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The Rise of the ‘New’ Donors for Africa

Dakar — “It’s taken the world a while to notice they exist – and now we’re obsessed with them,” is how Karin Christiansen, head of Publish What You Fund, characterizes the west’s relationship with what people call “new”, “emerging” or “non-traditional” donors.

Many are not new at all – India, Brazil and China have been giving aid for decades – but what is new is that a group of non-western donors is giving more humanitarian and development aid year on year, and reporting it more consistently to official trackers, such as the UN’s Financial Tracking System (127 donors reported aid in 2010).

As they “emerge”, the traditional hegemony held by western donors over how and where aid is dispersed is starting to be dismantled.

“A hegemony or sense of tradition has developed over decades in the western humanitarian movement, that it should spearhead response to disasters because it has special experience and ability,” says Randolph Kent head of the Humanitarian Futures programme at King’s College, London.

“But increasingly we are seeing more and more humanitarian players from the east responding to disasters – India, China, Vietnam and Bangladesh for example – are more than capable of responding and managing crises in their own countries.”

These donors do not necessarily want to join the Organization for Economic Co-operation and Development (OECD) Development Aid Committee – they are forming their own localized coordination groups instead.

Brazil and Spain signed an agreement in 2011 to jointly implement aid projects; Russia recently partnered with Venezuela on Haiti earthquake response; Brazil, India and South Africa set up a Poverty and Hunger Alleviation Fund in 2011.

Many are the same governments that have argued for years for a less top-down, more partnership-oriented approach when receiving aid. India, after all, was both the eighth-largest receiver of official development assistance in 2008 and is expected to be the third-largest economy by 2020.

Some governments are growing increasingly frustrated with the western domination of inter-governmental bodies such as the World Bank and International Monetary Fund. Brazil, Russia, India and China issued a communiqué in April 2011 stating: “The governing structure of the international financial institutions should reflect the changes in the world economy, increasing the voice and representation of emerging economies and developing countries.”

Western powers are not showing themselves keen to shift too much, yet. But in due course, all donors will be forced to shift at least a little, say analysts. In light of these changes, IRIN discusses just how transparent is China’s aid programme; analyzes the rising influence of Muslim and Arab donors and aid agencies; and asks analysts whether aid agencies are preparing sufficiently for the future by reaching out to new donors such as Brazil and India.

Copyright © 2011 UN Integrated Regional Information Networks.

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Democracy or Prosperity, Which Comes First In Africa’s Bid for Prosperity

Feature/Africa Development

Democracy or Prosperity, Which Comes First for Africa?

As Africa’s democracy gradually evolves, the arguments are whether Africa should concentrate on creating prosperity first and then grow its democracy later or build up its democracy first and then use it to develop its prosperity. This thinking has come about because of the on-going democratic revolutions occurring in Africa, in places such as Libya, Tunisia and Egypt, and multi-party democratic elections after elections have become recurring rituals.

Despite its global hypothesis, in the African context, the democracy-or-prosperity arguments wheel around Africa’s largely enviably untapped wealth and the continent’s painful dark political history where totalitarianism of all brands had been the order of the day. So whether prosperity first, democracy second, or the other way around will be determined by Africa’s political history in the past 50 years.

In most parts of Africa independence from colonial rule saw authoritarian one-party-systems and military juntas dominating the political scene. The erroneous thinking, as Kofi Abrefa Busia, a former Prime Minister of Ghana, explained, was that democracy was thought to be “alien” to “Africans thought and way of life,” and that the only language Africans understands is despotism that emanates from the African culture. As Ghana under Kwame Nkrumah witnessed, the argument was that authoritarian one-party system will bring rapid prosperity by controlling all dissent and freedoms.

Still, as military juntas in Southeast Asia such as South Korea or South America such as Brazil had done, the thinking was that Africa’s then mushrooming military juntas such as Uganda under Gen. Idi Amin will either be able to use their military discipline for either speedy advancement or laid the foundation for swift progress. In all this, the so-called rapid prosperity didn’t happen – Africa became more backward materially than before despite it’s immensely endowed human and natural wealth. Rather, the military juntas and the one-party systems left in its wake muddled thinking, oppression, deaths, confusion, state paralysis and state collapse, civil wars, endemic corruptions, tribalism, and constant fear and threats.

In Libya, a key face of Africa’s current democratic revolution, despite is immense oil wealth with a population of only 6.6 million; its problem is that for 42 years it has been despotically rule by Muarmmar Gaddafi. Despite having per capita income of about US$13,000, average life expectancy of 77 years, UN Human Development Index at 53th position out of 170 countries graded (high at 2010 rankings) and literacy rate of about 90 percent, the schisms between democracy and prosperity saw a civil war for democracy and freedoms break out in the face of dictatorial practices where freedoms were brutally suppressed.

On the other hand, Botswana, Africa’s longest democracy star, has about a third of Libya’s population, and a little better than Libya’s per capita income (at US$15,489). Botswana’s UN Human Development Index is at the 98th position (medium at 2010 rankings). But Botswana has been able to balance democracy and prosperity ever since it got independence from Britain in 1966 and its people enjoy greater peace, freedoms and democratic tenets for the past 44 years under the long-ruling Botswana Democratic Party. Unlike Libya, Botswana’s democracy has come with it sound accountability and transparency. Transparency International reports that Botswana is the least corrupt country in Africa. In the course of the Libyan democratic revolution, an anti-corruption worker who spoke to Transparency International’s Arab branch said, “It wasn’t safe to fight corruption. If you opposed the government, you would disappear. We were careful. But now we are ready to work.”

The lesson from the Libyan and other African states’ perturbations is that when a country is prosperous its people want more freedoms. Libya had been undemocratic for the past 42 years. Till the democratic revolution, Libya had put economic development first for prosperity but missed out in opening the democratic field (as South Korea, Chile and Taiwan did) and saw Gaddafi blew its authoritarian regime into pieces. Most Africans states, after gaining independence from European colonial rule had put democracy ahead of economic development but didn’t prosper and went back to despotism that sent most into turbulence.

Botswana and Mauritius’ experiences teach that there have to be skillful grafting of prosperity and democracy if holistic advancement is to take place without recourse to dictatorships. Botswana and Mauritius show that African governments who put democracy ahead of economic development do not slip back into tyranny. The 2009 Mo Ibrahim Index of African Governance, limited to sub-Sahara Africa, measures the health of African governance practices using different variables. The Index’s 2009 report revealed that Mauritius has the highest rank of “participation and human rights” and “sustainable economic opportunity.” With a per capita income of US$14,097, Mauritius came second in the “rule of law.” In the UN Human Development Index, Mauritius ranked 72nd out of 170 countries measured (high in the 2010 rankings).

The African understanding indicates that democracy and prosperity should be simultaneously affixed in the proposition for Africa’s sustainable progress. The Botswana and Mauritius’ successful models that are gradually been replicated Africa-wide is captured in The Prospects for Democracy in Africa (1961) by Kofi Abrefa Busia when he asked: “The question which we cannot avoid asking is whether economic development and nation building must mean authoritarianism and denial of freedom. Is it true that roads, railways, houses, harbours, factories and the like can only be quickly built under dictatorial forms of government?”

If you like this article, I’d recommend my book “If I Was Famous, I’d Have a Lot to Say”

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Is the West losing Africa to China?

Teo Kermeliotis

With Chinese yuan and Indian rupees increasingly finding their way into Africa’s economies, Western powers are worried that they are losing influence in the resource-rich continent, according to analysts.

Driven by their appetite for natural resources, trade opportunities and political alliances, emerging powers such as China and India are moving from the sidelines to the center stage in Africa — a region the West has long considered to be its own trading partner.

While Western countries are still important players in Africa’s energy sector, the deepening engagement of China in Africa’s infrastructure, mineral sector and telecommunications is creating “deep nervousness” in the West, says David Shinn, the former U.S. ambassador to Burkina Faso and Ethiopia.

Asian giants scent opportunity in Africa

The competition in these areas, he explains, usually pits big Chinese enterprises that are financially backed by Beijing’s deep pockets against Western companies that often have shareholders to consider and are by-and-large acting independently of their governments’ desires.

“If the Chinese government wants to encourage an engagement in the Democratic Republic of the Congo, they can make it happen,” says Shinn. “If the United States wants its companies to get involved in the DRC all they can do is say ‘look, there’s an opportunity there, why don’t you go explore it’ and if they want to explore it, they do and if they don’t they don’t.”

According to Shinn, this different system of government “does create anxieties” because “the United States and the West see China filling all kinds of voids that it thought it would eventually fill.”

China overtook the United States as Africa’s biggest trade partner in 2009, according to OECD figures, whereas in 2000 the United States’ trade with Africa was three times that of China’s.

India’s bilateral trade with Africa jumped from around $1 billion in 2001 to about $50 billion last year.

India bids to be Africa’s ‘new best friend’

The European Union still accounts for more than 40% of Africa’s trade but the share of Africa’s trade with the EU and U.S. fell from 77% to 62% over the last decade. At the same time, the share for new economic forces — China and India but also countries like Brazil, Turkey and South Korea — rose from about 23% to 39%.

China’s first official aid project in Africa took place in the 1960s, and in 1975 it completed construction of the iconic Tanzania-Zambia railway. In the early 1990s, when headline-writers would often label Africa as the “failed continent,” Beijing decided to step up its foray into the continent, filling the gap left by an exodus of Western investors.

“Just as Western companies were mothballing mines, walking away, certainly not bringing new investments, China plunged in and dared to go where the white man feared to trade,” says Richard Dowden, director of the Royal African Society, based in London.

“It was quite amusing to see the Western mining companies, who’d been shrugging their shoulders at Africa and looking elsewhere, suddenly rushing back in.”

The emergence of China as a major player in Africa has prompted many Western countries to change their strategies on the continent and emphasize the need for collaboration.

“Earlier on, you heard (U.S.) officials maybe talk about China as a threat or as a competitor in Africa,” says Richard Downie, deputy director of the Africa program at the Center for Strategic and International Studies. “All the language from officials now is about Africa as a place where competition is good … and all the efforts here (in the United States), at least in public, are about seeking areas for cooperation and collaboration with China — so the language has shifted.”

Yet concerns about China’s role are still being voiced in public.

When U.S. Secretary of State Hillary Clinton was asked about China’s growing influence in Africa, during her visit to Zambia in June, she said that Africa must beware of a “new colonialism.”

“We saw that during colonial times it is easy to come in, take out natural resources, pay off leaders and leave,” Clinton said from the mineral-rich country that has attracted heavy Chinese investment in mining.

Although Clinton avoided naming China specifically in her remarks, the suggestion that it could be fostering colonialism in Africa was immediately dismissed by Beijing.

Downie says Clinton’s comments come at a moment when China’s increasing role is creating “a sense of unease” in the United States which echoes a larger debate about America’s declining influence as a world power and China’s rising prominence.

“The U.S. is very sensitive about it at the moment,” he says. “Africa is the corner of the world where that declining U.S. influence is most evident,” he adds.

Ayo Johnson, director of Viewpoint Africa, a media organization dealing with news from the continent, says the growing influence of emerging players has left the West feeling “very rattled” and put African countries in a stronger bargaining position.

“It’s becoming very difficult for the West to deal with Africa from their usual perspective,” says Johnson.

“When you’ve been used to doing business in a particular fashion, when you’ve been used to dealing in a certain way and then there’s an injection of a third or fourth player who risk the entire dynamic — that’s exactly what has happened with India and China and now made it so much easier for Africans and their leaders and their communities to choose among the various investors.”

Shinn says that to the eyes of many African leaders China’s capacity to move fast, coupled with its policy of non-interference in other countries’ internal affairs, often makes Beijing a more attractive partner than the West, whose policy in the continent is usually linked to conditions about good governance and human-rights reforms.

One of China’s big advantages is that “the Chinese have no mission, no intention at all to change Africa,” agrees Dowden.

He adds: “There’s still a narrative in our minds in the West that Africa is backward and Africans have got to become like us — ‘we have got to change them’ — I think that Africans feel that and the young African generation that’s coming through are now very resentful of that.”

If you like this article, I’d recommend my book “If I Was Famous, I’d Have a Lot to Say”

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The Power of Partnerships in Africa, by Kofi Annan

We are witnessing a historic change to the development paradigm. Drastic spending cuts in the United States, uncertainty around Europe’s common currency and the consequences of the earthquake in Japan are reordering international priorities and put further pressure on aid budgets. At the same time, development needs in Africa are multiplying as climate change and rapid population growth add new financing demands, and populations empowered by advancements in information and communication technology are asking more of their leaders. While aid remains vitally important to build capacity, leverage other flows and achieve specific results, it is clear that African leaders and international donors need to look beyond traditional development strategies to fill funding gaps and accelerate progress.

We at the Africa Progress Panel are convinced that partnerships harnessing a broader range of actors and their energy, creativity and resources can provide at least part of the solution. In this year’s Africa Progress Report, which we launched yesterday at the World Economic Forum on Africa, we call on leaders in all sectors, including government, business, and civil society, to do more to strengthen, replicate and scale-up existing partnerships, but also to identify and consider new forms and areas of collaboration.

Partnerships have already demonstrated their transformative impact. In recent years, we have seen collaboration between the private sector and international philanthropists leading to significant reductions in malaria deaths. Partnerships between mobile-phone providers and governments have greatly increased access to finance for Africa’s poor. And collaboration between civil society and intergovernmental organizations has vastly improved access to credit for smallholder farmers and helped raise agricultural productivity.

By mobilizing resources, improving efficiencies or extending services, access and opportunities to marginalized groups, partnerships can clearly achieve tremendous results. In doing so, they are already complementing and expanding government-led development efforts. But — as the various partnerships around the introduction of mobile money in East Africa have shown — collaborations brought to scale can achieve much more. They can create vibrant markets, transform entire sectors, and lead to sustainable structural change.

As countries and companies are shifting their attention from Africa’s problems to its vast potential and abundant opportunities, new spaces for engaging actors around their comparative advantages are opening up. The private sector understands that it needs the access and knowledge of local partners and national governments to grasp the enormous commercial opportunities at the bottom of the pyramid. Governments and civil society organizations are recognizing the value of the resources, capacities and expertise the private sector can bring to their development efforts. As the interests of the various sectors continue to converge, and improvements in regulatory environments make cooperating easier and safer, opportunities for partnerships continue to grow.

However, despite the many encouraging examples we have seen, the number of successful partnerships remains miniscule compared with both the potential and the need for them. Too often, activities remain small-scale, localized and isolated, as actors lack the capacity, resources or incentives to scale up their operations, replicate them elsewhere, or deliver more than piecemeal change. As a result, many opportunities for tackling Africa’s problems and driving its progress are missed — to everyone’s detriment.

We argue that more can, and should be, done to facilitate the spread of successful partnership models across countries and sectors. National governments can do more to ensure the regulatory conditions that allow partnerships to mature beyond pilot projects. International donors and institutions can do more to initiate and provide seed funding, risk mitigation and other supportive guarantees to innovative models. Private-sector actors, particularly international corporations, can do more to move beyond traditional patterns of sourcing, production, and distribution, and expand their operations to marginalized segments of the population. And civil society organizations can do more to increase accountability and play a constructive intermediary role.

However, despite the enormous value they can add, partnerships for development are certainly no panacea for all of Africa’s problems. Even brought to scale, there are limits to what they can achieve. They do not replace good governance, strong institutions as well as political leadership and vision as the core ingredients of progress. On the contrary, partnerships depend on these to be able to fulfill their potential.

Crucially, partnerships do not shift the responsibility for progress away from the shoulders of African leaders and international donors, even though they can help to spread the burden. Donors still need to fulfill the extensive financial and political commitments they have made to Africa, and it remains up to African leaders to inspire processes and build capacities to translate the continent’s wealth and potential into tangible benefits for its citizens. It also remains up to them to protect these citizens from the vagaries of nature and the volatilities of the global economy, providing them with adequate public services and opportunities to feed and educate their children and make a decent living.

For this, Africa’s leaders need to rise to the interlinked challenges of growing their economies, delivering results for their people, conserving the environment, and achieving the Millennium Development Goals they set themselves a decade ago. My fellow panel members and I strongly believe that partnerships can help them with all of these tasks.
Kofi Annan is Chair of the Africa Progress Panel. The panel launched the 2011 Africa Progress Report — ‘The Transformative Power of Partnerships’ — at the World Economic Forum on Africa this week. The full report is available to download from www.africaprogresspanel.org

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Africa: ‘Continent of Hope’, Kofi Annan

The foreword to the Africa Progress Report 2011, by the former United Nations Secretary-General:

The last year has been particularly eventful for the continent, and the world as a whole.

A growing debt mountain in the United States, uncertainty around Europe’s common currency and the consequences of the earthquake in Japan are reordering the industrialized world’s priorities. This and the lingering repercussions of the global financial crisis, accelerating shifts in the balance of economic and political power, high food and fuel prices, and political change in North Africa have transformed the policy space in which African leaders and their partners operate. By compounding existing challenges, but also by creating new opportunities, these dynamics are transforming prospects for ordinary Africans across the continent.

The events of the last year have also accelerated changes in how Africa is perceived – and perceives itself. The broader aftershocks of the financial crisis, including currency and price volatility, fiscal crises and asset-price collapse, have proved that no region, for better or worse, can be seen as exogenous to the world economy. They have also highlighted the need for new growth poles and markets to sustain the economic order in the developed world. As a result, countries and companies are increasingly shifting their attention from Africa’s problems to its vast potential and abundant opportunities. In the process, they are redefining the continent’s image.

On the continent, these shifts in perception are accompanied by a heightened appreciation of the need for African self-reliance in an uncertain world, and by a palpable spirit of optimism despite some high-profile setbacks. The fast recovery and strong growth rates of many economies, plus numerous examples of social and political progress, are feeding a remarkable “can-do” spirit. This is reinforced by events such as the Football World Cup in South Africa, the peaceful referendum in South Sudan, the adoption of new constitutions in Kenya and Niger, and unforeseen political change in Egypt and Tunisia.

What was termed “the hopeless continent” ten years ago has now unquestionably become the continent of hope. Hope that strong growth rates will translate into jobs, incomes and irreversible human-development gains; that the continent’s enormous wealth will be used to foster equitable and inclusive growth and generate opportunities for all; that economic transformation and social progress will drive further improvements in democratic governance and accountability as the middle classes grow and demand more of their politicians and service providers; and hope that rulers who abuse their power to enrich themselves at the expense of the poor and of democratic processes are, at last, seeing the writing on the wall.

That many of these hopes actually seem attainable shows how far the continent has come. Hope, however, is not enough. Positive trends are being offset in too many countries by structural governance deficits.

Violence, political turmoil, and uncertainty still scar too many parts of the continent and add to the challenges already at hand. The slow progress towards the Millennium Development Goals (MDGs), the difficult task of providing productive employment for rapidly growing numbers of young people, increasing inequalities and food insecurity, the risk of contagion through increasingly interconnected systems and the effects of climate change all threaten past and future gains.

Despite repeated promises of reform by the world’s most powerful countries and institutions, Africans also remain heavily marginalized in world affairs, with little say in and control over how decisions affecting their countries are taken. The continent’s enormous potential remains constrained by unfair global rules and the ambivalent behaviour of many partners, particularly with respect to tariff and non-tariff barriers to trade, distorting quotas and bloated subsidy regimes.

Given these obstacles and challenges, it is all the more remarkable that some countries in Africa have shown such solid progress towards sustainable growth and development. They offer clear proof that, with the right combination of leadership, focused development plans, and international support, enormous advances are possible in even the most difficult circumstances.

However, all African countries face the increasingly difficult task of mobilizing resources in an age of austerity. As pressures on aid budgets increase, and climate change adds new financing demands, African leaders and international donors are realizing that they cannot drive development on their own. Official development cooperation remains vitally important to build capacity, leverage other flows and achieve specific results. Yet, there is also a growing need for partnerships harnessing a broader range of actors and their energy, creativity and resources to fill the gaps.

Such partnerships have already proven their transformative power.

Collaboration between the private sector and international philanthropists has led to significant reductions in malaria deaths. Partnerships between mobile-phone providers and governments have resulted in greater access to credit in rural areas and transformed business across entire regions.

Partnerships between civil society and intergovernmental organizations have led to vastly improved agricultural methods and inputs for smallholder farmers. By mobilizing resources, improving efficiencies, or extending services, access and opportunities to previously marginalized segments of the population, partnerships can clearly complement, expand and improve government-led development efforts. If scaled up, they can even affect sustainable structural change.

Current dynamics are highly favourable for strengthening cross-sectoral collaboration. Over the last years, new spaces have opened up for engaging actors around their comparative advantages and respective interests as the benefits of partnering have become more obvious. The private sector understands that it needs the access and knowledge of local partners and national governments to grasp the enormous commercial opportunities at the bottom of the pyramid. Governments and civil society organisations are recognizing the value of the resources, capacities, and expertise the private sector can bring to their development efforts. As the interests of the various sectors continue to converge and improvements in regulatory environments make cooperating easier and safer, opportunities for partnerships continue to grow.

The core elements of effective partnerships are well established, even though their combination may vary: political leadership and vision from governments, along with a supportive regulatory, legal and fiscal environment; a private sector incentivized to invest capital and ideas not just for immediate returns but for longer-term change that will strengthen markets, value chains and social stability; civil society afforded the space by business and government to keep both accountable for socially and environmentally responsible behaviour; and international organizations, African or otherwise, able to advocate global standards and share best practices, especially from other parts of the global South.

The idea of partnerships for development is hardly new. For over a decade, MDG 8 has been calling for stronger partnerships as a basis for achieving all other goals. Despite the existence of many encouraging examples, and valuable lessons learned, we are still not seeing enough success stories replicated or brought to scale to effect lasting structural change. Too many actors still see the risks of engaging in partnerships rather than the opportunities, and too many states still fail to harness the developmental potential of their civil society organizations or to provide the enabling environment and incentive structures to make partnerships attractive for private-sector actors. This results in missed opportunities to tackle problems and drive progress. Given the transformative power of partnerships, it will be crucial to overcome these blockages and convince all sides of the inherent benefits of partnering for progress. This is the main purpose of this report.

Kofi A. Annan

Chair of the Africa Progress Panel

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Africa Transforms to ‘Continent of Hope,’ Says Annan

Cape Town — Despite high-profile setbacks, Africa has in the past decade changed from being “the hopeless continent” to “the continent of hope”, former United Nations chief Kofi Annan says in a report issued Thursday.

“Countries and companies are increasingly shifting their attention from Africa’s problems to its vast potential and abundant opportunities,” he says. The continent’s quick recovery from the global financial crisis, and “numerous examples of social and political progress” are “feeding a remarkable ‘can-do’ spirit.”

“Hope, however, is not enough,” adds Annan. Violence, political turmoil and uncertainty “scar too many parts of the continent,” increasing inequalities, food insecurity, the effects of climate change and difficulties in creating jobs for the young. And Africa still has little influence on decisions affecting it which are taken by the international community.

Annan highlighted what he called “a palpable spirit of optimism” for the continent in the foreword to the 2001 report of the Africa Progress Panel, an international review panel established to monitor whether the world’s leaders are meeting their commitments to Africa. The report was launched at the World Economic Forum for Africa, which is meeting in Cape Town.

Annan, the leader of the panel, was scheduled to be joined at the launch by the former Nigerian president, Olusegun Obasanjo, activist Graça Machel and Botswana’s central banker, Linah Kelebogile Mohohlo, who are among other panelists.

The report notes that Africa grew more quickly than most parts of the world in the five years before the 2008-2010 global economic crisis, and that exports and foreign direct investment dropped during the crisis, but that “most of Africa is now resuming its growth spurt.” The report cites International Monetary Fund predictions that sub-Saharan Africa’s gross domestic product would grow in real terms by 5.5 percent this year and 5.8 percent in 2012.

However, the report adds, the average figure masks big differences between countries: “While the Republic of Congo, Ethiopia, Ghana, Mozambique, Nigeria, Tanzania and Zambia are all expected to be among the world’s ten fastest-growing economies, the Central African Republic, Chad, Côte d’Ivoire, Equatorial Guinea and Eritrea are projected to grow at rates far below the average.”

The report also underlines a key problem of most of Africa’s growth: that it is based in a number of countries on the extraction and export of natural resources and raw materials, such as minerals, without any value being added by processing or manufacturing on the continent.

“While natural-resource extraction has accounted for only about a third of Africa’s real GDP growth in the last decade, more than 80 percent of the continent’s export earnings come from primary, generally unprocessed commodities,” the report says.

It adds that the economies of several countries are geared towards the export of single commodities, including copper (Zambia) and aluminium (Mozambique). This has resulted in unbalanced development, with weak links between export-orientated and other sectors.

“With the notable exceptions of Egypt, Tunisia and South Africa, where manufacturing and services account for 83 per cent of combined GDP, 15 non-extractive sectors and competitive industries remain heavily under-developed in most African countries…

“Driven by capital-intensive extractive sectors, the current type of economic growth has little positive impact on employment and income levels and virtually no effect on employment-intensive sectors such as agriculture,” the report says.

Nevertheless, the report concludes that the current strong economic recovery reiterates Africa’s “immense” economic potential.

“While poor policies, conflicts, natural disasters and other seismic events may disrupt growth in individual countries and subregions and significant structural barriers remain to be overcome, the fundamental trends and drivers suggest a positive growth outlook for most of the continent…

“In order to make the most of the continent’s enormous potential, and counter the risks in years ahead, African leaders, with the help of their international partners, need to accelerate economic diversification and structural transformation,” the report says.

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The Wal-Mart Question Finally Hits Africa: South Africa Should Ensure Robust Scrutiny of The Deal

The next two months remain crucial in the history of foreign direct investment in South Africa. Wal Mart, the US retail giant is negotiating its grand entrance to Africa’s growing markets and this deal is reported to be its biggest acquisition since 1999 when it bought Asda, the British supermarket. A few months back, the international company offered to pay billions to facilitate its 51 % ownership share of South Africa’s biggest retailer MassMart. The deal was approved by Massmart shareholders in January this year. However, if recent objections in South Africa to Walmart’s anticipated entry into the African market are anything to go by, then it is assured an uphill battle in the next coming months.  South Africa’s powerful trade unions seem determined to take the retail giant head on and continuously express a strong desire to oppose the merger. Also, government has so far shown strong determination to oppose a deal that stands in contrast to South Africa’s economic development plans and its strategic priorities for the next years.

Since the announcement of the Massmart/Walmart merger numerous yet critical and necessary questions have arisen around the desirability of the deal in particular the implications it is likely to have for South Africa’s retail industry, small –to medium –sized enterprises and the country’s job creation project. The Competition Commission, a body tasked with regulating the South African market in the public interests recommended to the Competition Tribunal that the deal be approved without conditions. This decision was highly questioned by those who specifically maintain that Wal Mart needs to guarantee job security for its workers and voluntary bind itself towards using domestic suppliers.  The Competition Tribunal had scheduled public hearings on the deal last week but these have been postponed to May to allow opposing parties to the deal an opportunity to prepare for a cross examination of  witnesses provided by Massmart/Walmart.

Critics of Wal Mart’s operation and practices whether in the USA, Chile, Argentine, or India raise issues which create many uncertainties and questions about the deal. Also, Wal Mart’s alleged poor global reputation as an employer and increasing allegations of its lack of respect for workers rights including its negative attitude towards labour union activities cannot be ignored. Reports by Human Rights Watch and other human rights activists also paint a depressing picture thus making it absolutely necessary for South Africa to ensure a proper scrutiny of the merger. Obviously, there are two sides to any story and Wal Mart has in the past disputed the allegations. Nevertheless, the risks of ignoring the issues raised by those with direct experiences of Wal Mart operations are simply too much to be left unaddressed. When Norway disinvested from Wal Mart its pension fund’s ethics committee alleged that “Wal-Mart is involved in “serious and systematic human rights abuses”, consistently flouting international rules on child labour, health and safety, underpaying women and blocking unionisation in the workforce”. Can South Africa afford to turn a blind eye to these allegations?

What is in South Africa’s best interest? Without doubt, the country needs direct foreign investment, but at what cost?  Trade Unions maintain that they want ‘responsible’ foreign direct investment. It is therefore clear that South Africa needs to vigilantly apply its mind on this merger and any further dialogue should be in line with its strategic plans and priorities.

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Africa Is in a New Era With so Many Success Stories to Tell

Ngozi Okonjo-Iweala

For too long, Africa has been defined just by war, corruption and poverty. It was so welcome to read “A fresh chapter is opening in Africa’s history” (Editorial). It is time the rest of the world recognised the amazing resilience shown by Africa.

The continent quickly recovered after the economic crisis. Growth is forecast at 5.3% this year and 5.5% in 2012, making it one of the world’s fastest-growing developing regions. Africa’s resilience was the result of years of hard work – a deep commitment to reform and economic stability over 15 years. Two-thirds of African economies brought in reforms during the crisis to make it easier for investors. Foreign direct investments in sub-Saharan Africa grew by 17% last year.

Africa still needs aid but it should be aid that targets real results – in education and health, with malaria an example. It should also be aid that leverages private investment and creates jobs.

Africa presents a market of 1 billion people whose potential buying power should make the continent an important contributor to global growth. Africa is coming of age in a complicated environment, marked by issues ranging from global imbalances to climate change. It must seize the opportunities to tell and sell its own success stories.

Ngozi Okonjo-Iweala
Managing director
The World Bank
Washington DC

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