Entretien avec Lionel Yao, fondateur de S-Cash Payment

L’Afrique des Idées a rencontré S-Cash Payment, une solution bancaire, totalement digitale. Son fondateur Lionel Yao, revient dans cet entretien sur le rationnel derrière la mise en place de cette plateforme.

ADI : En quoi consiste votre initiative, pourriez-vous nous donner un aperçu général de vos activités ?

Nous avons développé le premier compte sans banque 100% mobile pour les personnes exclues des systèmes financiers classiques, afin de leur permettre de bénéficier de solutions d’épargne, de crédits et d’un porte-monnaie électronique permettant d’acheter 24h sur 24 sans prendre le risque de transporter de la liquidité sur soi. Ce projet nous a couté plus de 25 millions Franc CFA jusqu’à présent. 

D’où vous est venue l’idée de fonder S-Cash Payment ? 

En 2015 lors d’un voyage au Nigeria en bus, j’ai été frustré et peiné parce que je ne disposais pas de compte bancaire, ni de produit bancaire comme les cartes de crédit pour effectuer mes transactions en naira. Ce constat m’a amené à chercher une solution dématérialisée  qui pourrait répondre aux problèmes de tous ceux qui étaient ou se retrouveraient dans ma situation. En faisant les recherches, je me rendu compte qu’en Afrique, on dénombre 925 millions de personnes non bancarisées en Afrique dont 420 millions en Afrique subsaharienne alors que 277 millions possèdent des smartphones et un compte mobile Money. Dès lors la solution que nous voulions proposer était possible et se justifiait. C’est dans cette optique que mon équipe (2 financiers et 3 codeurs) et moi, avions décidé de nous investir totalement pour créer S-Cash.

L’administration vous a-t-elle aidé dans vos démarches ?

Nous avons obtenu un fonds d’amorçage auprès de la fondation jeunesse numérique (www.fjn.ci), on espère plus dans le future. Au delà, d’un intérêt réel pour notre projet, nous n’avons pas reçu pour l’heure d’autres concours de l’Etat. Il n’y a pas de dispositifs d’appui concrets à des initiatives comme la nôtre malheureusement ; cela aurait été le bienvenu.

Quels sont les retours que vous avez eu sur votre projet ?

Nous avons seulement lancé pour le moment la version test (MVP) pour acquisition client. En termes de commercialisation véritable cela se fera dans les mois à venir. Nous recevons chaque jours de nos leads des messages nous demandant l’horizon de commercialisation de S-Cash car impatient d’utiliser la solution. Seules les banques demeurent réticentes à l’ouverture de leur système par peur des cybers attaques.

Comment voyez-vous l’avenir de S-Cash Payment ?

Je vois S-Cash comme une entreprise leader et experte dans la fourniture de solutions de finances digitales pour promouvoir l’inclusion financière en Afrique. Après la conquête du marché national, nous avons pour but de nous étendre sur toute l’Afrique subsaharienne !

Une dernière chose que vous souhaitez ajouter ?

La solution S-Cash est toujours en phase test et ne sera commercialisée que cette année. Mais nous avons déjà récolté un investissement de plus de 35 millions Franc CFA. Et nous restons ouverts à tout investisseur qui souhaiterait appuyer notre initiative pour contribuer à renforcer l’inclusion financière en Afrique.

Pour suivre le développement de S-Cash Payment, suivre leur page sur Facebook : @scash4you, Twitter: @scashpayment ou Instagram: @scash_payment

Potential, policies, financing and de-risking in Renewable Energy sector in Africa

600 million Africans have no access to electricity while the energy sources, especially renewable energies (RE) abound on the continent. Its key features: environment friendly, availability and its recent cost competitiveness gains over fossil energy; make renewable energy an excellent avenue to start an energy revolution in African. However, having affordable, sustainable and smooth access to energy has a cost. Public policy in investments promotion and risk mitigation in the RE sector are among other issues on which African Government should work on.

This study evaluates the potential of the continent in terms of renewable energy source, assesses the investment needs in light of the renewable energy targets of African countries and presents a set of recommandations to ensure these could be reached. Read the full note.

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

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

 

ICT and sustainable development in Africa

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

Is financial aid helping Africa?

“Give a man a fish and you feed him for a day ; teach a man how to fish and you feed him for a lifetime”. In simple words this saying explains the complexity that lies behind financial aid. Back in 1970, the United Nations General Assembly adopted resolution 2626, it was agreed that: “Financial aid will, in principle, be untied […] Developed countries will provide, to the greatest extent possible, an increased flow of aid on a long-term and continuing basis.”

Half a century later, hundreds of billions of dollars have been transferred from rich countries to Africa, yet as the percentage of its population living under the poverty threshold ($1.90/day) has decreased, the total number of people living under this same threshold has increased ; a real paradox. An explanation alone will not do, there is a need to find a solution as well. The Organization for Economic Co-operation and Development (OECD) in its 2015 edition report recorded that $55 billion were given by its member to Africa. Contrary to popular belief, the biggest receivers are not African countries but Asian countries. Afghanistan, Myanmar and Vietnam are the top receivers of financial aid in the world, whereas in Africa the biggest receivers are Egypt ($5.5 billion), Ethiopia ($3.8 billion) and Tanzania ($3.4 billion).

 

Of the $55 billion given to the continent, the biggest donators are the United States ($8.9 billion), the International Development Association (IDA) ($6 billion) and the European Union ($5.9 billion). Almost half of these $55 billion were allocated to the social sector which includes education, health and water treatment. This choice is not random, focusing on such a crucial sector facilitates the development of a country through the expansion of its production function which is allowed by improving the available factors of production. Furthermore, it can be argued that the Millennium Development Goals (MDGs) were directly targeted through such policies. Surprisingly, the economic sector accounts for only one fifth of the $55 billion given. This raises many questions especially when considering that under this category fall transport, communications, energy and banking. By leaving aside such important components, economic growth is hindered and development is in harm’s way.

Usually, the receivers are blamed first when there is a lack of effectiveness from financial aid. Bad governance is pointed out; it is true that some leaders did not hesitate to embezzle financial aid. No one really knows how much wealth Mobutu Sese Seko gathered (even though some claim it to be $13 billion) while his country was running at the time with a debt of no less than $13 billion… Although, even when good intentions are present, mismanagement is another problem. Sadly, the white elephant (Expensive investments that serve no purpose) has become the most widely observed animal in Africa as financial aid is spent on non-essential sectors, due to a lack of expertise. Yet, this should not mean that the responsibility falls solely on the receivers.

The roles of the donators can also be questioned. 46 years ago it was agreed between the UN and the donating countries that each year, they would donate 0.7% of their gross national product (GNP) to developing countries. As of today, only five countries meet this criteria: Denmark, Luxembourg, Norway, Sweden and the United Kingdom… Then again, giving too much money can also be a problem as it causes a dependency on financial aid. Even more troubling is tied aid, its consequences are gruesome as entire populations are deprived because their governments do not satisfy the political criteria established by the community of donators.

Last but not least, the arrival of new donators should be welcomed cautiously. Even though most of the donators are western countries, new ones are emerging. The BRICS (Brazil, Russia, India, China and South Africa) as well as Turkey are more and more contributing. Furthermore, with economic downturns for the western economies, their donations has substantially decreased. This has allowed these new actors to rise, China for instance has pledged to donate $60 billion to Africa during the last China-Africa summit. However, the arrival of new donators does not necessarily lead to a more favorable situation for the receivers ; in the end good governance and inclusive growth are both the reactants and the products in this equation.  

 

Meanwhile, Africans living outside the continent send more and more money home to their families. It is only a question of time before remittances outweigh financial aid given to the continent… A strong reminder that Africans have the power to change Africa foremost.

 

Riad KAID SLIMANE

 

REFERENCES

OECD, Development Aid at A glance, Statistics by region, Africa, 2015 edition. http://www.oecd.org/dac/stats/documentupload/2%20Africa%20-%20Development%20Aid%20at%20a%20Glance%202015.pdf

MOYO Dambisa, Dead Aid: Why aid is not working and how there is a better way for Africa, 2009, p.208

Interview with Tidjane Deme, Office Leader for Google Africa

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

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.

 

Poverty in Africa

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

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

Are African States able to finance their development ?

The durability of the current economic dynamics of African states is an acute issue, for this performance relies more on the exploitation of natural resources than on the exploitation of production factors with high added value (capital and labor). According to Kuznets’ definition [1] of economic growth as “a long-term rise in capacity to supply increasingly diverse economic goods to its population, this growing capacity based on advancing technology and the institutional and ideological adjustments that it demands”, the current dynamics needs a thorough transformation of African economies. All analysts agree on this.


The structural transformation is a must. These measures vary a lot but many of them are based on industrial sector. This process requires an improvement of conditions for pursuit of an activity in order to attract investments and favor industrial development. Here the State has to play a crucial role. The conditions for pursuit of an activity depend not only on laws and tax break but mostly on the institutions and the infrastructure quality: a politically stable country with no basic infrastructure (electricity, road, ICT etc.) is less attractive for investors than a politically unstable country with quality labor force and efficient infrastructure. Yet, only the State has the prerogatives of building infrastructure.


Articles published on this website have already discussed the many possible sources for States to finance development. It supposes that budgetary funds finance structural projects which make the countries more attractive and favor changes. However, nothing ensures that the States will invest the available resources in structural programs. See the different examples of debt crises, and recently Greek one. Those situations question the ability of African States to finance their development, in which case they succeed in mobilizing enough resources.


This article offers to analyze the budget expenditure structure of African countries and identify to what extent it can be an instrument of support to the socio-economic dynamics of the continent on the long-run. 


Sub-Saharan countries have great needs in infrastructure. According to the World Bank and the United-Nations [2], the coverage of those needs would require an investment from 16 to 18% of the GDP, with at least 11% dedicated to the construction of new infrastructure. Nowadays in sub-Saharan Africa, public investment is in average 6% of the GDP, with hardly 4% of the GDP dedicated to the construction of new infrastructure. It is to note that the situation is not the same in the region: some countries have already reached level of developments which don’t need heavy investments for infrastructure construction but which need to ensure its maintenance; others have just come out of a time of crisis and need high levels of expenditure for the State reconstruction. 
In spite of praises of the current transformations on the continent, especially infrastructure building, those data remind us that those transformations, if any, are very slow. The lack of available resources explains this situation. However, does State maximize the available resources to finance the investments?  The following figure provides some answers.

Source: IMF - Classification of the budgets of African countries in 2013 Source: IMF – Classification of the budgets of African countries in 2013

First of all, it is to be noted, from this figure, that African countries spend only what they have and they must be under pressure of their financial partners due to their commitment to control their deficit. They are all located in the diagonal line of the figure made by the budget size (as a percentage of the GDP) and the financial resources (tax and other non-tax resources, including those from the exploitation of natural resources). However, here are some gaps: the Central Africa Republic and Bissau Guinea are countries coming out of crisis, with huge needs and dependent on international subsidies and which then cannot afford to spend more than their internal capacities. Other countries, more extrovert, incur expenses through the use of debt (Gambia, Ghana, etc.) or international assistance (Burundi, Malawi, etc.). Curiously enough, some countries do not make use of their full potential: well-resourced Congo Republic and Gabon spend very few.


Most countries have very limited resources and thus, a low budget. According to the available data, the domestic resources mobilized by the States have trouble reaching the 35% advocated by the United-Nations. However, there are great disparities between countries. While Lesotho exceeds 50% for domestic resources, Nigeria in spite of its high economic potential, have trouble reaching 35%. This situation conveys a certain State “incompetence” to raise resources for the implementation of the budget policy. In this context, States leverage poorly economy as they have limited financial base.
Moreover, much of the resources finance unproductive expenditure (see the size of balloons on the graphic). In average, nearly 85% of the domestic resources raised are used for the payment of salaries, public orders invoices (goods and services) and some transfers or subsidies, at the expense of productive spending. If the debt service payments (principal and interests) are included, the share for profitable investments is very small. Debt and international assistance could be an alternative, but the resources are limited by the financial availability of the partners on the one hand and by the cost and the obligations linked to budget deficit on the other. Even if other sorts of financing are taken into consideration, States cannot go through those constraints. Those different sorts of financing mainly enable to diversify the risk portfolio and alleviate their burden on public finances and economies.


Those states are mainly “consumers-employer” whereas African countries need more “investor States”. The implement pace of the few current infrastructure programs suffers from the costly running of African administrations and does not convey their capacities. A better distribution key of expenditure should enable States to finance more productive investments and limit the use of external resources. Outside financial sources can be a constraint on the long run, even in the current background characterized by limited domestic resources.


Ethiopia with 14% of GDP as domestic resources is here a good example. His budget is restrained to 18% of the GDP and his unproductive expenditure (without debt services) absorbs only 24% of domestic resources. He is one of the countries who make the best advance in the HDI ranking between 2000 and 2013 and one of the most attractive countries in the continent, even if he is not said to be part of the “great African democracies”. One can think that Ethiopian State could be a better catalyst and could accelerate the implementation of structuring programs if he reinforces the domestic resources raising system. On the contrary, Nigerian State has a low financial capacity, despite his high economic potential: the domestic resources represent only 11% of his GDP, including 91% dedicated to running expenditure and wage payment. The majority of the sub-Saharan countries has a profile similar to Nigerian one with some variations. In some cases like in the Central Africa Republic, Guinea-Bissau, to a lesser extent Sudan, Madagascar, the decay and the resilience of the central administration explain this huge cost of running. Other countries do not have great needs in infrastructure construction, which limits investments budget to maintenance works: Lesotho, South-Africa, Mauritius, or the Seychelles. This is not a better option.


The purpose here is not to blame the running spending, in favor of investment spending. Actually, great investment policy does not ensure that the economy shall be more attractive or performing. Every invested dollar must be efficient. However, the impact of the running expenditure is very weak on the economy. Public order (for the administration running) and wage payment enable to boost consumption and form a market for some companies. This sort of spending does not lead to business environment changes in order to develop new activities or attract more important private funds. This policy is a way to maintain the economy in the same bases. Its importance in the budget of African States is sticking point on the role of States in development process. 


Nowadays, sub-Saharan States measure the role they could play in development process but they are still limited by their financial capacities and their internal management which consumes a great part of the resources they have. Development plans and more assistance from financial partners are useless without deep changes in the running of State administration. States mainly need to stop being « consumers-employers » and act to (i) reinforce the mechanisms of raising domestic funds, especially the fiscal system, (ii) reorganize the public spending, especially the wage bill. More generally, decisions for a better public finance management must be taken in order to save funds for public investment and make public spending more efficient. The funds left to States are numerous and the lack of budget disciplinary prevent from maximizing the domestic resources raising and spending. The ways to economic emergence for African countries requires a breakdown in the public finance management and disciplinary.

Translated by Mame Thiabe Diagne

[1] Nobel Prize speech (1971)
[2] Economic Development in Africa 2014 : catalysing investment for transformative growth in Africa