Posts

, , ,

Africa Rising: A Future of Economic Growth

Africa Rising
This past May, the International Monetary Fund met with Governors and Finance Ministers of Sub-Saharan African nations to assess progress in the region over the last two decades and anticipate challenges for future growth.

Sub-Saharan Africa is considered one of the fastest growing regions on Earth. Last year,  after a recalculation of its gross domestic product, Nigeria surpassed South Africa as the largest economy on the continent, and placed it on par with the economies of Poland and Belgium as the 24th largest economy in the world.

Many countries in the region have benefited from strong economic performance, stronger institutions and higher investment in human and physical capital. However, job creation is low and there are large infrastructure gaps.

Even in Nigeria, per capita income is a low $3,000.

Leaders at the Africa Rising meeting in Maputo, Mozambique discussed ways to solve these issues and ensure that the growth the continent has seen in the past continues into the future. Policies will focus on job creation and diversification, and on correcting the income inequality that accompanied recent economic progress.

Those who attended the Maputo Joint Declaration also agreed on the need for a two-part system of transformation. The first of these is the creation of a strong private sector to create jobs; the second is investment in infrastructure with a focus on transportation and energy.

It is estimated that $90 billion a year is needed to close the current infrastructure gap across the continent.

“Sub-Saharan Africa will need to redouble efforts to harness the opportunities offered by its abundant natural resources and ensure that their fruits are equitably shared,” said Christine Lagarde, the International Monetary Fund’s managing director.

Despite recent growth, conflict still plagues sub-Saharan Africa, preventing further progress. The activities of Boko Haram in Nigeria, the crisis in South Sudan and a possible recession in South Africa all threaten years of development.

To maintain developmental progress, attendees of the summit agreed that economic policies should be flexible and tailored to each country, especially in the face of conflict. Leaders also expressed appreciation for the assistance of the International Monetary Fund and hoped for continued support in times of need.

The growth of African nations in recent years has allowed them to tap into the sovereign debt market for the first time.

Lagarde said national leaders must be warned of the dangers of racking up too much debt. The International Monetary Fund predicts that debt for sub-Saharan African countries will hide 35 percent of GDP in 2014.

“That is additional financing, but that is an additional vulnerability,” Lagarde said.

The International Monetary Fund estimates that fiscal deficits in the region will be 3.3 percent of the GDP this year. But in its biannual report, the International Monetary Fund also predicted economic growth of 5.4 percent, up from 4.9 percent last year.

It appears that Africa is indeed rising, and if it can withstand internal challenges and global shocks as it continues to grow, the world may also see a reduction in the extreme poverty situation that affects so many of its citizens.

– Kristen Bezner

 

Sources: Financial Times, The Guardian 1, The Guardian 2, IMF
Photo: Vacations and Travel

, , , ,

The Listening Project

the-listening-project-international-aid
The Listening Project began as an attempt to capture the side of international developmental aid that we don’t often get to hear. It’s conductors, Mary B. Anderson, Dayna Brown and Isabella Jean, wanted to collect the experiences of those who receive aid, so as to better outline their expectations and understand their realities.

The project’s main objective is to highlight the importance of critical feedback from those whose lives it affects most deeply. They discovered that there was an overwhelmingly popular opinion among the 6,000 people interviewed that the notion of aid is good, but its implementation is increasingly bad.

They found that those receiving international assistance generally held expectations that it would contribute not only to the economic betterment of their country but also to its increased political and social conditions. Ultimately, they hoped that the support they received would garner a relationship with the international community based on solidarity.

Almost every interview began along the lines of: “We very much appreciate the assistance… but…” The “but” was nearly always followed by a personal example of a negative externality produced by their country’s growing dependence on foreign aid. The interviewees agreed that their reality does not meet their expectations. While the stories concerning aid were all very cheerful in the short-term, they grew to be disheartening in the long-term.

The chief negative effect identified in the interviews typically involved an increase in the general sentiment of powerlessness and dependency. Those interviewed said that, at times, international actors bring projects that wind up perpetuating the need for more projects and more assistance. Additionally, the influx of public funds often leads actors within the country to create policies and projects that assume these funds will always be available. These practices establish an endless cycle of dependency.

Interviewees also noted how aid can increase tension between groups. Often this is brought on by a sense of relative deprivation caused by specific targeting of aid of one group and not of another. Because foreign agencies sometimes assign aid along ethnic or religious lines- divisions that may have caused violent conflict in the past- there runs a danger of reigniting long-standing prejudices.

Finally, interviewees say that the solidarity they hoped would come from aid has instead lead to a sense of mistrust toward aid agencies. The main suggestion of a great number of those interviewed was that there should be an increase in consultation. Aid agencies need to observe more closely the local social dynamics that play out in different cultural contexts before administering to the people.

On a more uplifting note, many observed an increasingly positive impact on the status of women. Many international programs focus on the improvement of the lives of women, and a great number have been successful at helping women become empowered. These programs often serve two purposes: to increase the capabilities of women and to force men to realize how this increase can contribute to the betterment of their community as a whole.

Before the project, the researchers wanted to emphasize that they in no way disagreed with the potential foreign assistance holds to bring positive impacts to the billions of people living in poverty worldwide. Their take on the issues of aid revolves around problems of implementation, not motivation.

They state in their book Time to Listen: Hearing People on the Receiving End of International Aid that the main problems stem from the historical focus on disaster response instead of prevention. They suggest that a proactive approach to humanitarian issues is the most helpful in the long-term. They also cite certain aid agencies’ adoption of business principles and mechanisms as a prevalent issue. Aid agencies sometimes adhere too closely to the interests of their profit-seeking donors while failing to respond appropriately to the needs of aid recipients.

Additionally, when local partners are used as “middle men,” it creates a wider disconnect between donor and recipient. This can provide an opportunity for the diversion of funds and most certainly breeds “competition instead of collaboration.”

The Listening Project aims to bring these contradictions between expectations and realities to light. Since its beginnings in 2005, the project has influenced multiple aid agencies to adopt policies that can better address the issues raised by the aid recipients. As the voices of these people are heard, the awareness of the need for changes in the way foreign assistance is provided also increases.

– Kathryn Cassibry

Source: The Listening Project
Photo: Global Humanitarian Assistance

Self-Sustaining Agriculture for Nigeria?

Niger_farmer_man_crop_yield_infrastructure_africa_crops_poverty_international_Aid_government_opt
In a country where 60% of the population are employed as farmers, it is a disheartening fact that Nigeria is not agriculturally self-sustainable. Not only does the country lack the level of food production needed to feed its growing population, but the shortfall is so great that Nigeria is the world’s largest importer of rice, spending $11 billion a year on food importation.

Despite some 100 million farmers, out of a population of 167 million, the majority practice subsistence farming. Less than half of Nigeria’s arable land is currently being used for food production, and some sources claim less than 10% is used optimally. Additionally, many of these farmers still aren’t employing modern methods and tools.

Without government intervention, this is unlikely to change soon. For one, the farming population is aging, despite 70% of Nigeria’s total population being under the age of 30. Youth are moving to the cities rather than remaining in rural areas, and this demographic shift takes a toll on farms as the potential workforce is depleted. Additionally, banks are reluctant to lend money to farmers, as returns on investments are slow. A system of government aid or microcredit may be necessary to allow farmers to update their equipment and buy fertilizer, and so increase their yields.

However, it is a lack of infrastructure in the country that might be the biggest contributor to the constant shortcomings in food production. Roads are often unsuitable for transportation, and water and electricity provision are inconsistent. The lack of suitable roads leads to a huge amount of waste as crops are unable to be transported in a timely manner. According to Nigeria’s Farms Minister, Akinwumi Adesina, 45% of the country’s tomato crop is lost every day, simply because farmers are unable to get them to the market.

The problems in agriculture stems partly from the discovery of oil in Nigeria in the 70s, and the subsequent shift away from farming. But more often it appears to be inefficient methods and insufficient workers. Crops often go unharvested, or yields simply aren’t high enough to provide a surplus.

Nigeria’s president, Goodluck Jonathan, has targeted 2015 to eliminate the need to import rice. With Nigeria’s population quickly swelling, though, it will take more than a simple increase in yields to meet the demand. Infrastructure will need to be improved, and a modernization of the industry must take place.

With the country set to surpass the population of the United States before 2050, this revitalization will be crucial to its future success.

– David Wilson

Sources: The Economist
Photo: IFAD