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The State Of Democracy in Africa: half in Earnest, half in Jest

Posted on by Thierry SANTIME

In 2017, what can be said about the democratic situation in African States? Whereas some countries are strengthened year after year, the democratic benefits often obtained come with difficulty and lots of sacrifices. Others don’t succeed in breaking free from the long-lasting and important lingering odour of authoritarianism. Whereas we witness pacific transfers of power and democratic alternations in some countries, we still deal with political leaders who use clever processes to unduly prolong their position as heads of the state. This is the demonstration that the obsession of power remains a perennial issue in the head of lots of political authorities in Africa. It shall be first specified that the democratic health condition of African countries cannot be determined only with regard to free and transparent elections in those countries. This would be  a really minimalist and subjective conception of democracy.

The Good Performers of Democracy in Africa

Ghana and Benin experienced last year, pacific elections and a democratic alternation at the head of the state. In these two countries, the political pluralism is seen as strength and is not stifled. Trade unions are well organized and constitute pressure means against the government. Benin is also the first country which organized the first national conference on the continent in 1990. Benin is moreover the pioneer in the establishment of an independent electoral commission. Benin is worthy  of note due the fact that this country didn’t stay paralyzed in a kind of excitement following this historical role of democratic precursor, but as the analyst Constantin Somé rightly underlines in his master’s thesis: « Benin distinguishes itself by its innovation ability in all fairness and transparency, which shows progress. Refusing the usurpation of political power by any group or faction that wouldn’t originate from the electoral body choice. This is why  an independent and autonomous « a mediator »  charged with elections has been established. Benin cultivates pacifism by an increasingly healthy management of electoral competitions and a progressive institutionalization of organs charged with regulating elections and above all their independence towards the government, the parliament and public authorities ». [1]

Ghana takes second place in Africa behind Namibia and the 26th at the global level of 2016 Reporters without Borders (RSB) ranking about press freedom. [2] This prominent place in this international ranking conveys the steady challenge of guaranteeing press independence and freedom of speech and opinion prerogatives. On the political level, the popular vote is respected and the losers accept their defeat. During the presidential election of 2012, Dramani Mahama was declared the winner by the Constitutional Court against Akuffo Addo after recourse of the latter before the said court. Following this sentence, he admitted his defeat and called Mahama to congratulate him. In 2016, the outgoing president Mahama was defeated by Akuffo-Addo during the elections and admitted instantly his defeat. This gives every reason to believe that the Ghanaian democracy is constantly growing.

Still in West Africa, Senegal is also an avant-garde in terms of democracy in our continent. Even if this country has known intermittent episodes of « crisis », it always knew how to recover. The longstanding and strong tradition of activism in the political, community and trade union spheres (Ex : Collectif Y’EN A MARRE, Raddho, Forum Civil as well as other organizations of the civil society and lively and committed political parties) forms a significant safeguard against authoritarian and anti-democratic vague desires. President Wade’s defeat against his opponent Macky Sall in 2012, the constitutional referendum organized in 2016, illustrate the healthy democratic condition of this country and the desire of citizens and political leaders to preserve the Senegalese democratic ethos. The insular States that are Cape Verde and Mauritius deserve as well to be mentioned as model democracies in the continent. These countries experience a political stability which is in particular the result of an institutionalization and of the respect of democratic rules and practices that govern the public action as well as the private sphere.

In respect to South Africa, it is a democracy which works well generally. Unlike a lot of countries in our tropics, we can add to the credit of this nation that the judicial power is still independent from the executive one. As proof of this, we can quote the legal problems of president Zuma entangled in corruption and abuse of power scandals. We all recall the reports of the Republic ex mediator Thuli Madonsela who revealed in all independence –even if she suffered political pressures- the « Nkandlagate » which refers to the renovation of a private residence with public funds and also the case concerning the narrow collusion between Zuma and the wealthy Gupta family. Even if the targeted murders are plentiful in this country, we can still notice that on the institutional field, freedom of speech is guaranteed and respected, as shown by EEF (Economic freedom fighters),deputies’ severe grumblings of Julius Malema during parliamentary sessions in the presence of president Zuma.

Sao Tomé and Principe is a democratic role model in Africa. Even if this little country, not much strategic in a geographical and economical perspective arouses little interest for the international observers and analysts, the essentials of democracy are established there and have value. The same analysis can be made for Tanzania.

According to a 2014 Reporters Without Borders (RSB) rank about press freedom, Namibia is the only country in Africa to get a score more or less similar to Scandinavian countries’, performing better (19th at global level) than France (37th) and many more countries of the Old Continent. Namibia is also the first African country to organize presidential and legislative elections by electronic vote in November 2014.Botswana is also quite reputable for its democracy. This country organizes regularly free and transparent elections, has good results in respect of good governance and fight against corruption even if we cannot ignore the coercive and repressive measures taken against the San minority, also called Bushmen. In North Africa, Tunisia tries to stand out from his neighbours. Tunisia adopted a progressive constitution and organized in 2014, free and transparent elections. Trade union or civil society activism such as the UGTT (Tunisian general union of work) and the Human rights league in Tunisia (LTDH) has without a doubt been an essential contribution in this democratic burst.

The political systems resistant to the long-term establishment of democratic principles

Alongside these countries that show notable democratic profiles, there are countries that counteract the good effects and are  still hostages to authoritarian systems or insufficiently democratic. In Africa, many regimes establish “cosmetic” or facade democracies. Many regimes claim that they become infatuated with democracy fundamentals such as multi-party system, free and transparent elections, Rule of law and basic law, even though the running of their countries reflects clearly an arbitrary power, autocratic or/and corrupt…the choice is yours. The Great Lakes region of Africa (Uganda, DRC, Rwanda and Burundi) and countries such as Eritrea, Gambia, Zimbabwe, Sudan, Djibouti, Ethiopia, Egypt, to name but a few, are among many that are far from having achieved the advisable or desired standards of a democracy. It is clear that the democratic situation of these countries is not utterly uniform. Some of these countries are led by tyrannical and last-ditch regimes, frontally resistant to populations’ democratic ambitions. Whereas in other countries, despite serious democratic gaps, some basic democratic principles are relatively, sometimes according to the desires of the regime, well promoted and applied.

African populations and especially the youth are very thirsty for democracy to freely express their potentials. They don’t want be stifled anymore by authoritarian obsolete drifts. Lately, we saw how Yahya Jammeh’s regime in Gambia attempted to carry out an illegitimate takeover in order to stay in power despite his defeat. This megalomania got fortunately what it deserved: a failure. The African Union as well as the sub regional organizations must assume an active role to stop the authoritarian momentums. It will be good when African democracy rises from the ashes and moves forward to progress!

 

[1] Somé, Constantin (2009, pp.31-32): “Pluralisme socio-ethnique et démocratie : cas du Bénin », a dissertation made to achieve a Master in political science at Quebec University in Montreal.

 

[2] RSF rank: https://rsf.org/fr/classement

Translated by

Corinne Espartero

 

FinTechs in Africa: Multifaceted Tools to Promote Financial Inclusion

Posted on by Pauline Deschryver

Mina lives in Sahuyé, 70 km away from Abidjan. Since 2008, she has used a mobile money account which she uses to send money to her aunt in Ouagadougou and to save a few bucks each month. Along with 100 million other people, Mina is now able to have access to basic financial services, which she did not have before. To what extent do FinTechs allow financial inclusion on the continent? Do they indeed offer financial services to all, from the Cape to Algier, from Dinga in Central African Republic and to Gondere in Ethiopia?. FinTechs are not a unique and global solution for Africa – it would be reductive to say that they are. They nevertheless offer a relevant response to daily challenges, as well as innovations that change profoundly the global financial ecosystem.

The singular breakthrough of FinTechs in Africa

Africa positions itself as new territory for financial services. Africa is one of, if not the only continent to have leaped directly to dematerialized financial services, without having to go neither through permanent agencies nor through large-scale landlines. This particularity can be explained through unpropitious access to the classic financial offer. Formal services are provided by agencies concentrated in urban areas, while the rural areas represent 2/3 of the African population and with high interest rates and commissions (around 10.07% in the ECOWAS region for example), one can then easily explain why people resort to inexpensive financial technologies.

This has then promoted a wider financial inclusion by granting access to basic financial services to a larger number of people and to marginalized communities. While the percentage of unbanked populations is 66% in Africa, with noticeable differences between countries, A resort to FinTechs is bringing about major change with 12% of Africans being able to access to financial services via FinTechs.However, it is clear that mobile money is only a solution among many others that are available to solve the problem. There are also money transfers, banking services, investment and wealth management operations, etc. This diversity is reflected in the diversity of African markets themselves, of their maturity and their needs. If some options, especially mobile money, are indeed fruitful in one country they may not make sense in another where a more or less sophisticated option would be more useful. Furthermore, some countries' profiles facilitate the deployment of one solution, where elsewhere the same solution would only respond partially or even not at all to increasing access to financial services. M'Pesa's success in Kenya, based on a demand-driven solution, has not been duplicated in Tanzania or Nigeria. These failures are linked to the diversity of ecosystems, highlighting the importance of adopting a plural approach to financial inclusion.

 

Challenges to FinTechs face and Solutions

Mobile Money today is the most developed and successful platform for financial inclusion in Africa. It positions itself as a gateway for a variety of services for its users. However, many issues must be solved to truly provide inclusive access, that is, financial service accessible to all, including those at the « bottom of the pyramid » Financial inclusion of people at the bottom of the pyramid remains indeed challenging, with or without FinTechs. This population, who live below the poverty line, carry out small operations, not above 2$ a day. Yet the agent-based model in the mobile banking system, whose revenue is 100% dependent on transactions, needs a certain total amount to become profitable. Considering 1$-operations conducted by an agent who spends monthly between 150 and 200$ and takes a percentage per transaction, the agent should register an amount of 20.000$ to get to the break-even point, which amounts to 2 transactions per minute, 8 hours a day, 7/7… Moreover, bragging about mobile penetration figures in Africa should not obliterate some realities. Mobile user rates in some African countries do not exceed 30% – on 100 people, only 30 in Burundi and 6 in Eritrea use a mobile phone. Digital data are also coming short. According to the telecoms company Tigo, only 20% of its clients / customers throughout the continent use data. Even if innovative financial services are multiplying, access to basic services is not yet guaranteed on the continent.

Other challenges remain to be overcome in order to  increase FinTechs ‘ coverage and ensure equal access to all, such as interoperability, which hinders domestic and international money transfers and efforts regarding financial education and awareness. While Rwanda can be cited as an example in terms of financial education, other countries like Nigeria do not promote FinTechs culture. For example, the Rwandan government has supported the implementation of digital platforms for basic services (Irembo) : payment for electricity bills, administrative procedures, etc. On the contrary, the economy in Nigeria is mostly based on liquidity with street agents, called Esusu or Ajo, operating day-to-day informally.

 

FinTechs potential provide a visionary ambition for Africa

If these limits / boundaries must be solved, the development of FinTechs paved the way for major progress towards financial inclusion. Financial inclusion is not limited to payments nonetheless. This « frugal innovation » deploys a wide range of financial services made accessible to most. Among the proposed services, there are of course the classic banking services, offering the possibility to those excluded from the banking system to take out a loan (as with Aire or Kreditech), insurance and micro insurance, investment, payment and online transfer services. Startups like Afrimarket, Azim or Mergims facilitate money or goods transfers safely at reduced rates. WeCashup and Dopay offer the possibility to pay online and/or get paid electronically, without any risk of corruption or security breach.

Moreover, these services not only increase financial inclusion, but also increase social inclusion with products facilitating access to basic services in health and education. For example, the Senegalese FinTech Bouquet Santé relies on the diaspora to solve some deficiencies in the national health system.These initiatives are supported by a range of elements facilitating the deployment  of digital solutions. First, the simplicity of the technology most frequently used, the USSD, as well as the dynamism of this sector which constantly offers innovations improving this technology and new applications. Second, the low cost of mobile phones, which promotes an easy and increasing penetration. Third, the ability to set up an extended distribution network, even in rural areas, throughout an agent-based system for mobile money. Finally, the increasing trend for players to seize this opportunity and to develop partnerships (between operators, banks, cooperatives, microfinance institutions) and facilitate the growth of their services with an effort in training and raising awareness.

So far, FinTechs have achieved a lot in increasing access to financial services. Today, the coverage of mobile money services in Africa exceeds 80%. In Kenya, access to banking services has increased by 58% since 2007, the year when the national unicorn M'Pesa was launched. It is undeniable that access to basic services has been reinforced on the continent with 15.4% of the total value of transactions in 2014 regarding bill payments and trade transactions.The growing access and participation in the financial system is not an end in itself, but a means to an end. They offer major direct and indirect advantages. At the heart of the system, they allow to reduce costs for trans-border funds transfers and for financial services by 80-90%, allowing companies to offer their services to low-income customers while securing their profitability. For users, they decrease the insecurity that goes with cash and provide the possibility to smooth their consumption, to manage risks linked to financial shocks by saving money, and step by step / little by little, to invest in education and health. For companies, facilitating access to credit by creating credit history allows them to grow and create jobs.

Last but not least, the growing interoperability and openness promoted by African regional integration offer exciting perspectives. Beyond mobile money, the bitcoin and block chains are a work in progress in Africa; some dare say that they could bear a revolution, the Impala Revolution. The block chain, which allows for the establishment of credit history, to check and/or create a basic financial identity may even be the next innovative leverage for financial inclusion and a tool for Africa to pioneer FinTechs at global level. To conclude, the possibility of providing larger access to financial services implies proposing tailored solutions covering the full range of needs on the continent, even adopting a local perspective because what is true in the capital city is not true anymore in a village. As a result, it is key not to believe in a single model capable of solving Africa's challenges as a single and homogenous entity. Finally, the key issue is to maintain the entrepreneurial vitality that can be observed for now in the FinTech sector.

Translated by:

Manon Richert

Reflections: From the Misery of Lucid people in a Simple World

Posted on by Philippe Ngalla-Ngoïe

lucides les deux fridas"And no doubt our time … prefers the image to the thing, the copy to the original, representation to reality, appearance to being … What is sacred to him, Illusion, but what is profane is the truth. Better still, the sacred grows in his eyes as the truth diminishes and the illusion grows, so that the height of illusion is also for him the height of the sacred.’’

Feuerbach, (Preface to the second edition of The Essence of Christianity).  

The propensity not to be interested in what really makes sense, which is characteristic of our century and many others, however, which is stronger in ours, diverts our attention from the questions we should ask ourselves in order to guarantee our progress in the long march of humanity. Yet to believe that man, although rational, self-conscious and present to the world, spontaneously asks questions about what is the basis of his existence, is only an additional illusion. To interrogate oneself in this way presupposes the habit of thinking, thinking hard.Now thought, which only requires time and availability of the mind, is made more and more difficult. The conditions of its exercise at least, more economic, and therefore social conditions, influencing production and dissemination of culture, promote cultural products, which, far from questioning us sternly and illustrating our troubled situation, like the works of the Greek tragedians and their successors (Shakespeare, Corneille, Racine), divert major concerns so that it is even sacrilegious to pay attention to it. Distracted by stupidity and inconsistency, such is the man of our times. Projected in a fictitious world free from the difficult condition of man, the consumer, whose only concern is the passive use of products, has replaced the citizen who, because he is a responsible actor, endeavours to understand his society and participate in its progress.

Spared from the frightful wars that seventy years ago were raging on almost every generation, his civil and political freedoms guaranteed by the victory of liberal democracy, robbed of individualism, spared from harsh material conditions through unbridled growth for three decades, The West, a longtime defender of the greatness of man and the fundamental values ​​of the latter (despite the very serious aberrations due to the belief in the inferiority of other races), gives signs of lassitude. The West is no longer the irreverent and fiery thought that, at the cost of bitter fighting, shakes up every idea of ​​enslavement, domination, in short, irrational behaviour. The obscurantism and the tutelage of all kinds conquered by audacious thought have been replaced by another flaw, one of the crux of his economic philosophy: the desire for simplification.

Yet, simplify, simplify! The condition of man, though modern, will remain complex and predominantly tragic! The need to think, to understand will never be replaced by technology and culture. Those who propose the dangerous goals of sparing difficulties without which man does not actualise, are merely quixotic: they take windmills for giants. This loss of sense of reality to shut oneself up in the ideal decreases the ability to face reality, and diminishes the capacity to negotiate in the face of destiny, but rather exposes it to being subjected to it. Indeed, it is not by dodging reality that one gets in front of it and that one finds a modus vivendi, but by getting involved with it.

Merely thinking in a context in which everything is organized to hold reflection at a distance, supposes, when one is not born a philosopher, that awareness has been marked by a phenomenon or an event which refers so deeply into itself. That, confronted with this self, that is questioned and which in turn questions us, births an inner dialogue whose synthesis will form our own apprehension of reality, and therefore our thought. The impressions the world makes on us are reflected upon our consciousness, and from this relation arises our own vision. It is only through the friction of the ego with phenomena or reality that we are able to react. Thus one becomes aware of oneself and hence, the fact that a real relation to the world requires the prior analysis of the latter by self. It is thanks to the frequent trade and practice of thought that one confronts reality, that it is decomposed because thought (logein) promotes an understanding of what binds phenomena to one another. And they are said to be intelligent those who, by by reason of their clairvoyance, readily bind the facts among themselves. The habit of observation, of reflection, of concern for objectivity, truth and rationality, which therefore characterises souls marked by movement and courage to see and accept reality as it is, are melted like a nugget in the crucible of lucidity.

Unlike the romantics who live according to their feelings and their imagination, animated by the hubris. These are characters of tragedies carried to the height and crash in the manifestation of their person, which, accordingly as their extra energy and disorder are tame or not, produce either the very great, the very beautiful, or the pitiful, the lucid.Armed with that light that makes them perspicacious, having the passion of the real to which they have no desire to escape. They accept it because they do not reinvent it, but only modify it by confrontation. Such an ability to analyze phenomena in the details that underlie the relevance of views; the security of judgment assured by prudence and doubt, which refuse the ease of appearances, produce strangeness that always ends up disturbing others. As most humans, driven by their moods, passions, and interests, rather than by sacred reason, do not forget the characteristic, certainly restrictive, but most important, of humans.

This is the beginning of the misery of the lucid. Having abhorred the natural propensity, which marks the history of humanity, to be led by group, national, regional, partisan, religious affinities and any reconciliation based on something other than objective truth, they defeat emotional ties if necessary. They brave the authorities when proven unjust and violate the laws. One would think of such heartless people as they reason and analyse perpetually; who are, on the contrary, when one looks at them well, people of great sensitivity, but who shun all sensibility.

Translated by:

Adaeze Akaduchieme

 

The private sector: A strong vector for Morocco’s economic integration in Africa

Posted on by Hamza Alami

During the 27th African Union summit in Kigali of 18th July 2016,King Mohammed VI declared that ‘’Morocco is already the second investor in Africa but aims to become the Continent’s foremost investor very soon”. Indeed, between 2003 and 2013, more than 1.5 billion dollars have been invested by Moroccan companies in West and Central Africa. This only represents half of the direct foreign investments launched by Morocco, in the last few years.

In the early 2000’s, many Moroccan companies of the private sector started businesses in Africa in a wide range of sectors. For example, bank branches of BCP (Banque Centrale Populaire), BMCE Bank of Africa and Attijariwafa Bank have been opened in about fifteen African countries. More so, the insurance company Saham has also been planted in about twenty countries since the takeover of the Nigerian company Continental Reinsurance in 2015.  In the telecommunications sector, Maroc Telecom increased its influence on the continent through the takeover of 6 African branches from their Emirati shareholder Etisalat.

Moreover, many holdings such as Ynna Holding and the National Investment Company through its mining branch Managem, have operations in the African continent.  In the property business, the company named Alliances Développement Immobilier, has signed partnership agreements with the Cameroonian and Ivorian governments in order to build thousands of council housing. The company, Palmeraie Développement, has launched building projects in Gabon, Ivory coast and recently in Rwanda. Attracted by the important investments in infrastructure (highways, bridges, ports, council housings, universities, etc.), the Addoha group pitched its tent on the continent too via two of its companies: Addoha and CIMAF (Ciments de l’Afrique). They have been recently joined by LMHA (LafargeHolcim Maroc Afrique), a company held jointly by LafargeHolcim and the national investment company which is a Royal Holding.

So, the private sector plays a key role in the economic integration process of the continent. The mobilization of private investments is essential to economic integration as it helps to create jobs, improve productivity and increase exports. The economic integration between Morocco and other African countries put in place by the King Mohammed VI invites the companies of the Kingdom to share their expertise and to strengthen their partnership relations with the African countries.

The Moroccan private sector will now play an important role in skill transfer, while enhancing its production capacity. It will then improve its competitiveness on an international level. Concerning inter-regional trade, it will boost the commercial exchanges, which are still weak and reduce the structural deficit of the Moroccan trade balance. The economic potential is huge. The Economic Community Of West African States (ECOWAS) and The Economic Community of Central African States (ECCAS) have altogether more than 300 million consumers, that is to say a market which is  nine times the size of the Moroccan population.

The Role of Economic-stimulus Groups in the Reinforcement of Economic bilateral relations

Whenever King Mohammed VI makes an official visit to  a Sub-Saharan country, his country Morocco makes advantageous agreements that includes customs facilities and tax concessions. The aim is to promote commercial exchanges and to develop intra-African investments. Recently, economic relations between the Moroccan Kingdom and other African countries are ruled by a legal frame of more than 500 cooperative agreements. This is so important to the Moroccan Kingdom that the King Mohammed VI called a meeting of his government, during the first ambassador conference that took place in August 2013, to work with the different economic operators from the public and the private sectors in order to grab investment opportunities in countries having strong economic potentialities. Thus, the last trips of King Mohammed VI allowed mainly to create economic-stimulus groups on the between Morocco-Senegal and Ivory Coast. These groups, co-chaired by the foreign ministers and the presidents of employers of each country, aim to promote partnerships between the private sectors and to boost commercial trade and investments [1].

With a total population of 22 million inhabitants, Ivory Coast is the first economy in the West African Economic and Monetary Union (UEMOA) area and is also the second economic power in the ECOWAS area. Also, the investment options are numerous: industry, infrastructure, construction industry, mines, energy, and so on. Senegal is also not left behind. There are so many reasons that encourage investment in the country. These include political stability, economic opportunities and new infrastructures. A guarantee is also given to the Moroccan investors through notably mutual protection and promotion agreements of investments and non-dual taxation agreements. The Memorandum of Understanding concerning the creation of a joint venture between the Moroccan group, La Voie Express and the Senegalese company Tex Courrier signed on 9th  November 2015 at the ceremony to present the work of the Moroccan-Senegalese EIG – chaired by King Mohammed VI and President Macky Sall, is a good example of the instrument's driving role in boosting private-private partnership[2].

Exchanges between the Moroccan kingdom and the African continent have increased clearly during the last decade. Between 2004 and 2014, global exchanges have quadrupled, going from 1 billion dollars to 4.4 billion dollars. The study '' Structure of trade between Morocco and Africa: An analysis of trade specialization '' produced by OCP Policy Center in July 2016 shows that West Africa remains the first destination of Moroccan exports[3]. This region has indeed welcomed around 50.08% of exportations in 2014, the equivalent of 1.04 billion dollars[4]. However, an analysis of the export structure reveals that Moroccan exports to the other African countries are dominated by intensive goods in raw materials and natural resources[5]. A strong potential is to be developed to boost more Moroccan exports. The Directorate of Studies and Financial Forecasts (DEPF), attached to the Moroccan Ministry of Economy and Finance, stressed in its study "Morocco-Africa Relations: the ambition of a new border" that "Moroccan companies targeting the African market should focus on a penetration strategy based on cost considerations from targeted sectorial choices, in the light of the current and, above all, future needs of African populations. Demographic growth, the rise of the middle class and the rampant urbanization of the continent are all factors to be taken into consideration, in order to anticipate the rising configuration of these emerging economies ".

In this sense, Moroccan exporter companies had better anticipate the dynamics of economic, social and cultural transformations that are on the horizon in Sub-Saharan Africa by setting up adaptation strategies in order to capture a higher market share and catch up their delay in this fast-growing region.

Economic Action at the Heart of Morocco's Integration Strategy in Africa

Economic integration is important for both Morocco and the African continent.  The recent trips of King Mohammed VI to Rwanda, Tanzania, Senegal, Ethiopia, Madagascar and Nigeria is designed to reinforce this notion. The Eastern part of Africa is the fastest growing region in Africa. Added to that, its economic potential  is still unexploited. If Morocco wants to reinforce its influence on the African continent, a number of options have to be investigated. First, the internationalization of Moroccan companies and their investment in African countries have to be encouraged by putting at their disposal a real database on the specificities and the potential of each economy. Second, export flows to African countries have to be fostered. Both public and private actors are involved in the promotion of Moroccan products. The new Moroccan agency for the development of Investment and Export, as well as the ASMEX (Moroccan Association of Exporters), will have to conduct trade missions to various African deposits and offer national companies the necessary support to develop their exports and / or carry out their development project in the continent. Finally, strengthening trade integration with the various African countries is important. The consumer market is growing with the emergence of a middle class more interested in manufactured goods with a high added value. The negotiation of advanced partnerships with ECOWAS and CEMAC, including the creation of free trade areas, is in turn an ideal gateway to this large market of more than 300 million people.

In the era of globalization and fierce international competition, the growing interest of emerging countries towards the African continent is marked by rivalries: China, India, France, Japan or Germany have all unveiled their African ambitions. Facing this international context, Moroccan diplomacy is more ambitious and aggressive. King Mohammed VI declared at the opening of the Moroccan-Ivorian Forum the 24th of February 2014: "Diplomatic relations are at the heart of our interactions. But, thanks to the profound changes that the world is undergoing, their mechanisms, their scope and even their place in the architecture of international relations are forced to adapt to new realities.”

In the wake of this , Morocco would win by organizing a Moroccan-African business summit. The latter would be a continuation of the Africa Action Summit and would focus on the economic development potential of the continent. The Summit would bring together governments, businesses, the public and private sectors, around the economic, social and human development of Africa. The challenge is to reaffirm the strategy of influence of Morocco on the continent.

Translated by:

Pape Djibril Diagne

[1] Economic impetus groups include 10 sectors identified as priorities: banking-finance-insurance, agri-business-fisheries, property-infrastructure, tourism, renewable energy-energy, transport- Logistics, industry-distribution, digital economy, social and solidarity-craft economy, human capital-training and entrepreneurship

[2] Christophe Sidiguitiebe, Four new agreements signed between Morocco and Senegal, Telquel.ma, 10.11.2016: www.telquel.ma/2016/11/10/quatre-nouveaux-accords-signes-maroc-senegal_1523082

[3] Four of Africa's top five trading partners (Algeria, Mauritania, Senegal, Côte d'Ivoire and Nigeria) are part of West Africa.

[4] With regard to imports, the weight of North Africa accounted for nearly all Moroccan imports, with a share of 82% in 2014 compared with 53% in 2004, mainly by importing natural gas, manufactured gas, petroleum and related products.

[5] Moroccan exports consist mainly of food and living animals (25%), machinery and transport equipment (18.5%), chemicals and related products (18.1%), manufactured goods 15.9%) and mineral fuels, lubricants and related products (11.7%).

 

The Iroko project: The Crowd lending Pioneer in West Africa

Posted on by Rubrique Entrepreneuriat

The Iroko project is the first crowdlending platform in West Africa. The objective is to allow individuals to lend their savings directly to small and medium-sized companies in West Africa, for a fixed term and interest rate.

The project:

The project was created by two former students of Paris HEC (who graduated in June 2016), passionate about the dynamics and stakes that cross the African continent, especially West Africa.

Their work is based on a threefold observation: in the coming decades, the creation of millions of jobs represents a major challenge of the region, but SME’s are the main levers of job creation. However, these companies often lack the necessary funds for their development. This is the famous “missing middle” or “missing link” of financing. Since September 2015, they have been working on the opportunity of crowdfunding for small and medium businesses from West Africa and they conducted a feasibility study in April/May 2016 in Senegal and Ivory Coast. This study led to partnerships notably with Cofina group and Lendopolis (KissKissBankBank Group).

There were 3 objectives: to develop a legal operational model in the West Arican legal framework (there is no regulation on crowdlending in West Africa yet), to gauge the SMB and lender's interest in the service and to create strategic partnerships with local institutions. Then, they  presented and published their report (which is available on their website) and went back in October to start their activity.

The aim of the pilot stage (october to march) is to realize the three first lendings of about 30 millions CFA francs each. The first collection will start after the first project presentation during the launching event in Dakar on November 15th. They also joined the Cofina Group business incubator in Dakar.

Function and business model

The pivot of their model is their partnerships with agencies that assist SME’s, such as the Entreprise Upgrading Office or the ADEPME in Senegal. Every small and medium business funded is supported and  tutored by these agencies for at least a year.  These provide quantitative and qualitative information on the companies they assist and act as trusted third parties. The applications transmitted by these agencies are then reviewed by the Iroko Project team, and for those selected, presented to the lender community. The needs of the projects funded, vary between 10 and 100 million CFA francs. If the needs are more substantial, they can be complemented with a traditional bank loan. Once the project is presented online, lenders choose individually if they want to contribute, depending on the quantitative and qualitative information available on the company and its team. They also decide the amount they want to lend: between 100 000 and 2 million CFA francs. During this phase, lenders have the possibility to exchange with the manager and ask questions about the company activity. Data on social and environmental impacts are also highlighted, following the setting up of credit are also highlighted. These include: number of jobs created, reduction in the use of fossil energy, impact on local products etc. Once the collection is completed, the credit is disbursed and the reimbursements start. The proposed remuneration to lenders equals the credit interest rate and is around 9 to 14% each year.

The service proposes a complementary source of financing and a performing savings product, affordable for individuals. Once the credits have been set up, the Iroko project teams are in charge of following up the reimbursements and the possible recovery in partnership with the agencies. Concerning the default risk, as a last resort, it is supported by the lenders who are actually paid for the risk taken.

The economic model relies on the amount drawn during the credit setup, incurred by the company at a rate of 4,5 % of the total credit amount.For the lenders, the service is free and joining the community is very simple. Iroko project is open to every resident having a bank account in CFA francs. The only documents required are an ID and and bank transfer information.

Conclusion

The goal is to create a dynamic network where lenders and borrowers coordinate their funds, competence and know-how to encourage the development of the West African economic structure. The team is aware that their service targets the West-African privileged part of the population who have a strong savings capacity.   Developing innovative and popular payments channels such as mobile money is a priority.  However, these solutions are still very expensive and very difficult to bear by the parties at stake (SMB, lenders, Iroko Project).

Finally, the team hopes that their initiative helps the implementation of a specific regulation for crowd lending in this region. That is the reason why they discuss with the Senegalese authorities and the UEMOA zone to support the reflexion in that way.

The official project launching is scheduled on November 15th 2016 in Dakar.

You can contact the Iroko project team at contact@iroko-project or on Facebook and Twitter

Translated by

Anne-Sophie Cadet

Pateh Sabally’s Death: What is the Point in Rescuing a Mere Migrant?

Posted on by Hamidou ANNE

Pateh Sabally, a 22 year-old Gambian refugee, died in the Grand Canal of Venice on Saturday 21st January. After the death of the Nigerian Emmanuel Chidi in July 2016 beaten by racists in Fermo, Italy has again become the theatre for another barbaric racist act.Pateh Sabally's death conveys something about our time; it demonstrates what Hannah Arendt called “the banality of evil”. In 2017, a young man drowned while bystanders and tourists were laughing. They let him die while hurling racist insults at him.  No one attempted to rescue him, but some picked up their phone to shoot the scene, you know, to “be there when it happens”. Inhumanity has reached a scary dimension through the mediation of cruelty.It is a tragic spectacle that Europe shows. The same Europe which keeps claiming to be a model of democracy, freedom and respect for human dignity all the day long. The Old Continent keeps lecturing Africa on morality about election and the conflicts which wreck our countries. But the way it treats migrants and refugees who are running away from atrocities, is nothing but degrading.

What is the point of rescuing a mere migrant?

Those Venetians and those tourists would have jumped to rescue anything, even a camera. Thus, their guilty behaviour results from the persistence, in Europe, of a certain discourse drummed by the press on the danger that others embody these include migrants, refugee or a simple foreigner. There are plenty of qualifiers used to refer to these people and they all show total disregard, these include  “Negro”, “invader”, “world’s misery”, “job thieves” …

Media channels have reported Pateh Sabally’s tragedy by invoking the indifference in which his death occurred. The expression is false. The young man died under the conscious sniggering of people which are nothing but indifferent. He was only a migrant, what was the point in rescuing him? They said to themselves! Others are going to die, regretfully. Just have a look at the debates in Europe: a politician says such outrageous things about the foreigners, refugees, Muslims and still enjoys a surge in popularity. Elsewhere, physical and symbolic barriers are being erected against those who were not born in the right country or who don’t have the right religious persuasion.

A wave of xenophobia is sweeping across the Western World that reminds us of the darkest days of our history. Tempers will not be calmed by the decree signed on January, 27, by Donald Trump, which bans the USA entrance for nationals from seven countries, including three Africans one : Somalia, Libya, Sudan.

Nothing can foretell when the horror cycle will end. On the contrary, we get caught by the verbal and murderous escalation which is the underlying cause of Emmanuel Chidi and Pateh Sabally’s death, who were trying to escape Boko Haram and Yahya Jammeh’s dark regime, respectively. Their death will be a burden on the mind of all those who, each day, point finger at others as the problem. That is the shame of Europe and the executioner of our young exiles.

Translated by:

Mame Thiaba Diagne

 

Achille Mbembe, a cure to  the ‘fetishism of  identity’

Posted on by Adrien DE CALAN

Achille MbembeAt about 60 years old, the Cameroonian scholar Achille Mbembe devoted himself to an ambitious as well as risky exercise. He looks at the world as it is, where self-hatred has been transformed into a rejection of others, “Scapegoats have become objects  such as  foreigners, Muslims,  the ‘veiled woman’, the refugees, the Jews or black people”. According to him, a real desire of Apartheid is growing in contemporary societies, which is deeply-rooted in the establishment of liberal democracies and their link to colonialism.

Mbembe painstakingly dismantles the racist  and deep-seated fears and tries to bring a  ‘treatment’  to them. Inspired by the work of the Martinican psychiatrist Frantz Fanon , in  his treatment measures in Algeria in the 1950s and his heated writings against colonialism. In this article he speaks to ADI, about his last essay Politics of enmity, published in March 2016. He presented the latter at a grand colloquium in Dakar and Saint-Louis in Senegal ( from the 27th to the 31st of October, 2016). This was a gathering of about twenty African intellectuals who are at the heart of this revival of the African thinking.

You wrote that the days that we live in are characterized by the rejection of others and for the spread of the ‘state of exception’. Furthermore, what does the “politics of enmity” that you speak about stand for? This is of course, what inspired the title of your book

In this project, I meant to take a snapshot of the world. This snapshot is characterized by the propensity to violence and the uprising of war-like instincts. Since the terrorist attacks of September 2001, in the United States, the ‘state of exception’ has become more or less the rule and is connected to the quest and the obsession with the enemy. For us, citizens of the Global South, I wanted to retrace the historical origins of this hostility; to take a look at those moments when politics becomes a vector of  hostility than one that links individuals.  

In your essay, you explain that this violence has long existed in liberal democracies. It also existed in colonial plantations or  penal colonies, far from  the eyes of the world…

The point was to rethink democracy as the ultimate form of human government. More so, a historical rediscovery of modern democracy, the liberal form particularly, enables us highlight that the system was established as a democracy for like-minded people. There is no democracy except the one which gathers like-minded people. This was the case during the long period of slave trade in the United States and in Europe during the colonial period.  Historically, democracies always needed a neutral place beyond their borders where they could accept violence without any boundaries against those who were not considered as part of their clan. The colonial period embodied this moment that I speak about. 

Why did you focus your analysis on liberal democracies? Isn’t this ‘enmity’ a distinctive feature of all states, of every national community which is founded on relationships?

Indeed, this is the peculiarity of the state, and mostly the nation- state, which as we can see with its name, is a state for nationals-for those whom we think are like us. And yet, I am particularly interested in liberal democracies, because, all things considered, I can’t see any hope beyond democracy. But, in the last quarter of the 20th century, the democracy, that we thought was going to triumph over all other political approaches fell apart and underwent a process of reversal. There has been an unprecedented opposition between capitalism and democracy. I do not think that it is possible for  a certain form of capitalism, especially financial capitalism, to co-exist with democracy. I join my voice to recent criticisms of democracy- that it has reached the end of its lifespan. We need to reinvent something else, or at least think about a possible way to revive democracy so as to bring solutions to our problems and save us from this savage world, with extreme and irrational expressions of violence, like terrorism . Although, the fight against terrorism is also an embodiment of violence.

You made reference to Franz Fanon’s ‘pharmaceutical treatment’. To what extent is his method in Algeria the model of an ideal cure?

Fanon is quite a dangerous author… I refer to him because he understood well, maybe even better than any theorist of the anticolonial struggle, how violence was both a remedy and a poison. This reference to Fanon does not aim to present him as a master with the suitable solutions for our current stalemates. I talk about him because he really emphasizes the tensions – unsolvable for most of them –  that we face.

We can say that Fanon dealt with violence and radicalism without inhibition. What would be the practical applications today?

Violence in Fanon’s work  plays a cathartic role, meaning that it enables the colonized subject to get out of his present situation. Paraphrasing Fanon, the oppressed needs to come to the realization that ‘the blood  that runs in the settler’s veins is the same colour as his’- that there is an essential and fundamental similarity among everybody. Violence wakes the oppressed from his slumber. Furthermore, violence brings us back to earth. Its is like an earthquake, which destroys the colonial and racist system and based on those ruins, we might imagine a new order.

But the mythological dimension of violence is not really what I am interested in, but the fact that Fanon who advocates violence, is very attached to what I would call the politics of treatment. It is this same Fanon, who studies the psychological disorder that the policeman who tortures Algerian nationalists has to go through. From an intellectual point of view, I am interested in the double-dialectic of violence and care.   

In order to fight this enmity, you propose the ethics of a traveler. What is this about?

Behind the idea of a traveller is the huge cosmological reflection on “who are we?” and how can we define the essence of human life in relation to the long history of the universe where the human species represents a small fraction- a species amongst others. It seems to me that one of the main characteristics of humans is our temporal being on earth as travellers. We don’t choose our place of birth, that is a choice made by others. What we choose is the type of experiences we have on our journey and what we do with those experiences.

If we really take that image of the traveller seriously, it would open us to new horizons on the question of identity and fetishism of identity. That image would also enable us think differently on the form of the nation-state, which has become a prison. In an era where mobility speeds up everything, it would most importantly, enable us reflect differently on the issue of migrants, of the person who is passing-by, and the types of laws created to face those processes which are sources of fear.

Isn’t the image of the traveller only for those who have the opportunity to travel and to meet others?

Not at all. If we consider people in motion, refugees, people who are forced to leave their place of birth and take risky paths without any guarantee of destination- their numbers are constantly on the rise. Mobility has become the most important condition of survival for a large number of human beings. The tragedy today is being stuck and not being able to move on. Millions of people are facing that tragedy. Governing this type of mobility is probably one of the biggest challenges of the 21st century. If we do not confront and find human solutions to this challenge, we will end up to multiplying the tragedies that we could have avoided. We need to take seriously this image of the traveller and temporal passage as the foundation of our human essence.  

The tone of your book is a worried one. Isn’t the intellectual situation in Africa reassuring?

Yes, absolutely. There is an intellectual and artistic effervescence in several disciplines, from Literature to Dance including the Visual Arts and Philosophical Critique. Indeed, there is a huge movement, which I think will be on the rise over the next decades from people in Africa to those in the African Diaspora. The place of birth of this effervescence is movement and mobility.  This reflection on mobility is what I call Afropolitan.

Further reading – Achille Mbembe, Politics of enmity, Ed. La Découverte, March 2016.


Translated by Laurence Mondésir

Original article by Adrien de Calan

ICT and sustainable development in Africa

Posted on by Rafaela ESSAMBA

Throughout the centuries, technological innovations have shaped relations between individuals, as well as interactions between these individuals and their environment. One can think for example of printing, first used by the Chinese (since the 2nd century A.D.) and then sophisticated and generalized by Gutenberg.

It has been said that printing strongly contributed to the diffusion of the thinking and ideas since the Renaissance, consequently revolutionising the transmission of information and knowledge between individuals. The development of the internet since  the early 2000s significantly modified our ways of life  and paved the way to new tools and models of communication. Through this New Information and Communication Technologies (NICT), the world became a "global Village"- globalization as they said!

By revolutionising our surroundings, living environments, our thinking schemes, in a nutshell our daily lives, ICT has  reshaped from top to bottom  the structure of our societies.  At the heart of these transformations, technological innovations brings answers to social, economical and environmental issues. This observation is even more emphasized in African countries-the boom of telecommunication has created ideal conditions for local apps and softwares to develop.

The most striking example is the rise of the mobile telephon in Sub-saharan Africa. The mobile is currently the best way of accessing the internet. According to a study published in 2013 by the GSM Association, the number of mobile subscribers in this area of the world has increased by 18% per year between 2007 and 2012. In Africa, most of the mobile phones are sold with an Android system. This is an operating system on which it is very easy to create mobile applications/softwares. It also enables the creation of synergies between different sectors and contributes to social innovation (e-health, e-learning, and etc), economical innovation (mobile banking, urban waste management, and etc).

First restricted to private use, today ICT is acclaimed in the formal and institutional sphere.It is seen as a real tool for development, for socio-economic growth and for populations looking for emerge in the global economy. These technological innovations also impact in different ways to African GDPs. According to a study of the McKinsey Global Institute (MGC) made available to the public in November 2015, the internet contributes 3.3% to the GPD of Senegal ; 2.9% to the GPD of Kenya ; 2.3% to the GPD of Morroco and 1.2% to the GPD of South Africa [2].

So it is not surprising that ICT is directly mentioned in 4 out of the 17 Sustainable Development Goals (SDGs) adopted by the UN in September 2015. As a catalyst for education, gender equality [3], or driving force of the construction of resilient infrastructures for a sustainable industrialization [4] profitable for all, it is largely admitted that ICT play a major role in the emergence of Africa. This article revisit the role that ICT can play in the emergence of Africa as well as the way they will contribute to inclusive growth on the continent.

1. ICT as catalyst of development in Africa

The interest of ICT in Africa lies on their utilities and the services they allow to develop : they're no longer only used as simple communication materials (private or professional), but rather as real tools of socio-economic development. The help of ICT in the continent went from "leisure use" to "therapeutic use" : they bring solutions to the populations regarding their basic needs : education, health, transportation, nutrition, access to energy and drinkable water, and so on. [5] But this wasn't always like this ; for a very long time, " ICT-scepticals" saw the emergence of these new means of communication as the wood for the trees : a lure that distract the attention away from the "real" issues of Africa : famine, malnutrition, illiteracy, epidemics and pandemics, wars, natural disasters and other calamities attached to the representation that some people (and some still have today!) had of the continent. But isn't time the best ally? On this subject, time has ruled in favour of the "ICT-optimisitcs". Indeed, for a decade, an abundance of mobile applications, developed by innovative start-ups has proved that ICT aren't unnecessary, on the contrary they are one of the solutions to resolve "real" issues african countries are facing.

The most well-known are Obami in South Africa (online plateform of free courses and educative videos), Gifted Mom in Cameroon (mothers and infants healthcare), M-Pesa in Kenya (mobile banking), Jumia (e-shopping), W Afate in Togo (3D printer made from electronical waste), M-Louma in Senegal (agricultural stock exchange). Every bold initiative illustrates the key role that ICT play in the fight against poverty, in the access for a good education for all, in the access of healthcare. As Alain François LOUKOU [6] emphasized "ICT aren't a problem completely disconnected from other development-related issues. They rather as in interaction with them." Moreover, the use of ICT through the development of mobile applications has an extent of intergenerational responsibility, not highlighted in the analysis of the rising of ICT in Africa. Indeed, by developing an application as Gifted Mom or Obami, the developers have responded to actual needs as well as those of future generations : access to healthcare and education and so on.  In that sense, ICT are well and truly tools that will allow the reach of the SDGs as set by the UN. Thus, we can paraphrase the definition of sustainability saying that ICT are technologies enabling to answer to the needs of the present generations as well as those of the future generations.

2. ICT as tools of inclusive growth

It is undeniable that ICT contribute to boost development for the african continent. The time we saw ICT as luxury for Africa (prey to heavy structural and infrastructural backwardness) is over. Today thanks to ICT, many african entrepreneurs offer to their compatriots local solutions to local problems. But some initiatives even have an international impact, this is "glocalization"  : develop local solutions that can extend beyond the national market (especially in countries that share the same issues). For instance, this is the case of the applications for money transfer by mobile in companies where very few private individuals own classic bank account, but do own 2 or 3 mobile phones. Today the thought isn't about the usefulness of ICT for Africa's development. The fundamental question now is: how ICT can contribute efficiently to a sustainable and inclusive growth for african countries?

In front of all the benefits mentioned, rulers and economic agents get down to the job to implement strategies promoting ICT through the rising of digital economy. According to the Australian Bureau of Statistics, digital economy can be defined as the whole wealth-generating economic and social activities that are activated by plateforms such as the internet, the mobile phones or sensors, including e-commerce. This new category of the economy includes the ICT sector, digital-oriented sectors which couldn't exist without these new technologies. The versatility of the technological innovations makes them vehicles for growth, productivity and competitiveness in some fields such as agriculture, finance, access to energy, consumer goods and services, and so on. Yet, for ICT to become true growth levers, necessary resources have to be mobilised.

a. The role of States

Starting by an offer in education and formation that are in line with the needs of the employment market. Very few educational structures provide courses to learn how to use ICT : very few elementary schools, middle schools, high schools in Africa have computers for computer science teaching. Rare are the schools that offer internet classes or workshops. Learning is completely informal (with friends, family and internet café).

There's no point of specifying the downward slides that this lack of frame engenders (communication tools hijacked for unethical purpose).

A lot of learners are self-taught men and women, or have followed courses in training structures dedicated to ICT [7]. Those trainings come too late in the global educative offer when not marginal. The sector of digital economy is booming, and its need in skills will be huge in the future. With this aim in mind, Africa needs to form future coders, engineers, IT developers and not remain in a lethargic state that will make the continent a desert of skills.

Besides public administration didn't invest the digital sphere : for a while now, we note a digitalization of the government bodies (website, social media account, access numbers via mobile application, and so on). This indicates a mobilization by the rulers who gradually understand the interest of ICT in the daily management of services. The setting up of a dematerialized administration would allow the States to be more efficient and to better serve their citizens.

b. The role of firms

Let's remind that for an inclusive growth of the african countries, the on-site firms have a key role to play. Still today, internet access is expensive for a lot of private individuals. The rates (very wide so every consumer can be satisfied) often stay very high for a continuing consumption. It's not rare for some people to not have access to internet for several days because their bundle is over. They have to recharge their mobile to have internet. The access to this latest is indeed increasing, but still not enough to fill the North-South digital divide and reduce inequalities inside the regions (rural, suburban, urban areas). High rates are the consequences of the weakness of infrastructures and the weak connectivity inside the continent [8]. The decrease of the prices of the internet "subscriptions" is the minimum requirement in order to guarantee continuous internet access to all.

In order to do that, IT firms in collaboration with the states and investors have to work to improve telecommunication infrastructures. As part of their Corporate Social Responsibility (CSR), it would be to the firms’ advantage to deploy telecommunication networks more efficient and modern : the dilapidation of equipment and the low rate of electrification on the continent are the biggest handicaps impacting the quality of the services delivered by the operators.

The lack of funds in the telecommunications sector can be resolved by the setting up of guarantees and by an improvement of a business climate more healthy and responsible. Together with the States, firms have to fight against corruption and unfair practices. This is how african countries will know how to appeal new investors, to compensate the low renewal of equipment and the dilapidation of infrastructures. The difficulties stemming from this dilapidation are also the result of the failure in the maintenance of the infrastructure. These lacks can also be explained by the lack of human resources highly qualified. Still in the frame of CSR, firms can benefit from the strengthening of the skills and capacities by building partnerships with training centers, so these latest can train apprentices to the jobs firms really need. Once more, education and training offers are at the heart of the impact of ICT on african countries' development.

Let's mention, before ending this article an element little addressed in the thoughts on ICT in Africa : the management of electrical and electronical waste (EEW). In a context in which the communication between 2 rival operators is excessively expensive, consumers have taken the habit of having multiple phones (one for each operator) or one phone with multiple chips. It is necessary to add to this, tablet computers, laptops and computers. If we consider that each individual changes his mobile phone every 18-24 months, all of this represent a ton of waste badly recycled or even not recycled. Some cautions (for example wearing protection equipments) have to be taken in the treatment of this waste. Indeed all of these devices are composed by elements that are toxic for humans' health and environment if not correctly recycled. Without regulations, the market of recycling and EEW's increasing is mostly informal, so subject to severe negligence in the respect of security measures. In the frame of CSR, telecommunication firms will have to find solutions to manage "e-waste". These latest, if neglected, would generate severe health issues to recyclers (cancer, breathing issues) and severe environmental damages (pollution of ground waters and grounds close to the wild sorting and recycling centers.)

ICT are indeed tools in the service of the sustainability of Africa, but if we think further, we can confirm that with some fulfilled prerequisite, ICT can be catalysis for the sustainable and inclusive growth of the african countries. We've enumerate some improvement targets for the States and the firms as they are the main actors of the development of the continent ; without denying though the importance of civilians on this path toward emergence. ICT are today a key link of the economy of a lot of african countries, and the contribution of the internet might reach 5 to 6% of the african countries' GPD by 2025. This reveals that the sector is highly dynamic. It is necessary to add an informal sector whose datas are "informal" and escape to any formal statistics. The informal sector generate thousands (even millions) of small jobs and substantial incomes to people from every age and sex, who practice wherever networks are available.

To confirm those facts, reliable indicators should be set up in order to appreciate the real impact of ICT on the development of african societies. There are two trails to do this : on one hand, quantify the share of digital economy in the africans GPDs (for example, through the number of descent and lasting jobs created in the ICT sector). We mention countable approaches because they express themselves uniquely in financial terms or job creation. On the other hand, quantifying the shortfalls in case of "deprivation" of ICT ; we would evaluate the organizational consequences of unused ICT on firms, private individuals and administrations."

Translated by : Ornella-Ashley Sangronio

Original Article by: Rafaela ESSAMBA

 

[1] http://www.gsma.com/publicpolicy/wp-content/uploads/2013/04/gsma_ssa_obs_exec_french_web_01_13.pdf

[2] http://www.medias24.com/MEDIAS-IT/pdf6666-En-Afrique-Internet-est-promis-a-un-bel-avenir.html

[3] 5.b  Renforcer l’utilisation des technologies clefs, en particulier l’informatique et les communications, pour promouvoir l’autonomisation des femmes

[4] 9.c  Accroître nettement l’accès aux technologies de l’information et de la communication et faire en sorte que tous les habitants des pays les moins avancés aient accès à Internet à un coût abordable d’ici à 2020

[5] Besoins qu’on peut assimiler aux 2 premières bases de la pyramide de Maslow à savoir les besoins physiologiques et ceux de sécurité/protection

[6] Alain François Loukou, « Les TIC au service du développement en Afrique : simple slogan, illusion ou réalité ? »

[7] Signe d’un fort engouement pour l’économie numérique et les TIC, des espaces d’innovation digitale (hub, pépinières, espace de co-travail, incubateurs..) voient de plus en plus le jour en Afrique.

[8] La plupart des pays africains utilisent la largeur de bande passante internationale pour un partage de données au  niveau local ; opération extrêmement chère.

[9] http://www.geo.fr/environnement/actualite-durable/le-ghana-poubelle-pour-les-e-dechets-25740

Governance and climate change adaptation: Roles and challenges of African countries

Posted on by Cheikh Ba

Today, it is a fact that risks due to climate change are a serious threat to our societies. The concept of “climate governance” used by climate experts appeared in this context.

Govern the climate? This question is doubly puzzling. For what reasons? What historical process? With what methods?

Climate is, firstly, a matter of geography, then of physical and atmospheric sciences. How has climate become an object of governance at the end of the 20th century? Is climate can actually be governed, when we daily witness on TV tornadoes, floods and extreme weather disturbances all over the world?

Governance applies on many levels, and we can retain three dimensions: An international, national or regional and then a local dimension. We talk about local, territorial, corporate, employment and global governance. In addition, the word “governance” derives from the Latin "gubernare" which means governed, to pilot a ship. So, this is the art or manner of governing, by promoting a business management model.

According to Jacques Theys governance is:  "a managerial conception of public systems and it basically intends to find pragmatic solutions to market or public intervention failures" (Theys, 2002).

 

The objective of this article is to determine the climate issues in Africa and the role of African States in global climate governance.

 

First, Africa is a continent that consumes little power with 621 million people that don’t have access to electricity. Then, from one country to another, differences are huge. For example in DRC access to electricity is of 16%, 53% in Botswana and 85% in South Africa. Besides, this is also in Sub-Saharan Africa, excluding South Africa, where the consumption is up to 139 billion KWH for a population of 860 million, which is far less than in Spain, 243 billion KWH for a population of 47 million inhabitants (Le Monde, 2016). For example, a Tanzanian will consume in eight years as much energy as an American in a month. Moreover, in Great Britain, a  kettle used by a family consumes five times more electricity than the average annual consumption of a Malian.

However, even though Africa is the continent that contributes the least to global warming worldwide, 4% against 15% for the US and 26% for China, it must be said that Africa faces the full brunt of the climate change effects with the multiplicity of recent years floods and droughts on the continent. It is urgent to take action and to adapt to climate change knowing that a temperature increase of two degrees could cause a decline in agricultural productivity, up to less than 20% in 2050, which would worsen the food crisis. This adaptation should be both political and environmental to protect against major risks of climate change. Indeed, the most commonly used definition of human adaptation systems to climate change is the one of the Intergovernmental Panel on Climate Change (IPCC): an "adjustment process to the current climate or expected as well as its consequences, so as to minimize detrimental effects and to exploit the benefits. " This definition refers to both current and future climate, and considers both natural and anthropogenic climate change.

Does Africa have the means to adapt and govern climate risks?

According to the UN, Africa’s adaptation costs to climate change amounts to 45 millions euros per year by 2050. The issue of climate finance from Northern countries to the benefit of countries of the South was one of the challenges of COP21. Indeed, a support fund would find alternatives to charcoal, which is widely used in Africa, 4 out of 5 Africans use it for cooking. The consequences of this use are ecological but also sanitary. Each year, 600,000 Africans die from inhalation of this fuel, it is almost as much as much as malaria and HIV. Renewable energy is a new alternative that is why more and more African countries rely on green energy. Thus a country like Ethiopia has decided to develop renewable energies to reduce climate risks.

Resolving problems related to climate change is also initiating governance at global and local levels that will find adapted solutions to climate risks. What is the role of Africa in global climate governance? The Paris conference on climate change in December 2015 has once again demonstrated the ridiculous place of Africa in the various issues of climate negotiations. This can be explained by the fact that for African countries, the main objective is economic development. But economic development without environmental concerns is it sustainable? The issue of climate change is therefore put at the second place in the hierarchy of needs in Africa, enough to retain a single point on the various African climate concerns: support to poor countries to adapt to climate change and reallocate 1000 billion $ of private investment towards low carbon economy.

 

All in all, the African continent remains fragile on the various threats related to climate change. Even though important initiatives around a green economy are erected in some countries that are ahead in energy policies like Morocco with the world's largest solar park, a local work will need to be done. To drive a real momentum in the fight against environmental changes, it starts with empowerment of local and regional civil awareness. This extension of ecological civic consciences towards nature will allow a better consideration for environmental concerns in African issues. This will pave the way for a better valorization of African local and regional initiatives in the development of environmental programs worldwide. So far the influence of Africa in this geopolitical climate is very limited.

Translated by Anne Sophie Cadet

Interview with Tidjane Deme, Office Leader for Google Africa

Posted on by Lareus GANGOUEUS

ADI: How does Google aid the development of the Digital ecosystem in Africa? And why does Google do it?

We do so because we are convinced that the region needs an internet ecosystem that is dynamic and as well open. That is to say, an internet system, where each person has free access to information that he needs without any hindrance.  Despite the developments that we see in mobile internet, it is still insufficient.  We have not yet reached the cut-off mark. The speed and penetration rate are still low. For example, one cannot play a high definition video without the question of data coming up or the short waits to allow the videos to buffer. We can’t still do a lot on the internet and it is quite expensive. Even those who go on the internet still do not have access to high-speed internet (broadband).

picture 1

However, there is a new trend of providing limited internet access to well-known sites. In fact some Internet service providers (ISP)  offer packages that only give access to these selected sites. However, if an entrepreneur starts to provide a new service, his service is not included in this package and is therefore not accessible to all. This forms the base for our need to have an internet platform that is open to all. We are presently trying to tackle three aspects:  

We are working on problems of access to internet. That is the infrastructure that limits access; price and regulatory problems that limit the development of an open internet platform. To us, high speed internet allows for quick access to all types of content.

The second aspect is on content. Today, there is so much content on normal media platforms but these are not available on the internet.

The third aspect is focused on encouraging entrepreneurs t o develop a high-growth industry.

Internet in French-Speaking Africa: What are the differences that exist among the regions in French-speaking Africa?

There are many differences that exist among the countries. I will look beyond the Francophone region and talk about it in a global manner. It is difficult to draw conclusions because there are about 50 countries in Africa with different characteristics and contexts.  We group and analyze these countries based on certain aspects.

One criterion that affects the access to internet is the policies and regulation of telecom operators in each country. This environment often determines the state of the market. It is in this case that we see enormous differences in the English-speaking countries in East Africa and those of West Africa especially the Francophone countries. In general, there is a difference between French-speaking and English-speaking countries. We have some policies that I will say are very modern. As the sector evolves though, the policies have to adapt to an environment that changes very fast. This is often not the case in many countries. For example, Senegal changes it’s polices every ten years. There is a telecoms code that came into effect in 2001 and another new code which has not been implemented. So, this market which has changed drastically over the years is governed by a regulatory policy which has been in effect since 2001. The capacity of the regulatory system to adapt to the market is a modernizing factor.

                                                                                                               

picture 2A second important regulatory aspect is the segmentation of licenses. The old polices (of 20 years ago) are based on monolithic licenses. One license was enough to become a mobile Operator.Today, when we look at the telecoms market, there are many operators that carry out different functions. For example, there are those who provide data (ISP), those who develop mobile towers and antennas which are then shared by different operators. Also, there are those who provide infrastructure and those who provide Voice over IP   (VoIP) on mobile phones and fixed lines.

 

The last criterion of modernity in licenses is linked to the fact that the telecoms sector was created on the basis of concessions run by a third-party so that the latter could bring revenue for the government. This political approach for a long time focused on revenue-making than on the impact the telecoms sector made on the economy. Modern policies will therefore have to measure the impact that each policy will have on the sector and the economy in general. When we look at these three criteria, French-speaking African countries still rely on archaic methods, which do not allow for  the existence of a large number of actors and  they target a  small number of actors that are taxed heavily (Benin, Mali, Senegal, Cameroun, etc). However, we have the total opposite (with an eye on long term benefits) in English-speaking African countries and in Mozambique (in view).These points create two criteria that distinguish the countries.

Following this, we arrive at a certain market structure. In certain countries, you have a market with a small number of actors who are vertically integrated and who do everything. Take for example, Senegal. There are three mobile operators and one internet provider.  In Benin, there are 5 operators. Now take Ghana as another example, there are 5-6 operators and about 20 internet providers and numerous actors who deal with content. In Kenya, there are 13 providers of international capacity and 5 infrastructure providers. Here, the mobile sector is not as competitive, as Safaricom dominates the market (85%) but at least there are many actors who intervene enormously. So, we categorize the countries according to these 3 criteria: 1. Type of controls 2. Market dynamics; and 3. The state of infrastructure

The 4th criterion of the ecosystem is the amount of investors that are present on the market, who create employment and value and those which the African governments have not grasped or encouraged.

 

On the Francophone Marketplaces, what are the methods of payment? What do you think of these new actors?

For a long time, it was said that the classic e-business solutions could not work in Africa because we were lacking some key elements in the African digital ecosystem like payment portals. Now, when we look at the new actors on the market like Rocket International, Jumia, Kaymu, and Kangoo in Nigeria, there are two phenomena that have aided their growth:

First of all, there is the emergence of the growing middle-class in African mega-cities. These people have a standard of living that is quite similar to what you see in Europe or in the United States. They possess credit cards and buy online due to their style of living. Once, this middle class increased; a market was created, in order to duplicate the same style seen in Europe.

That is one of the reasons Jumia, Kaymu, Jovago, etc arrived on the market. They were even innovative enough to cater for the rest of the online population by providing new payment solutions. In fact, we always thought that mobile phones would constitute a useful tool for payment. But today, when we look at these actors, they have bypassed the mobile and are offering the method of payment on delivery. They do not make use of mobile phones as a method of payment.  

This means that the operators have missed a great opportunity. They have all dragged their feet in the provision of an Application Provider Interface (API) to developers. This only has to do with Francophone Africa. Safaricom with its famous tool M-PESA will soon provide an online payment solution. On the other hand, Orange has just announced that it will start testing its Orange Money* API with developers. The same goes for MTN Money. So, I think that the operators have yet to explore this potential growth area of Mobile Money which is a method of online payment. Nevertheless, there are a good amount of users who make use of mobile payments for money transfers and bill payments. It is therefore not surprising that these solutions have arrived with the growing middle-class.

Translated by Onyinyechi Ananaba

Copyright  Google Photos – Will Marlow The real internet – Charles Roffey –The context of the digital society. Interview of Tidjane Deme  on Google’s strategy for  francophone Africa . Interview in September 2015

Key words: Google / Telecoms regulation /digital ecosystem / Marketplaces / Mobile Money

(*)  Interview carried out in September 2015 for a professional thesis on the levers in digital marketing for the promotion of African cultural products– ILV Paris – MBAMCI

 

The WTO Trade facilitation agreement (TFA): the Bali agreement

Posted on by Rubrique Analyse Economique

The first multilateral agreement concluded since the creation of the WTC was adopted by consensus during the Bali ministerial conference, on December 2013, attended by the WTC members. This is the Trade facilitation agreement that will enter into force upon ratification by the two-thirds of the WTO members. As at December 16, 2015, 63 ratifications on 162 had been obtained. Seven African States ratified the agreement: Botswana, Ivory Coast, Kenya, Mauritania, Niger, Togo and Zambia. The agreement is divided into three sections and approaches amongst others release and clearance of goods, cooperation between border Agencies and Customs cooperation in general. Besides, it provides for Special and Differential Treatment (SDT) measures that enable developing countries and least developed countries (LDCs) to determine their implementation pace of the provisions and to notify any external reinforcement needed. Moreover, it provides trade facilitation committees. A mechanism launched on July 22th, 2014 by the WTO Chief Executive Roberto Azevêdo and operational on November 27th, 2014, aims at supporting the developing countries and LDCs in the implementation process of this agreement.

 

The 2015 world trade report, entirely dedicated to the analysis of the TFA, estimates that the implementation of the agreement would lead especially to the annual increase of the world exportations by 1 000 billions of dollars and a reduction of the trade costs between 9.6% and 23.1%. The developing countries and the LDCs are considered as the major beneficiaries of the TFA. Indeed, more than a reduction of trade costs of almost 16% (18% for manufactured goods and 10.4% for agricultural goods), those countries will take significant advantage of the diversification of their exportations in terms of goods and partners, favored by the agreement.

The African regional trade agreements (RTAs)

The RTAs are reciprocal trade agreements between at least two partners. According to the WTO statistics, the Free Trade Agreements (FTAs) and the partial-scope agreements represent 90% of those RTAs, compared with 10% for Customs unions. The eight African Regional Economic Communities (RECs) recognized by the WTO are registered and reported as RTAs.

Some African States or regions concluded interregional agreements with States or regions members of WTO. For instance, the European Union (EU) and South Africa signed on October 11th, 1999 a bilateral free trade agreement on goods. This RTA, recognized by the WTO and entered into force on January 1st, 2000, includes tariff quota, Customs procedure and balance of payments measures. Ivory Coast also concluded with EU a RTA whose scope and fields are similar to EU-South Africa ones. This agreement was signed on November 26th, 2008 and entered into force on January 1st, 2009. So is the agreement between EU and Eastern and Southern Africa signed on August 29th, 2009.

The Preferential Trade Arrangements (PTAs) with Africa

The PTAs are unilateral trade preferences. African States benefit from several PTAs through arrangements in favors of LDCs. Between 2002 and 2012, the LDCs exported at least 72% of their goods towards partners with whom they have PTAs[1] : in a decreasing order of the percentage of exportation, those partners are the EU, the USA, China, India and Japan. The EU has granted almost 100% duty and quota free access to its market for all the LDCs since 2001. Since 2010, China has given duty quota free access for 60% of tariff lines to forty LDCs. India grants progressive duty and quota free access in order to reach 85% of the tariff lines in 2012. As for Japan, since 2008, nearly 98 % of tariff lines have benefited from duty and quota free access to its market.

The USA have not concluded any specific PTA with the LDCs. Nevertheless, they have set up a unilateral regime in favor of sub-Saharan States through the “African Growth and Opportunity Act” (AGOA). This act promulgated on May 18th, 2000 and notified to GATT/ WTO on January 10th, 2001 grants duty free access for goods from “D” code in the “Special” column of the Harmonized Tariff Schedule, as long as they respect the rules of applicable origin.

As the AGOA was due to expire on September 30th, 2015, WTO General Council authorizes its expansion. This is the AGOA 2.0 whose success depends on many challenges. [2]

2. The eventual conflicts between agreements and African challenges to international agreements.

Contradictions between the RTAs, foundations of the African REC

The regional agreements create rules, in particular in regional trade, that is supposed to be implemented to all the signatory States. However, in practice, it is noted that the multiplication of trade regimes could point out some inconsistencies or be an obstacle to their efficacy. Thus, in 2011, the Southern African Development Community (SADC), of the Eastern African Community (EAC) and of the Common Market for Eastern and Southern Africa (COMESA) had some member States in common, but who implemented the trade regime of one organization to the expanse of others’ ones. Fourteen COMESA members on nineteen obeyed the rules of the free-trade treaty; four members remained at the stage of the law preceding the preferential trade area [3]. The five member States of the EAC were part of the REC Customs union in order to set up a common market. Lastly, twelve of the fifteen members of the SADC implemented the terms of the agreement, launched in 2008. The identification of those overlaps leads the three RECs to start discussions in order to create a common free-trade area.

Generally, the treaties of regional organizations provide for how to deal with the contradictions of the different law regimes. Let’s see the example of the West African Economic and Monetary Union (WAEMU) and the Organization for Harmonization of Business Law in Africa (OHADA) which includes 7 of the 17 member states of the first one. The treaties of the two organizations consider that the acts adopted in each organization prevail on national Law (article 6 of the WAEMU treaty and article 10 of the OHADA treaty) without any mention of supremacy of one treaty over the other [4]. Yet, some of their areas of responsibility overlap: the OHADA is supposed to govern business law while the WAEMU treaty lends authority to itself to adopt any rule needed to achieve its objectives in the area of economic, monetary, sector policies or the common market, an area which can include business law.[5]

Incompatibilities with the international system

WTO encourages the creation of regional organizations as they are regarded as a mean to achieve the development objectives. However, they have to respect WTO rules. In theory, all the member States have to apply the same trade treatment the other member States, even if in practice the PTAs derogate from this principle.

The implementation of the WAEMU Common Customs Tariff (CCT) in 2015 revealed how hard it could be to reconcile Community and international commitments. Indeed, the CCT imposes to the each WTO member State not to raise the rate of Customs duty beyond a certain level, called “the bound rate”. The rates applied in reality were often lower, especially for agriculture. Thus, Nigeria had a bound rate of 150% for agricultural goods, compared to an applied rate of 33.6%; the Senegal bound rate was 29.8% while Ivory Coast one was 14.9%. The new WAEMU CCT fixed to 35% on agricultural good placed those countries automatically beyond the rate that they committed not to exceed [7]. Even if some mechanisms, like the payment of compensation, make possible the cohabitation of the two norms, one can note easily that regional commitments could enter into conflict with the engagements within other systems.

Besides, the European Union seems at first sight to approach the EPA negotiation more logically as she talks with regional groups: central Africa, Eastern and Southern Africa, Western Africa, Southern African Development Community and East Africa Community. This multiplicity of interlocutors shows many limits: the members of the COMESA for example, are divided into 3 regional groups that negotiate separately the terms of the EPA related to them, although the COMESA countries share the same objective of common market. Moreover, as the EPA is a reciprocal but asymmetrical agreement between the EU and the African countries, he aims at fostering trade between the two areas and minimizing the tariff barriers. Even if the African countries keep benefiting from derogations to protect their weak economies from the concurrence of the strong Europe, one can understand that forwards low Customs duties could conflict with rules like the CCT fixed by some regions and be inferior to the tariffs practiced within a region, favorishing Africa-Europe exchanges at the expanse of intra regional exchanges.

Which stakes for Africa in front of this diversity of agreements?

In its 2015 report on industrialization through trade, the United Nations Economic Commission for Africa evokes the importance, and even the urgency, to implement a mega-regional agreement specific to Africa to boost its economic positioning. Indeed, the Commission studies shows that an effective implementation of the non-African mega-regional trade agreements, like the transatlantic trade and investment Partnership (TTIP), transatlantic partnership and the global regional economic partnership, results to the increase of one thousand of billion dollars by 2020, of the member States exportations. In the contrary, it would lead to a fall of the African exportations of some 2.7 billions of dollars because of the intensity of the competition and the attractiveness for markets covered by those mega-regional agreements. However, this trend could be reversed if Africa gets its own continental free trade area (CFTA) because its exportations would increase of some 40 billions of dollars, through an acceleration infra-regional trade. The CFTA implementation is a current project: African Heads of States and Governments have pledged to the acceleration of its implementation by 2017.

On June, 10th, 2015, the COMESA, SAEC and EAC Heads of States and Government, gathered in Sharm El Sheikh in Egypt, launched the tripartite free-trade area (TFTA) that set up an integrate market of 26 countries, of a population of 632 millions habitants representing 57% of the global African population. This TFTA is certainly a critical step of the African CFTA implementation process as it represents a global GDP of 1.3 billions of dollars (2014) which is 58% of the Africa GDP.

The commitment of African countries in those different agreements demonstrates before all the evident willingness to integrate more in the world trade and to benefit from it to accelerate their development. However, they fail to achieve the expected results and sometimes they may constitute a constraint for the continent. To benefit fully from this global trade opening, Africa needs to reinforce its production capacities, thus to modernize the trade infrastructure and to mobilize the financial resources.

.

Translated by  Mame Thiaba Diagne

 

 

[1] Economic Commission for Africa, 2015, « Industrialization through trade », annual economic report on Africa.

[2] United-Nations, African Union, 2014 « How ‘AGOA ‘2.0’ could be different “  

[3] TradeMark Southern Africa, 2011, « Aid For Trade Case Story : Negotiating the COMESA ‐ EAC ‐ SADC Tripartite FTA », Pretoria

[4] IBRIGA (LM), 2006, “The juridictionalization of the integration process in West Africa”, University de Ouagadougou

[5] KONATE (IM), 2010, “The OHADA et the others community regulations: UEMOA, CEMAC , CIMA, OAPI, CIPRES etc.”.

[6] DIOUF (EHA), 2012, “New CEDEAO Common external tariff and individual commitments of its members in WTO: overwhelming incompatibilities”, Passerelles, Part 13 – number 3.

[7] Ibid.

 

Controlling inflation in the WAEMU

Posted on by Daniel OUEDRAOGO

1000179_blogspot-quels-futurs-pour-la-politique-monetaire-et-la-croissance-economique-94771-1The need for coordination of economic policies in a monetary union is widely accepted, in order to adress various issues (inflation, debt, GDP, etc.), necessary to ensure the union viability. In a monetary union, macroeconomic targets can be managed according to its characteristics, whether by a specific authority (monetary authority or fiscal authority), or by two authorities. In the latter case, it performs the policy mix to handle the target. In this article based on a study[1] on the coordination of economic policy in the WAEMU, we are particularly interested in the control of inflation. For that aim, we will start by the analysis the inflation history in the area. After that, we will study the inflation determinants to finish by deducing the right policies to control inflation.

1. Inflation in the WAEMU : an overview

The chart below show the evolution of inflation in WAEMU between 1970 and 2015 except for Guinea-Bissau which joined the union in 1997.

inf
Source: Author based on the BCEAO data.

Three main periods can be noticed in the evolution of inflation WAEMU:

  • 1970-1994: This is the period before the birth of the WAEMU, characterized by a relative high volatility and significant amplitudes (from -15% to 30%);
  • 1994: At the approach of the WAEMU birth (in 1994), there is a convergence of inflation levels. However, the devaluation occurred in the same year has resulted in historically high inflation levels. We can also notice that Guinea-Bissau had the highest desynchronized inflation until its admission to the union in 1997;
  • 1994-2015: A clearer inflation convergence but sometimes there are inflation rate in double digits and negative inflation rate.

If the inflation was not stable over the time in the WAEMU, what are the factors behind the different variation during that period?

2. Inflation determinants in the WAEMU

The control of inflation within the WAEMU[2] is mainly entrusted to the Central Bank, BCEAO (Article 8 of the statutes) since countries independence (1962). At the birth of the economic union in 1994, governments have been associated in this management through the definition of convergence pact which imposed a maximum annual inflation rate of 3% in each member States (see Ouedraogo, November 2 2015, for details on the convergence pact criteria). The previous historical analysis clearly shows that inflation management remains difficult. Using an econometric approach to decompose inflation into short-term and long-term components, we inferred that the short-term component inherent to transitory items are most relevant to explain the inflation level. This explains the inflation volatility. This short-term component is affected by several shocks. On one hand, there are two common shocks in 1994 and 1987. The devaluation of the CFA franc in January 1994 led to higher prices (imported inflation) in all countries. The 1987 shock is attributable to the fall in the price of oil which has affected domestic prices. On the other hand, there are many idiosyncratic shocks (which affect a specific country). These idiosyncratic shocks are due to political instability (for example forced introduction in 1990 of multiparty politics in Cote d’Ivoire or military coup in 2003 which led to lower demand components in Guinea-Bissau), climate shocks in Benin (1985), in Burkina Faso (1976), in Mali (1992), in Niger (1991) or in Togo (1984). We can also notice that these idiosyncratic shocks have the most significant effects. In addition, inflation in the WAEMU is mainly determined by idiosyncratic shocks.

3. What is the appropriate policy to control inflation in the WAEMU?

The WAEMU inflation was initially managed by the BCEAO and in a second time by the policy mix since the birth of the economic union. Both management practices do not appear to have allowed inflation full control. Indeed, non-monetary origin of inflation is inferred in the literature. An article previously published (Ouedraogo, June 29, 2015) allowed to show the monetary transmission difficulties in the WAEMU and the marginal influence of monetary policy on economic activity. Inflation mostly explained by idiosyncratic shocks, so its control by a single and common tool is not efficient. That is why the period 1970-1994 was marked by significant levels of inflation and high volatility. If any shock affects and destabilizes a member State’s inflation, it is difficult for the BCEAO to change its monetary policy to only stabilize this inflation. This policy could destabilize inflation in other countries. It is the result of policy failures during the period 1970-1994. The policy mix does not seem very effective because it alternates periods of high inflation and disinflation since the BCEAO remains the main actor in inflation managing. It only remains the control of inflation by the governments. This management seems most efficient. Indeed, if inflation is mainly due to specific shocks, it should be handled with the domestic (national) tools that will respond quickly and efficiently. However, to ensure harmony within the union, the national management should be coordinated through the definition of an optimal threshold to be necessarily met by member States.

The proper control of inflation is necessary in a monetary union because inflation can influence other macroeconomic targets. High inflation may slow economic growth and deteriorate employment. Similarly a persistent negative inflation rates may lead to deflationary spiral that will lead to negative effects on growth and employment. This article shows that inflation should be managed by governments in the WAEMU because it is inherent to idiosyncratic items. Coordination of fiscal policies in order to ensure similar levels of inflation is also recommended. Furthermore, it should be noted that despite all these facts, the WAEMU area remains the most homogeneous area in Central and Western Africa.

                                                                                                                                                        Daniel E. T. Ouedraogo

[1] Proofs are available upon request from the author (daniel.ouedraogo@dauphine.fr).

[2] The Monetary Union (WAMU) preceded the Economic Union (WAEMU).

Poverty in Africa

Posted on by Foly ANANOU

The World Bank recently stated that the number of poor people in the world has declined by 3.2 points from 2012 to 2015 and now reaches 702 million people (a little less than 10% of world population).  At this pace, the World Banks predicts that extreme poverty could be eradicated by 2030. Theses numbers are even more impressive as the international poverty line has increased from 1.25 USD a day to 1.90.

It should be noted that in reality, this line remains unchanged. The principle used by the World Bank’s analysts is to keep the purchasing power parity rate and to inflate it at the 2011 prices. In other terms, purchasing and consumption haven’t changed but the prices have. This new line reflects inflation and not an upward variation of real capacities and that is for the best. World Bank’s estimates results are not linked to the methodology.

Concerning Sub-Saharan Africa, poverty rate went down from 56% in 1990 to 35% in 2015. The figures show that in African countries the fight against poverty is actually effective. Yet, on the 702 millions of people, about 346 millions of people are from Sub-Saharan Africa. Comparitively, they represented 285 millions in 1990. 

So, the 35% poverty rate announced for Sub-Saharan African may be due to a base effect. Over this period, African population has considerably grown and went from 523 millions people in 1990 to almost 1 billion in 2015. In comparison to other countries with a similar poverty level in 1990, the result is that the growing of African population came with a less pronounced increase of poor people. Indeed, in South Asia or East Asia and The Pacific, the number of people living in extreme poverty respectively went from 582 millions and 1 billion in 1990 to 225 millions and 84 million in 2015.

Obviously, the situation differs from country to country. Some have been through many years of socio-political crisis which have interfered with any solutions that would have improved the poorest’ living conditions. Besides, the numbers are only estimates that might be revised up or downwards when more precise data will be available. Beyond these methodologies, the numbers reflect the failures of the different programs (including Millennium Development Goals (MDG), private initiatives of NGO aimed at reducing poverty. Is the African context the problem, especially when these exact programs seem to work effectively in other countries? 

We already gave an answer in a previous article, insisting on the fact that these programs are focused on economic growth and do not take in account transmission channels and are not really adapted to local realities. Corruption (misappropriation of money) and socio-political tensions are many factors that counter the efficiency of these development programs. The lack of independent, autonomous development planification is another obstacle. Many countries undergo the evolution of their population without being able to give an appropriate solution. For example, the lack of urbanization policies results in the concentration of rural into non-inhabitable areas. These people are facing recurrent problems of flooding, which create sanitation problems, and then create delays in back-to-school seasons, which prevent the rising of living conditions of these people, who are going to be reported as poor. 

African economies are extroverted and outward looking but the recent economic performances had only a small impact on the situation of the poorest, because they do not participate at the improvement of the economy.  The solution to poverty strongly relies on the capacity of the countries to establish autonomous economic policies that will improve the conditions of the poor, just as other countries did. 

Is nothing had been done for more than 20 years? The answer could be: a lot but not enough. Obviously, if nothing had been done, the number of poor people in Africa would be way more important. The fight against poverty should be deepen, and it would take more responsible politics (economic, social and management) that aim a global well being of the society. If the financial approach of poverty is questionable, it may not constitute an argument. The approach used is based on an Western way of living, but an “African way of life” (even if it is difficult to give a definition in this era of globalization) is not a life without access to decent living conditions (education, nutrition, access to health care…).

Translated by Anne Sophie Cadet

How citizens’ activism brings hope to Africa

Posted on by Julie Lanckriet

On October 13, 2015, after 28 years of omerta imposed by the government of Blaise Compaoré, the remains of former President of Burkina Faso, Thomas Sankara (1983-1987), one of the emblematic figures of African citizens' movements, was exhumed for autopsy. The conclusion is clear: the body of the revolutionary riddled with bullets confirms that it was an assassination, a fate reserved to democrats by authoritarian regimes.

“Y’en a marre” (Fed up), “le balai citoyen”(The Citizen’s Broom) or “Filimbi”, these movements identifying with Sankara, Patrice Lumumba or Mandela, emerged in the 2010s.

From 2012, they yielded strong democratic victories:  fall of the "old" Abdoulaye Wade in Senegal, Compaoré’s expulsion of Burkina throne and (provisional) sanctuarization of the Congolese Constitution against Joseph Kabila’s will to extend his stay in power.

What are these innovative initiatives? What are their influences and how are they organized?

 

A diplomatic strategy that embraces the international codes…

Although quite unusual, these citizens’ movements are different from existing social movements because they have managed to seize all conventional political legitimacy levers while focusing on African values ​​and advocating cultural references.

First of all, the rhetoric used is very much appreciated by international organizations. The terms "democracy", "non-violence", the rejection of radicalism and even "good governance” feature prominently in the African Citizens Movements Declaration written and co-signed in Ouagadougou during summer 2015 by more than 30 movements of the continent.

These organizations are “legitimists”. They do not advocate revolutionary uprisings, as social movements created under colonization, nor the denunciation of structural adjustments plans imposed by the IMF, like those of the 1980s, but they advocate respect for constitutions in place. This is the case for  “Filimbi”, "Ras-le-bol"(Fed up), and "Touche pas à mon 220"(Don’t touch my -article- 220) movements started in Congo – Brazzaville, that fight for the respect of the limitation of presidential terms imposed by the laws.

In addition to speaking the language of western investors, these movements rely on their negotiation boards and seek to bring their demands to the UN and the African Union (AU), while their representatives do not hesitate to meet with influential politicians of the international scene  (the "yenamaristes" have been received by Laurent Fabius and Barack Obama, among others).

 

… And that advocates the continent’s own values

However, while using western communication vehicles, they emancipate themselves with ideological references specific to Africa. Charismatic leaders of these groups openly criticize the models and methods used by developed countries. "In Senegal, as in France, we are fighting the same form of social injustice, the same pangs of uncontrolled and wild liberalism" said Fadel Barro at the French NGO Survie.

This is the concept of liberalism, as a whole, that is rejected:  one of the main objectives of these movements is to propose "an alternative political project to the dominant neoliberal system. The vocabulary used, as well, is close to Marxist philosophy: "the labor" must fight against "land grabbing", while the terms "capital" and "struggle" are hammered. We find similarities with references to Marxism-Leninism of the social movements of the 1970s, which had caused agitation mainly in Portuguese-speaking countries.

 

But, the work of Senegalese, Burkinabe, and Congolese movements are not limited to a strict rejection of a discredited model. Their ambition is to create an "Africa-centered" academic reflection promoting their cause: the Ouagadougou Declaration therefore "encourages the production of academic research (…) to promote the existence of African experts on the citizens movements in Africa” The emancipation however has its limits, particularly when it comes to the issue of funding. Accusations that have been made ​​against them, to be supported by Washington and Ottawa, even if they haven’t been proven, however, raise the issue of the actual independence of these movements.

 

The ideal of panafricanism, for the expansion of a movement that is still an exception

Another interesting aspect of the philosophy of citizen initiatives is panafricanism. Promoted in 1949 by the Central African Barthélémy BOGANDA and by Kwame Nkrumah, panafricanism represents the hope that one day the “United States of Africa” will emerge. From the first clashes in Burundi, the “Balai Citoyen” (Citizen’s Broom) sent messages of support to the Burundian people, while the 30 movements gathered in Ouagadougou last summer asked for the release of political prisoners held in Kinshasa. There are exchanges between their structures, they advise each other on action and training of their members: for example, members of the Congolese organizations “Filimbi” and “Lucha” met their counterparts from the “Balai Citoyen” and “Y’en a marre” in march 2015 in Kinshasa.

This dynamic and variable proven successes should remind us that such organized and influential movements are still missing in too many countries of the continent, in opposition to authoritarian regimes from Pierre Nkurunziza or Robert Mugabe, just to name a few.

Where the civil war is still too fresh or repression too harsh, it is difficult to consider any organized and claimed opposition before a long time.

But the statement is full of hope: in just five years, concrete civic organizations rose up and brought down political figures that once seemed unshakeable. These movements are rooted locally, branched with their counterparts in neighboring countries and work to establish a philosophy of their own, and the more capable of mobilizing energies. Many obstacles still await citizen movements of the continent, the fifteen elections scheduled for 2016 will be an uncompromising test, but there are reasons for hope.

Translated by Anne-Sophie Cadet

Loss of competitiveness in the Waemu: do not blame just the CFA

Posted on by Koffi ZOUGBEDE

waemuTwo very different monetary zones, yet linked through currency

There are three “Franc zones” stemming from colonization and sharing one (though not interchangeable) currency, the CFA Franc: the WAEMU (West African Economic and Monetary Union), the CEMAC (Economic and Monetary Community of Central Africa, or EMCCA) and the Union of the Comoros. This currency has evolved in a fixed parity regime with the French Franc from 1959 (1981 for the Comoros) to 1999 before being pegged to the Euro.

This fixed parity aimed at ensuring macroeconomic stability, reducing risks of exchange rate crises, importing policy credibility and promoting intra-zone trade. It was deemed adequate given that the Eurozone is the main trading partner. Nevertheless, both monetary areas are not only suboptimal with regard to Mundell’s criteria, but are also very different from one another, as the Eurozone consists of industrialized countries and the CFA Franc is used in low-income economies. This potentially induces incompatibility of monetary policies, and therefore an inadequate policy stance in the Franc zone. The inflation target in the eurozone is 2 percent, acceptable for a group of industrialized economies, but less desirable for the Franc zone whose target of 3 percent is costly in terms of growth. Studies have clearly shown that inflation levels of developing countries between 7% and 11% stimulate production, against 2% to 3% in developed economies. However, the main goal of the three Franc zone central banks is to fight inflation with tools adapted to an inflation of monetary causes in a zone where real factors dominate: climate hazards impacting countries still very reliant on agriculture, an increase in energy prices (notably oil) and inflation imported from the Eurozone. Despite these factors, they maintain the 3% target while trying to support local economic activity.

The immediate explanation of currency overvaluation

A common challenge to all monetary zones is convergence among its economies. In the Eurozone, this convergence is still a slow on-going process—marked by diverging competitiveness, labor market trends, and external balances.[i] Within the Franc zone, a few groups of countries emerge. CEMAC economies experience trade surpluses thanks to oil exports. This similarity of production structures allows for a convergence of CEMAC members’ external trade, measured by the standard deviation of their current accounts weighted by their real GDP.[ii] In the WAEMU, Côte d’Ivoire (the largest economy) displays significant trade surpluses while other countries experience deficits, such as Senegal, often considered another WAEMU economic power.

Critics estimate that the strong level of the Euro against the US dollar is responsible for an overvalued CFA Franc that penalizes the zone’s export competitiveness. The question is whether this loss of competitiveness is simply due to the CFA Franc level, or whether other factors can be identified.

Economies with little diversification and very exposed to international competition

WAEMU global competitiveness, measured by the real effective exchange rate, has deteriorated over the 2002 – 2011 period by about 5 percent according to the BCEAO. In 2012, it improved with a decrease of 3% of the real effective exchange rate and inflation lower than its partners’. WAEMU countries are mainly commodity exporters. Between 2000 and 2004, oil, cotton, cacao, gold and precious metals represented 50% of exports and rose to 60% in the 2005 – 2011 period. In 2012, these countries recorded increasing export rates, due to the dynamism of extractive industries, with the exception of Senegal and Guinea-Bissau that lost respectively 0.2% and 1.4% in 2012 compared to 2011. The zone as a whole gained 2.1% over the period 2002 – 2011 and an additional 1.1% in 2012. On the other hand, the penetration rate for foreign enterprises progressed by 1.2% between 2001 and 2011, and an additional 3.8% from 2011 to 2012, which translates into a decrease of domestic companies’ market share, and thus a net loss of competitiveness. At the level of individual countries, foreign penetration rates increased by 11.3% in Burkina Faso between 2001 – 2011, 14.7% in Niger and 8.7% in Togo.[iii] In addition, imports are generally finished equipment and consumption products with a strong added value. Individual countries’ deficits suggest that imports outweigh competitiveness gains.

High costs of factors of production and an unfavorable business climate

Over the period 2001 – 2011, the steady increase in world oil prices strongly disadvantaged local producers. This caused a generalized price increase in oil products within the WAEMU and therefore a cumulated growth of energy prices of 33.4% in Côte d’Ivoire and 91.5% in Senegal over the same period, the weakest prices being in Benin. Different price levels among countries are chiefly due to differing tax levels. Electricity and transportation costs have equally risen. Fuel oil, used as intermediate consumption in thermal electricity production, leading to an increase of electricity rates of an approximate average of 100 FCFA.

Labor and financing costs also rose substantially. While remaining stable in Côte d’Ivoire and Senegal, minimum interprofessional wages went up by 26.5% in Benin, 50% in Niger and even 103.5% in Togo. Higher costs of factors of production have strongly deteriorated local companies’ competitiveness.

The unfavorable business climate to these higher costs. The World Bank’s 2014 Doing Business ranking, based upon the ease of doing business in a country, issues a severe judgment for the WAEMU and the Franc zone generally. First among these countries, Burkina Faso is ranked 154th, just before Mali (155th) and Togo (157th). Côte d’Ivoire, the regional export champion, is only 167th, Senegal 178th and the Central African Republic and Chad come last, respectively 188th and 189th.

What policies for the future? Budgetary rigor, economic diversification and… federalism ?

Competitiveness could be restored with budgetary restraint measures aiming at minimizing situations of twin deficits in the long run. This may be difficult to conciliate with economic development imperatives, and may come at a cost for public as well as private investment, in countries that have paid the costs of structural adjustments in the past. More reforms at the regional level will be needed to ensure convergence among economies. As mentioned before and alike the Eurozone, the WAEMU is far from being an optimal currency area due to its exposure to idiosyncratic shocks and low mobility of capital and labour. The BCEAO has admittedly decided to reduce banking transaction costs in the whole zone, but federalism is certainly not underway. The WAEMU has undertaken a number of initiatives in favour of greater market integration in labour, agricultural and manufactured goods, energy and oil products, but in the end decisions are still taken at the national level, thus perpetuating an intra-zone segmentation that limits the competitiveness of local companies and delays convergence among countries. But dismantling trade barriers, especially non-tariff ones, would improve efficiency of investments as well as circulation of talents, knowledge and goods. This integration, coupled with efforts in broadening the tax base (an IMF recommendation for the EU also applicable to the WAEMU), could provide local political and economic institutions with greater means to finally stimulate the emergence of a real common industrial setting and diversify their economies in order to improve resilience to idiosyncratic shocks. This seems all the more desirable as the openness of local economies weakens local enterprises, very exposed to international competition, yet still lacking the capacities to produce needed equipment goods. Finally, even if the fixed pegging to the Euro remains an important factor of stability and credibility given the weaknesses of African economies and their persistently strong ties with the Eurozone, the question of abandoning this monetary regime may be raised more seriously in the nearby future, especially in view of increasing trade relations with Asia, and China in particular.

Koffi Zougbede and Victor Valido Vilela

[i] (OCDE, estimations Coe-Rexecode, D. Ordonez, 2013)

[ii] Lessoua, Albert & Sokic, Alexandre, “Union monétaire et compétitivité comparée : les cas de la zone euro et de la zone CFA”, Bulletin de l’Observatoire des politiques économiques en Europe, 2012

[iii] Rapport sur la compétitivité des économies de l’UEMOA en 2001-2011 et 2012