2015 IIAG, is remarkable as the only country, in Africa or anywhere, to have achieved a successful “Arab Spring”, which started in the country in late 2010. The country embarked upon independence from France in 1956 as a one-party state with moderate socialist policies. These were gradually abandoned. When Zine El Abidine Ben Ali, took over from independence leader Habib Bourguiba in 1987, he partly liberalised politics while remaining firmly in control, and became increasingly corrupt, until he was toppled by the peaceful “Jasmine Revolution” in January 2011.

tourist industry. Nevertheless, the IMF, in its 2016 staff assessment, commended Tunisia for successfully preserving macroeconomic stability in the face of these threats plus a difficult international economic environment. Rwanda is something of an outlier in this list, though maintaining a veneer of democracy, President Paul Kagame has in fact maintained firm control and shows no signs of easing his grip or leaving office soon. Nevertheless, the IIAG 2015 ranked Rwanda ninth, mainly for its remarkable improvements in the economy and in human development. Before the 1994 genocide, the country was largely a political and economic mess, mainly because of hostility and frequent violence between the Hutu majority and Tutsi minority. In the relatively short time since he took power to end the genocide, Kagame has taken his country to fifth place in human development in the IIAG ranking, with a score of 71.2%. Rwanda rose a record 14.4% over the last decade to reach that

place, overtaking even South Africa which ranked sixth with 70.6%. Rwanda came first in providing welfare to its people. In its latest staff report in 2014, the IMF commended Rwanda for “strong inclusive growth since 2000” with real GDP averaging 7.8% a year and poverty declining from about 60% in 2000 to below 45% in 2010/11. “Inclusive growth has been led by policies geared towards agriculture through investments in fertilizers, improved seeds, electrification, irrigation, and rural roads and better provision of social services, especially to the rural poor. Access of the poor to financial services has also improved. “Much of this success is due to prudent fiscal and monetary policies, including judicious use of foreign aid in support of economic development.” Terence Corrigan, a consultant on governance to the SA Institute of International Affairs, says in general these (and other) African countries have succeeded through pragmatism, developing strong institutions and maintaining rule of law – and avoiding ideology. Still, these successes are not guaranteed. They require constant application. Even rock-steady Botswana could face problems if it does not diversify its economy before its diamonds run out, which is predicted to happen around 2050. Rwanda needs to become more authentically democratic. Tunisia could still be destabilised by violent extremists. And so on. However, the main lesson to be distilled from these stories is that economic and social development depend on good political governance.

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Somerset Hospital in Cape Town

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ÂŠJohnson & Johnson Services, Inc. 2017

Letâ&#x20AC;&#x2122;s share a better world.

At Johnson & Johnson, we are proud to support NEPAD and their work to create a better Africa. Their mission is one that complements ours, as we have worked to make life healthier for Africans over nine decades. We are honored to be a trusted partner in this worthy endeavor.

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Can we open up Africa to all its people? An African Union passport remains a pipe dream for the continent’s people. Dianna Games finds out how feasible it will be to implement it by 2018 considering the practical, technical and political challenges ahead.

he African Union (AU) passport, launched in 2016 with much fanfare, is still a faraway symbolic gesture for Africa’s billion-odd people, with just a handful of high-profile leaders having one in their possession. The continental passport, which is due to have been rolled out by 2018, is part of the AU’s goal of realising visa-free travel for African citizens within the continent by 2020. Initially it is only available to African heads of state, AU officials and select government officials. The presidents of Rwanda and Chad each have one, as does Carlos Lopes, former head of the Economic Community for Africa. But it is a pipe dream for most Africans who still have to battle through layers of bureaucracy and inconvenience to travel around their own continent.

Many Africans now prefer to take their money to countries that welcome them and give them longterm visas. It is those who want to bring in their money, either to shop, go on holiday or invest, who are bearing the brunt of visa hassles. Many Africans now prefer to take their money to countries that welcome them and give them long-term visas. That is where they will spend their money, adding to the problem of financial outflows from the African continent. The AU has mooted 2018 as the year by which the passport will be rolled out. Nkosazana Dlamini-Zuma, outgoing AU Commission chairperson, said the organisation has agreed “to create the conditions for member states to issue the passport to their citizens, within their national policies, as and when they are ready”. www.nepadbusinessfoundation.org

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President of Chad Idriss Deby (R) and Rwanda’s President Paul Kagame show their Africa passport designed to allow free travel throughout African Union countries during the 27th African Union Summit.

Questions have also been asked about how the new passport would affect the status of refugees and internally displaced people. East Africa is the easiest region to get visas for, particularly since the introduction of a single visa for Uganda, Kenya and Rwanda and visa-free access for nationals of the region. In southern Africa, the visa-friendly nations are Mauritius, Madagascar, Zambia and Mozambique. West Africa fares better with six countries regarded as visa-friendly. Nigeria, Angola and South Africa, the continent’s biggest economies, are among the hardest to get visas for. The visa situation undoubtedly affects economic growth and trade. AfDB president Akinwumi Adesina says the complexities and challenges for African passport holders to travel across the continent is a major contributor to very low levels of intra-African trade – estimated to be about 13%, which is well below all other regions. Africa’s richest man, Aliko Dangote, has been outspoken on the issue, saying he needs 38 visas to travel across Africa. Even though many governments say they want investment, he says they make it difficult for investors to get into their countries. The continuing need to put in place obstacles to the free movement of Africans is built on an aversion to immigrants and the fear that richer countries will be swamped by nationals from poorer nations. South Africa, for example, supports the notion of free movement on paper but has to deal with high inflows of illegal immigrants, particularly from its economically embattled neighbour, Zimbabwe. This has worsened the climate of intolerance towards foreigners by some South Africans, particularly those at the lower income levels who believe foreigners provide competition for jobs, housing and other benefits. Some countries cite security concerns for controlling their space. However, Rwandan officials have said the benefits of bringing new talent and visitors with money to spend far outweigh the potential problems. Many countries use visas as a revenue stream to supplement government budgets or fund diplomatic missions. But this fails to take into account the greater revenues that could be generated by making it easier for visitors to come to the country, with potentially significant trickle-down benefits from spending on travel, accommodation and tourism as well as investment and trade. Research done in 2016 by global travel technology provider Sabre Corporation found that African air travel spend could increase by 24% with the introduction of the pan-African passport. Travellers from four countries – South Africa, Nigeria, Kenya and Egypt – were surveyed, with those having flown in the past 24 months saying they would spend 24% more with the introduction of the passport (from $1 100 to $1 500 annually). Questions have also been asked about how the new passport would affect the status of refugees and internally displaced people. The passport initiative undoubtedly has merit, particularly for a modernising Africa. But there are still many practical, technical and political challenges that have to be addressed before this can become a reality. In the meantime, much could be done to make it easier to travel between countries – giving longer-term visas for business travellers, for example, and reducing the bureaucracy involved for visas. Even these measures require political will. But it would be a good place to start while the modalities for the African passport are being worked out. www.nepad.org

Image courtesy of Anadolu Agency

This timetable has been criticised for being unworkable, particularly because it will be up to individual countries to implement the passport. They can then move at their own speed, which means it could be many years before the passport is in the hands of ordinary people. The document will be a biometric passport, or electronic passport, which would use contactless smart card technology, to reduce the chance of fraud. Unfortunately, most countries in Africa do not have biometric technology in place yet. A bigger challenge is political will. The Africa Visa Openness report, released in 2016 by the African Development Bank (AfDB), shows that movement across the continent for African passport holders remains challenging. The report said that on average, Africans need visas to travel to 55 percent of other African countries, including Ethiopia – the home of the AU. Currently, 13 AU member states offer visas on arrival, including Rwanda, Mauritius and, more recently, Ghana. Only 20% of countries in Africa don’t require Africans to have visas to enter them. One is the Seychelles, which does not require visitors from any country to have a visa.

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Good corporate rule

versus poor government Can good corporate governance and increased investment survive amid poor state governance? Monica Dowie addresses this interdependence.

frica requires much growth, investment and economic development in order to meet the needs of its people and reach its full potential by harnessing its rich culture, diversity and resources. Governance cannot be ignored and the issue is often in global headlines for negative reasons, trumping the few positive stories. Governance failures are seen in country dictatorships and the lack of free and fair election processes, or economic governance failures, such as corruption and illicit financial flows. It is also evident in social governance such as the violation of human rights, or corporate governance like the much-publicised Enron scandal that affected many different stakeholders. So what do we mean when we talk about governance and why do we need good corporate governance? What is government’s role in supporting good corporate governance and can good corporate governance survive amid a poor governance eco-system?

What is governance?

Governance refers to the process of governing, whether by a government, market or network, whether over a family, tribe, formal or informal organisation or territory. The leadership governs through laws, norms, power and/or language. In Africa, there are two governance monitoring and reporting mechanisms that are most often referred to: the Ibrahim Index of African Governance (IIAG) and the African Peer Review Mechanism (APRM). The IIAG assesses annually the provision of the political, social and economic public goods and services that every citizen has the right to expect from their state, and that a state has the responsibility to deliver to its citizens. The APRM, on the other hand, is a voluntary self-assessment tool instituted by African heads of state. It was designed to promote more effective governance to foster the adoption of policies, standards and practice. These are intended to lead to political stability, high economic growth, sustainable development and accelerated economic integration. Such mechanisms show that good governance is not a stagnant goal that countries should strive to attain, nor is it a one-size-fitsall framework that can simply be applied. External and internal factors mean that countries need to adapt continuously to changing environments and implement suitable measures to meet good governance practices. Good Governance • Rule of law • Transparency • Participation • Accountability • Sustainability

Bad Governance • Inefficiency • Red tape • Maladministration • Corruption • Secrecy

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What is good corporate governance?

Corporate governance consists of processes, customs, policies, laws and institutions which affect the way people direct, administer or control a corporation. As corporations are legal entities, they rely on good corporate governance to ensure accountability to their various stakeholders. These include employees, suppliers, customers, banks and other lenders, regulators, the environment and the community at large. Good corporate governance supports national economic development through attracting investment that will lead to the creation of wealth and employment opportunities, sustainable and competitive business and remittance of taxes.

Government’s role

Government should be the policymaker, enforcer and overseer of corporate governance. It should enhance corporate governance by supporting the establishment of self-regulatory institutions, providing a sound legislative framework and ensuring adequate enforcement of law through effective monitoring mechanisms. Foreign investors, in particular, are comfortable in assessing political, business, market and currency risks, but are averse to investing in countries with higher risks of lawlessness and corruption that usually arise from poor governance. It is therefore government’s responsibility towards its business community and citizens to mitigate these risks and set an example to encourage investment and good business practice.

Foreign investors are comfortable in assessing political, business, market and currency risks, but are averse to investing in countries with higher risks of lawlessness and corruption that usually arise from poor governance. Governance and corporate governance

To better understand the relationship between overall country governance and corporate governance, we can look at both the topperforming and worst-performing African countries in the IIAG findings. Mauritius has ranked consistently as the top-performing country in the IIAG and is also the highest-ranked African country in the World Bank Ease of Doing Business 2017 report. On the other end of the spectrum, Somalia is ranked as the worst-performing country in the IIAG and the lowest-ranked country in the World Bank Ease of Doing Business 2017 report.

Mauritius

The Mauritian government is committed to improving economic growth and, to enhance the business environment, has established a strong legal and institutional framework for corporate governance.

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Somalia

Somalia experienced a number of years without an effective government, leaving it underdeveloped and weak in service delivery. Lack of governance left it exposed to insecurity, unpredictability, corruption and the poor management of natural and human resources, which negatively affected its future productivity, development and the livelihood of its people. A number of initiatives have been undertaken to restore peace and build the foundation for good governance, although much work still needs to be done in this regard. According to the IIAG, Somalia has shown improvements in all categories, with the exception of â&#x20AC;&#x2DC;Safety and Rule of Lawâ&#x20AC;&#x2122; indicators. Through years of uncertainty, Somaliaâ&#x20AC;&#x2122;s economic landscape was characterised predominantly by an informal business sector. Governance reforms are beginning to change this, leading to increased confidence and the development of a more formalised economy.

For sustainable economic growth and development, Somalia will need to strengthen accountability and oversight within its government sectors, which can be achieved through stronger institutions to ensure that the rule of law is followed. A lack of capacity and the failure to implement corporate governance principles has meant that corporate governance has not been a business priority. Many local businesses have been intent to continue operating within the status quo, although international NGOs have been required to adhere to their foreign obligations. Some local businesses, such as the National Energy Corporation of Somalia, have realised that voluntarily adopted good corporate governance principles can attract foreign direct investment.

Corporate governance is an essential component for foreign investment and sustained economic development. Without the proper legislative frameworks, strong institutions, monitoring and enforcement of law to hold offenders accountable, good corporate governance principles have not been able to be applied effectively. Corporate governance is an essential component for foreign investment and sustained economic development. Good corporate governance can survive amid poor government governance, however, the effectiveness of corporate governance mechanisms is largely impacted by and reliant on the existence and enforcement of sound legal frameworks. Corporate governance rules and regulations would be negated by a weak judiciary system, making it hard to obtain convictions when rules are violated, thereby compromising accountability and transparency.

Queen Victoria statue outside the government building in Port Louis, Mauritius

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In 2008, the National Committee on Corporate Governance (NCCG) established the Mauritius Institute of Directors (MIOD) as an independent legal entity to champion best practices and effective corporate governance. Mauritius continues to seek better ways to enforce compliance with existing laws and regulations, standards, and improved public sector governance and reporting. Corruption remains an area of concern, although a number of initiatives are under way to improve confidence. One is the Good Governance and Integrity Reporting Act 2015, which aims to promote a culture of integrity and good governance through statutory measures. Another is the voluntary MIOD Integrity Pledge Project to assist businesses in combating corruption in global value chains through better compliance. The latter will assist in developing an auditable standard, including a tool for companies to assess their ethical culture, anti-corruption framework and integrity model. The promotion and implementation of good corporate governance have been instrumental in achieving investor confidence and attracting investment. Corporate governance codes and principles have been supported by proper legislative frameworks and overall good governance in Mauritius.

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Men must play their part to

fight gender violence Gender violence cannot be stemmed by women alone and men play an even bigger role in changing the status quo, writes Mmatshilo Motsei.

ears ago, I was stranded with a flat tyre on a dirt road between Hazyview and White River in Mpumalanga, South Africa. It was early evening. My father taught me to drive at 13 and, like him, I tend to explore new roads and short cuts. This was one of those days when I was trying out an unfamiliar route. Three farm workers who lived in a shack near the road came to my rescue. In a matter of minutes, my wheel was replaced. My mobile phone was not stolen. None of them spoke to me in a way that reduced me to a sex object. When I left, the older one came to my door and closed it for me. He gave me his number and insisted that I call them to let them know that I arrived safely. I called him later to thank him. I have not seen them since but I carry the memory in my heart as a reminder of how beautiful black men can be. I know that I could have been brutally raped. After all, South Africa is reported to have one of the highest prevalence of rape in the world. These three men did not even point a finger in my direction. I know from my childhood experience that many girls are brutally initiated into sex by being raped by grown men. I also know from my work with abused women that being born female still poses a serious threat to life, let

Mmatshilo Motsei

“Sometimes I did not feel good about the way we treated girls, but I could not do anything about it. My brothers said that is how a real man must behave.” alone fundamental human rights such as movement, safety and security. My work with young men has shown me that many are initiated by popular culture, tradition and religion into the dominator model of power. A greater part of this power encourages an expression of manhood that condones the discrimination and mistreatment girls and women. The following is what a young man shared in a healing circle I facilitated: “My brothers initiated me into the world of dating and sex. I dated many girls and www.nepadbusinessfoundation.org

I taught my friends how to relate to their girlfriends. Sometimes I did not feel good about the way we treated girls, but I could not do anything about it. My brothers said that is how a real man must behave.” In another healing circle with exoffenders, a participant who was in prison for rape for more than 20 years said: “This is what I was taught when I was a boy. I am glad that I went to prison. It saved my life.” For centuries, the world equated leadership with a scenario in which a human

being who is male leads from the front. One key characteristic of such leadership is the dominator mindset. This begins in the family where the head of the household punishes his wife and children for defying his law, to a community in which a group of men rape and murder a lesbian for defying what they perceive as men’s rule over women’s bodies. Then, there are masculinist political parties in which members are suppressed for holding alternative views and a religion in which the Father punishes his children for defying his commandments. Sadly, the politics of domination run as a thread through life as we have come to know it. To survive, parties and institutions are trained to dominate and conquer. It is not uncommon for such dominance to take a form of violence. Even though this violence

Image courtesy of Mmatshilo Motsei

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THE OFFICIAL NEPAD YEARBOOK 2017

Both men and women took part in the Women’s March in Charlotte attended by an estimated 10 000 demonstrators

differs from one context to another, what is common in all forms is the tendency to use aggression to defend male honour. At the tail-end of this continuum is the attack and domination of nature. Included in this domination is an economic system that thrives on the unlimited extraction of natural resources for the benefit of the few. The link between colonialism and the breakdown of African values is real. Out of that breakdown we are left with intergenerational suffering, disempowerment, substance abuse, suicide, violent crime, incarceration and recidivism. Masculine woundedness remains hidden behind the cloud of folklore and masculine erotic fantasy. From my work with ex-offenders, I know that men are not allowed to feel: not in prison, not at home and not in society. The only emotion that men are allowed to show is rage. Many African proverbs encourage men to be numb and to punch out their feelings. To break down walls of patriarchy, men must be involved. There are several reasons why men need to help address gender

inequality generally and violence against women in particular, including: • Responsibility: Men and boys are primarily responsible for gender inequality and violence and they are therefore indispensable in the struggle to end it. • Men’s potential and influence: Men generally occupy influential positions both in government, business, traditional and religious institutions. Working with men in key influential positions will create space for men to influence other men. • Rights: Boys and men have the right to live lives free from violence and develop their potential as humane, caring and civil members of the society. • Unifying women and men around an expansive meaning of gender equality: Societal roles encourage men to engage in risky behaviour that includes the use of violence, alcohol, drugs and having multiple sexual partners to prove one’s manhood. Gender inequality and violence are not simply biologically or racially determined but culturally prescribed. Working on an expansive programme that

Masculine woundedness remains hidden behind the cloud of folklore and masculine erotic fantasy.

includes men will contribute towards an expansive model which emphasises true partnerships between women and men. Patriarchy is not a condition against which we can legislate. It lives in the minds of men and women. This is, in part, attributed to the conditioning in the home. If left untouched, the family will always be an effective patriarchal conveyor belt because it reinforces those values that we try to change in the public space. Until we transform the private space, the myth of gender parity in the public sphere will remain. Central to this is a review of ways in which culture, tradition and religion uphold discrimination and violence against women in spite of signed constitutions and conventions. Mmatshilo Motsei is an author, speaker and spiritual health coach. She has worked with women and men’s groups across Africa, including with women who were raped during the war in Mogadishu, Somalia. In 2012, she was contracted by Hivos in Harare, Zimbabwe to develop a microcredit finance programme for rural women that integrates gender and gender violence. She has also worked with various institutions in the US, Australia, Canada, Europe and Nepal and has written several books, including The Kanga and the Kangaroo Court: Reflections on the Rape Trial of Jacob Zuma.

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Soccer stars

peaking too early On the face of it, teenage African footballers excel but they seem to lose their mojo once they become adults. Luke Alfred explores this apparent phenomenon.

t is a commonly held belief among African football fans that the chances of national success diminishes with a player’s age. Success at international events for youngsters at under-17 and under-20 level – goes the argument – is seldom reproduced by senior national sides. A case in point would be the 2014 World Cup in Brazil, where, out of five African qualifiers, only Nigeria and Algeria progressed out of the group stage to the last 16, losing to France and Germany respectively. Of the three that didn’t progress beyond the group stages, neither Ghana nor Cameroon won a game (although, memorably, Ghana drew with Germany). The Ivory Coast won one of theirs, beating Japan, although they lost by a single goal to both Colombia and Greece. At youth level, however, the scenario is startlingly different. Nigeria’s national under-17 side has won the under-17 World Cup a record five times. They are the current holders, having won in 2015, and, prior to that, in 2013 and 2007. They are the most successful country in the footballing world at this level, eclipsing the achievements of senior giants like Germany, Brazil, Spain and Argentina. Interestingly, Nigeria has not qualified for the latest edition of under-17 World Cup, scheduled to be played in India in October. They failed to reach the African qualifiers from which four progress to India, so will be unable to defend their title, a situation that points to poor governance and lack of continuity at federation level. www.nepadbusinessfoundation.org

While Nigeria’s (and to a lesser extent, Ghana’s) success at under-17 level is incontestable, it is fascinating to compare Africa’s success rate as a continent with what has gone on in world football at under-20 level, the next rung up the football ladder. Of 10 finalists in the last five under-20 World Cups (2007, 2009, 2011, 2013, 2015), there has been only one African appearance, Ghana, which beat Brazil on penalties at the 2009 tournament in Egypt.

“For all the predictions about the rise of Africa, that’s not likely, because of income, population and experience. Africa is nowhere on the first two and it’s not enough to go and hire a coach. Poverty stops African nations.” The relative failure to transition, reproducing under-17 success three years later, is probably attributable to a host of factors, including the fact that African players mature physically and athletically early, compared to those in the rest of the world. The figures also speak to the comparative

desperation of young African players to impress in the shop window. The under-17 World Cup is often their first opportunity to play in a major international tournament in front of scouts, European club officials and technical directors. By the time they play in under-20 tournaments three years later, they have often been placed or sometimes “parked” in Europe, at secondary or satellite clubs. A pathway to glamour and riches has been assured. Perhaps the incentive to impress isn’t quite as important three years later. And, besides, the South Americans and the Europeans, with their sophisticated club structures, have caught up. Yet are we being fair to detail a conspicuous tailing off between under-17 and under-20 level for African teams? If we widen the sample size beyond five, taking the last 10 under-20 World Cups, (1997-2015) there is greater African representation. Finalists Nigeria and Ghana were beaten by Argentina in 2005 and 2001, with Mali, Morocco, Egypt and Ghana all reaching the last four of the tournaments in the period. The wider sample size suggests that the key might be in the most recent 10-year period in the 20-year spread. Perhaps the last 10 years (2007-2015) haven’t so much witnessed an African decline as a European explosion, where coaching, club structures and the sheer weight of expertise and technical know-how have catapulted them to the forefront of the world game. Clubs like

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Image courtesy of Sakis Mitrolidis

THE OFFICIAL NEPAD YEARBOOK 2017

PAOK’s Spanish midfielder José Canas (L) vies with Qarabag’s South African forward, 19-year-old Dino Ndlovu (R), during the UEFA Europa League Group J football match.

Bayern Munich or Real Madrid have budgets more than 10 times the size of those of African federations, and you have to go back to 2002 to find a World Cup winner (Brazil) outside of Europe. Like elsewhere in the world, the last 10 football years have seen the rich getting richer. While the middling and poor might not be getting poorer per se, they are fast losing touch with the club and country superpowers of the world game. As author Simon Kuper said in promoting his and Stefan Szymanski’s 2009 bestseller, Soccernomics: “For all the predictions about the rise of Africa, that’s not likely, because of income, population and experience. Africa is nowhere on the first two and it’s not enough to go and hire a coach. Poverty stops African nations.” But let’s dig a little deeper. At the under-20 World Cup in the Netherlands in 2005, Argentina beat Nigeria 2-1 in the final, Argentina going to their fifth title. Argentina’s two goals were scored by Lionel Messi, both from the penalty spot, as he

finished with six in the competition. Chinedu Obasi – then referred to as Chinedu Ogbuke – scored for Nigeria in the final, and he finished with three goals in the competition, the two players going their separate ways after the final in Utrecht.

The figures also speak to the comparative desperation of young African players to impress in the shop window. In the 10 years after that, Messi went on to become the world’s favourite player with Barcelona and Argentina, while Obasi found himself with Lyn Oslo in Norway with his Nigerian teammate, John Obi Mikel. While at Lyn, Obasi was courted by the Norwegian authorities, who wanted him to become a

naturalised Norwegian. After considering the offer, he refused. Two seasons later, Obasi found his way to TSG 1899 Hoffenheim in Germany, where he played 92 matches across five seasons. Three years ago – while still only 27 – his career stalled at Schalke. His appearances were sporadic, and he now finds himself with Swedish club, AIK. Obasi’s appearances for Nigeria since his move to Lyn in 2005 have been limited. The Norwegian tug on his allegiances has been disruptive and nailing down places in the teams for which he’s played has been more important than turning out for his country. Such is the lot of the European-based African footballer. Once in Europe, the demands of home become difficult to honour. Travel is time-consuming and indirect; European clubs aren’t keen on giving him time off and he loses touch with the guys with whom he once played. With all of Africa’s best players playing in Britain and Europe, such little things also finally count against Africa climbing up the world ladder. www.nepad.org

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CROSS-CUTTING ISSUES

Africa’s shot at a future of digital money What can we learn from the past to take into the future of money on this continent? Raymond de Villiers considers the options.

hen it comes to money and financial services infrastructure, Africa has a relatively unique place in the global landscape. The digitisation of money is opening up new ways of writing, and righting, our relationship and story with money. The continent’s history is one that has led to a present-day reality in which we lag behind much of the developed world in terms of infrastructure and modern ways of managing and transacting with money. One of the facets of the financial technology (fintech) revolution is that it is not being developed with reliance on historical structures and ways of dealing with finance and money. Consequently, fintech provides us with an opportunity to jump straight ahead into the digital era, and not worry about the inadequacies of our past.

Colonial legacy

During the colonial era, Africa was occupied by countries that had no interest in developing a financial infrastructure on the continent. In fact, during this era the continent was seen as a financial resource for the exploitation and benefit of the financial structures of Europe. Africa was a financial resource to be mined, not a financial partner to be developed. In the post-colonial era the creaking and simplistic analogue financial infrastructure that was in place was one of the reasons why so many kleptocratic leaders were able to misappropriate the financial resources of the continent. There are a few exceptions where the new leaders invested in building a proper infrastructure, and the benefits endure today. Botswana and South Africa come to mind – despite the latter’s use of the infrastructure to finance the abuses of apartheid.

Images courtesy of Shutterstock

A new revolution

We are now engaging in a new revolution, and unlike the ones that led to the fall of colonialism and many post-colonial kleptocrats, this is a global revolution that is changing the landscape for everyone. It is the digitisation of the global economy. This global revolution offers a unique window of opportunity to Africa’s economy. Without the digital revolution, we would need to invest in developing more robust financial infrastructure and governance that is aligned with the legacy systems of the developed world. In this historical situation, by being the latecomers to the party, we are subject to the rules decided upon by the incumbent players. Fintech and the digital revolution provide us with the opportunity to get in www.nepadbusinessfoundation.org

at the beginning, and be involved in writing a new set of rules for a new financial game. But how should we engage in the process of the changing of the global financial landscape? What are some of the practical things to consider, understand and ask?

Disrupting our financial future

Money sits at the heart of much of the most personal and intimate elements of our world, and as it changes we feel those shifts very closely. The changes impact our daily transactional reality, future investment security, and even the way in which we insure ourselves and our possessions. We are at the digital juncture that coincides with the first time a person was offered coins instead of bartering for items they wanted to trade, and like that transaction changed the world millennia ago, so too are we on the threshold of social change. Banks and other financial services organisations are aware of the changes on the horizon and are trying to understand the implications for themselves and their clients. But they are seeing it more like an invasive virus rather than an opportunity for growth. Consequently, many of the players in the industry are considering how to respond to the changes, like a body’s immune system responds to foreign invaders. Weighed down by their legacy structures, they are responding slowly. This slow pace of change offers an opportunity for those who are willing and able to move more quickly and aggressively, just like a virus overwhelming a tired body weakened by the ravages of time.

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As a continent we don’t need to immediately move all of our finances into these new vehicles and options, but we do need to consider them. The potential of fintech

There are several areas of activity within the fintech sector, many of which offer unique ways to engage with the digital economy without first needing to build “old world” financial infrastructure. Mobile money One of the areas where Africa is a leading player in the fintech sector is in the field of mobile money. M-Pesa and its equivalents around the continent have radically changed the way the unbanked are able to manage and transact with their money. Cryptocurrencies Cryptocurrencies have huge value to offer to citizens of countries on the continent where economic activity is often held captive by the kleptocratic actions of a small but influential layer in society. Cryptocurrencies are independent of any national or regional economy. They offer a stability that legacy currencies will not be able to match in the digital age. Distributed ledgers Distributed ledgers, like the Blockchain, can be used to track any contract, not just financial transactions. The tracking and recording of information is instant and hyper secure, and can respond dynamically to changing circumstances. Fintech, like Blockchain, enables us to circumvent the creaking, burdensome and often broken bureaucracies across the continent. Robo-advisors Our continent suffers a lack of effective and relevant financial advice. Consequently, much free money is squandered, or poorly managed for want of proper advice and information. Our continental economy is one of the growth engines of the world, so imagine the situation in which we would find ourselves if more of our consumers were able to make informed financial decisions with the aid of artificial intelligence-enabled robo-advisors. Insurtech, peer-to-peer lending and crowdfunding are other areas of the fintech revolution that offer opportunities to launch our continental economy into digital age prosperity. How do we get from here – our current financial reality linked to the continent’s exploited past – to there – a digital future in which we are full partners and co-architects?

Evaluating our options

We need to engage our financial advisors, banks, finance ministers and others and ask them how they, and the organisations to whom they have entrusted our hard-earned finances, are going to manage this time of disruption and position themselves (and our finances) for the future. There are some questions it will be worthwhile to ask. They are formatted below for financial advisors, but can be tweaked for anyone who takes care of our money, or whose decisions affect the future of our money. Five questions for our financial stakeholders: 1. Do you know about fintech? If so, what do you know? If not, how do I move my money to someone more informed? 2. How are you responding to the opportunities for greater returns, security and flexibility that fintech offers me as a client, or citizen? 3. When can I expect an evaluation of my portfolio, investments and insurances to take advantage of new options in the market? 4. Which up-and-coming fintech innovators are you tracking, and why? 5. Is there anything you won’t show or aren’t showing me because of the disintermediation impact of fintech? Let’s look at these options and then discuss how we can use the savings obtained to benefit both of us moving forward.

Measuring our response

As a continent we don’t need to move all of our finances immediately into these new vehicles and options, but we do need to consider them. We need to evaluate the relative benefits and opportunities they offer, and then incorporate them into our financial systems. The current fintech options may carry more risk than historical ones, but in the near future, as the tide shifts, remaining in the traditional structures will be the most risky. An early partial move will make the eventual integration of the disrupted future of money a more profitable, and less painful, transition for all who have seen the shifts in the tide.

Raymond de Villiers is part of the TomorrowToday Global team and his focus is on talent leadership and trends in the new world of work.

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