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  • Babs Iwalewa 4:20 pm on May 11, 2011 Permalink
    Tags: , , world bank   

    The Role of the Informal Sector in African Economy 

    The informal sector of the economy often refers to the unregulated and mostly unregistered sector of the economy, put simply it refers to the numerous petty or small scale businesses operated by artisans, peasants and other micro entrepreneurs, within the economy.

    Experts have argued that in most African economies, the informal sector is often the driving force of the economy and that as a matter of fact it is opined that the reason why most Western originated economic recovery prescriptions channeled through the World Bank, IMF and so on to Africa have often failed is because of the inability of such prescriptions to take the informal sector in most of these African economies into consideration.

    The prominence of the informal sector in most African economies cannot really be underemphasized as almost all persons who cannot find placements within the formal sector of the economy finds solace in the informal sector of the economy. In as much as the informal sector, drives most African economies, it is a very much neglected sector as it seldom accounts for a pride of place in government planning for the overall economy. This may be due to a myriad of factors such as the unregistered and unregulated nature of most businesses in the informal sector, poor work ethics of most micro entrepreneurs, which often leads to mismanagement of such businesses, tax evasion and illiteracy on the part of most operators in the informal sector.

    Giving the role of the informal sector, in the economies of most African nations, governments in African countries should begin to take more than a simple look at the informal sector with a view of enacting policies that will synergize the informal and formal sectors in order to unleash the vast potentials of the African economy since activities in both sectors of the economy are not mutually exclusive. A massive drive to register and have a data base of all businesses in the informal sector can also be carried out to ascertain the number and needs of the operators in the informal sector.

  • TalkAfrique News Flash 10:33 pm on February 26, 2011 Permalink
    Tags: , , , ICT, Kenya Economic, kenyan, macro-economic policies, world bank   

    Is Kenyan African Silicon Valley? 


    Kenya is on the brink of becoming Africa’s ICT hub due to the continued growth in Internet and mobile technology use in East Africa’s biggest economy with investors flooding the country.

    The recent Kenya Economic Update report by the World Bank states that over the last decade, ICT has outperformed all others sectors in Kenya, growing at an average of 20 per cent annually.

    “The benefits of ICT are starting to be felt in other sectors, and have contributed to the conditions for the country to reach an economic tipping point,” the report says.

    The report reveals that Kenya has opened 2011 with renewed and stronger than expected growth on the back of a new constitution, strong macro-economic policies, and a favourable regional environment.

    Over the past three decades, Kenya has experienced only two short periods of economic growth that exceeded five per cent and was sustained for at least three consecutive years: 1986-88 and 2004-2007.

    This has raised the question: Is Kenya on the verge of experiencing another growth spurt? Will it last longer and go deeper than the previous two episodes?

    The World Bank researchers envision that this could indeed be the case, as the uptake of ICT throughout the economy could provide the impetus required for high and sustained growth.

    Today, Kenya has the largest mobile money platform in the world. An estimated 15 million mobile phone users were using mobile money by the end of 2010, the equivalent of three out of every four adult Kenyans.

    In East Africa, Internet access in recent years has recorded a significant growth.

    The World Bank estimates that in 2004, there were 1.65 million active Internet users in the region.

    By 2007, the number had increased to 4.78 million, and by 2010 the number of regular users had jumped to 6.78 million, a penetration rate of about 5.1 per cent of the population.

    The introduction of data enabled smartphones, which allow internet access through mobile phones has boosted this area hugely.

    Kenya’s active Internet usage stands at 8.7 per cent of the population, the highest in the region, compared with Uganda (7.9 per cent), Rwanda (3.1 per cent), Tanzania (1.2 per cent) and Burundi (0.8 per cent).

    Paul Odhiambo, CEO of a Nairobi-based ICT consultancy firm, says that creating demand for locally developed software will provide a much needed stimulus for growth of the sector.

    “If the government passed similar policy as was passed regarding local content on television—that a certain percentage of ICT solutions in government institutions must be home grown—this will go a long way in developing our local ICT talent.”

    Mr Odhiambo says the region needs to develop confidence in its own human sources.

    “What we need is to believe in our ability to make this sector really take off, and deliberately create demand for local solutions. We must invest in our own,” he says.

    Those that actually need the Internet the most are the very poor people,” says Dr Bitange Ndemo, Permanent Secretary in the Kenya Ministry of Information and Communication.

    He believes that the government should step in and make ICT infrastructure an open access platform, just like the road network. “This is the only way prices will come down.”

    Last June, Kenya’s telecommunications regulator slashed the licence fee for third-generation (3G) mobile Internet services by 60 percent to $10 million to raise penetration, and announced that it would not charge for an upgrade to 4G.

    The wider applications of ICT are starting to reshape the structure of the economy, especially in the financial sector.

    In 2010, this sector benefited from a number of innovations, including Equity Bank and Safaricom’s M-Kesho, a joint venture allowing mobile phone users to earn interest on their mobile phone-based savings accounts.

    In agriculture, for instance, an SMS platform is used to disseminate information on commodity prices allowing farmers to make better decisions regarding their produce.

    The platform also allows disease tracking and consultation to enable communities isolated from healthcare infrastructure to diagnose and treat diseases.

    Civil society organisations have also effectively used mobile technology to monitor social unrest and human-rights violations, mobilise voters and disseminate election results, and even track the management of local budgets.

    All this is not without challenges. Last December, for instance, a number of fibre optic cables that run around Nairobi were dug up in the middle of the night and severed, causing communication blackouts.

    The attacks were blamed by many on digital turf wars between rival firms, keen to seize any advantage in the emerging broadband market.

    Others blamed disgruntled employees.

    CHRISTINE MUNGAI, The East African

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  • Author 11:01 am on December 16, 2010 Permalink
    Tags: , Africa Aid, Africa Governance Initiative, Africa Government, Africa Leaders, Africa Leadership, , G8 Summit, , , world bank   

    Making Government Work Can Transform Africa 

    Tony Blair, Former British PM

    Tony Blair, Former British PM

    Tony Blair

    As British Prime Minister I trebled aid to Africa. At the 2005 G8 summit we took far-reaching steps in debt cancellation worth more than $100 billion to the poorest African nations. I am immensely proud of what we achieved at Gleneagles: Every day since, the aid given to developing countries has been saving thousands of lives. But I came to recognize that aid alone is not the answer.

    The truth is that ultimately Africa’s future prosperity lies with the decisions of Africa’s leaders. We need leadership that is democratic, accountable and transparent. But in addition, we need leadership that is effective, that can shape plans and deliver policies that will make a difference on the ground.

    The problem for many African countries is not the absence of the right vision or the right intentions. It is the simple lack of capacity to achieve them. Government today, even in the West, has often far less to do with ideology, but to do with delivery. The techniques for this are not that different from the private sector — the right mix of focus; prioritization; capable people and machinery to deliver; performance management and innovative ideas.

    This is hard enough for developed nations. It is a vast challenge for African leaders, whose governments very often lack the most basic levers of delivery, the expertise and the know-how.

    In the last three years, the charity I set up, the Africa Governance Initiative, has focused on these issues. We bring in dedicated teams of international staff who have worked in government or for leading private sector organizations. They work alongside the leader’s office and key government ministries, building capacity to prioritize and get things done. Because the only long-term route out of poverty is economic growth, we make a big thing of helping the governments we work with to attract quality private-sector investment to create jobs and livelihoods. Our staff — with expertise gained working in the international financial sector — sit alongside the government and coach them to bargain on equal terms with big multinationals.

    Over the past three years, we have been working in three countries — Rwanda, Sierra Leone and Liberia. In each case, of course, the prime movers are the leaders and their teams. And in each country the results are both deeply impressive and offer real hope for the future. Rwanda was the fastest riser in the World Bank place to do business rankings last year. Sierra Leone has seen Freetown with the lights on, and a 90 percent cut in deaths of children from malaria. Liberia has seen astonishing progress, not least in attracting major private investment, with $16 billion committed in the past four years.

    This is all part of the change now happening in Africa. There is still a long way to go. But the feeling of optimism is palpable.

    For its part, the international development community needs to find new ways to support, not just exhort, leaders in Africa to do the right thing. The democracy and accountability revolution that has swept across Africa over the last 20 years has done immeasurable good. No leader deserves a blank check. But it is not enough for us to just say that Africa needs more Mandelas and fewer Mobutus.

    Instead, the goal must be to create a dynamic where current African leaders can deliver real improvements in the lives of their citizens and where the next generation of leaders — in some countries the first to grow up under stable, democratic rule — have models of true public service they can aspire to follow.

    What these leaders need is practical support in articulating and delivering on their priorities, so that the donors can align their assistance behind them. That is how we give real substance, not just symbolism, to the idea of “country ownership.” Here, the World Bank, USAID and others have been breaking new ground in making the new partnership with Africa, which Barack Obama articulated on his visit to Ghana, a reality.

    The development community already invests a great deal in keeping Africa’s leaders honest. The question is whether it invests enough in supporting them to succeed. Good leadership is about capacity, not just character.

    LIVE WEBCAST: Watch Tony Blair’s keynote speech to the Center for Global Development at 10:00 a.m. EST.

    Tony Blair was UK Prime Minister from 1997 to 2007, and is Patron of the Africa Governance Initiative (AGI). ‘Not Just Aid: How Making Government Work Can Transform Africa’ is published by the Center for Global Development.[ad#Adsense-200by90]

    • Tony Blair, Former British PM
    • aldee 7:00 am on January 29, 2011 Permalink | Reply

      i i i i i is all i hear. is this an Afiracn blog or what? Tony Blair thans a lot but it ends here. what is wrong with the black man? must the white man always the one to solve our problems? this is irony of it, we can’t cause we will fight amongst ourselves and kill each other till they intervene. let the whites handle their own mess and let blacks learn how to stand up for themselves. it is time.

  • Kwabena A-Manager 10:24 pm on November 22, 2010 Permalink
    Tags: africa economies, , , african imports to US, china currency manipulation, currency manipulation, , international currency war, , US federal reserve, world bank   

    The Currency wars: when two elephants engage in a wrestle fight… 

     Governments across all continents are doing whatever they can in order to avoid ever using the ‘R’ word in any briefing. I mean the RECESSION.

    That itself is not a bad thing. They way they do it could have damning unintended consequences on developing nations, especially those in Africa.
    The US and China have been in a tug of war for a while regarding currency manipulation by the latter. Perhaps in order to show its disapproval of the Chinese policy, the US Federal Reserve announced it was pumping over $600 billion into the US economy. Several countries were swift to register their disapproval of the US move but similar or alternative policies with similar effects are being employed by all big economies.
    Let us call it  the Cold ‘International Currency’ War. The big guys will surely find a way to resolve it among themselves either by sitting around the table or by indirect punitive measures as is already happening.
    We often say that ‘when two elephants fight, it is the grass that suffers’. If Africa’s fragile economies get caught up in the middle of this tug of war, the consequences are obvious. And it would not be the first time Africa will have to suffer the consequences of a currency war. In fact currency war indirectly led to the rise of Hitler and hence the second world war in which 1000s of African military were drafted to fight for their colonial masters and never came back home.
    This time, I doubt it will be a war of the armies. It will be a war around kitchen tables and markets across Africa. My fear is that if policies that allow cheap money to flood the markets are unguarded and go viral, they may leave African countries with no borrowing power, less export potential, and dependent on imported goods. A few days ago, I wrote my opinion here on what is needed to really lift the African economies to the level always talked about: it is open access to western markets of African goods and services. Cheap western money will have the direct opposite effect.
    Currently, the Bank of Japan, the US federal Reserve, the Bank of England the European Central Bank are competing with one another in pumping out billions of electronic money into their economies. This is no different from the race to build the first nuclear bomb. This policy which they call quantitative easing [The term quantitative easing (QE) describes a monetary policy used by some central banks to increase the supply of money by increasing the excess reserves of the banking system] is flooding fragile economies with the wrong kind of investors leading to unexpected rise in exchange rates, again. African economies are caught up in the middle of the war among the giants.
    Many African countries have made significant progress in creating a more business-friendly environment to promote local investment as well as foreign direct investment. Undeniably, many African countries have made impressive progress towards political and economic stability, too. I applaud the World Bank’s move to promote the African economy with press releases and even YouTube videos. Currently some analyst rate the African economy with the highest return on foreign investment. Annual foreign direct investment flow in Africa rose from $9 billion in 2000 to 62 billion in 2008. Currency policies that will be at war with such an enviable trend are very unwelcome.
    By the way, is it not about time that we got a globally empowered body to police financial policies of all nations: the US, Europe, China, and others, to ensure a uniform playing field?
    • Koosei 6:13 pm on November 28, 2010 Permalink | Reply

      cheating is cheating, it does not matter who does it. USA, china or UK. We’ve got to call them the right words and stop using mild words like currency policy. China is actually CHEATING! and rather than telling them so , everybody else is following them to cheat/
      Thanks! for this article

    • Brother 6:25 pm on November 23, 2010 Permalink | Reply

      I think the US decision was a good one to let china know that everybody can break the rule. China and other nations were shocked by what US did and I think sometimes such actions are necessary.
      Unfortunately, as you said, sometimes there are unforeseen consequences and it’s bystanders (developing countries) who pay for those consequences

    • Charlie 11:16 am on November 23, 2010 Permalink | Reply

      I don’t understand these things very well in order to evaluate the consequences of the monetary policies. But I think for a scientist to clearly express opinion on things like this is impressive.
      The idea of a world body to monitor finacial policies is long overdue. Right now china can do anything becos it’s not a democracy. One person can just dream of something and start implementing it the next day. There has to be somebody to take them to task. Bcos of such actions are not deterred, it triggers a chain reaction and other start manipulating thier systems. And the poor countries just look on.

  • TalkAfrique News Flash 9:14 am on November 17, 2010 Permalink
    Tags: , , , , , , , , world bank,   

    Watch out for Africa, says the World Bank 

    Africa economic opportunity
    The World Bank's new report on Africa, published this week, concluded that that continent "could be on the brink of an economic take-off, much like China was 30 years ago, and India 20 years ago".
    In its draft strategy for Africa, published on Monday, the bank said the continent's steady economic growth, progress on the millennium development goals and good rates of returns on investments give Africa "unprecedented opportunity for transformation and growth". Promoting Africa as an exciting and lucrative investment destination will be crucial to fulfilling this potential, it added.
    "The emergence of new development partners such as China, the untapped potential of mobilising domestic resources, as well as the rise in private capital flows to Africa, calls for a new approach – Africa as an investment proposition – and points to the need for new partnerships among governments, development partners and the private sector," said the bank.
    Based on data from the World Development Indicators, private cash flows (remittances and foreign direct investment) to developing countries totalled more than $650bn in 2009, while official development assistance fell to less than $130bn.
    As the strategy's name – Africa's future and the World Bank's role in it – might suggest, the draft, which comes five years after its last Africa Action Plan, is both an optimistic reading of Africa's development and an assertive defence of the critical role the bank can play in its future. According to some, the emergence of new and very eager investors like China and India has left the bank worried about losing its footing on the continent.
    Writing in the Nairobi-based Business Daily, Johnstone Ole Turana argued that: "The increased accessibility of grants from the BRIC [Brazil, Russia, India, China] nations, which is being provided with less conditionality compared to the World Bank and the western countries' bilateral aid, has forced sub-Saharan African nations to re-orient their engagement from the west to the east."
    The draft moves away from a focus on single-issue projects – in an implicit critique of an MDG model of development with separate targets – and instead focuses on systems and structures, giving special attention to closing Africa's "infrastructure gap" and leveraging its investment potential. This means developing a more "attractive" climate for foreign investors, tackling "key constraints" from the regulation of labour and land to the lack of "financial (and overall business) literacy".
    The bank is, of course, positioning itself as the essential partner for both developing countries and potential investors, willing and ready to exercise its "comparative advantage" in partnerships, knowledge, and financing. "From the reputational perspective, it's absolutely crucial for them to be seen as linchpins to African development, particularly with regard to private sector linkages" , said Soren Ambrose, from Action Aid Kenya, last month.
    Yesterday, the bank's managing director, Ngozi Okonjo-Iweala, approached the China Mining Congress, being held in Tianjin, China, with a bid for how "the World Bank can help lay the ground work for larger investments", offering knowledge and guidance to investors and advice to governments on how to marry investment and development priorities. Okonjo-Iweala also advertised the bank's programme of providing "political risk" insurance to investors in case of war, civil unrest or expropriation.
    Changing perceptions
    The draft also sets out the bank's commitment to improve the otherwise poor perceptions of Africa, which can make attracting investors challenging. The paper claims the rate of return on foreign investment in Africa is higher than in any other developing region, but notes that "given its legacy of poverty, slow growth, conflict and disease, not everybody sees Africa as the emerging frontier".
    The bank's wants to help change the public mindset, "not just in providing the evidence of the changes on the continent and educating the rest of the world, but also in supporting those, such as the media, who interpret this evidence to the public and thereby shorten the lag between perceptions and reality".
    The bank also plans a shift in its own communications with the public, moving away from the stand-alone reports aimed at specialist audiences.
    One early example of this shift is the bank's decision to make public a series of stakeholder consultations on the draft strategy, held in 36 countries between June and September this year, and uploading a promotional video on YouTube.



    Now, the bank has launched an online consultation alongside the draft, actively seeking comment from the public to feed into its final strategy for Africa, due early next year.
    What feedback the bank chooses to incorporate into its strategies and programmes on the continent – if any – is the crucial question. In the past, critics, such as Beatrice Edwards, of the Governance Accountability Project, have come down hard on the bank for showing "transparency about the problem but no accountability or attempt to fix it".
    But the online consultation does provide an opportunity to tell the bank what you think – and posting a comment isn't too arduous, at least from the UK. Feel free to cross-post your comments here.
    (Report from the Guardian, UK)
    • Africa economic opportunity
    • GM 10:00 pm on November 17, 2010 Permalink | Reply

      This time around the western world -America in particular will be late to the party. What's happening now – shift from western to Chino-India is similar to what was happening in the 50s and 60s – western to soviet. Except of course, this time the shift is an economic one and not communism. And moreso, technology has made it possible for the youth to be fully engaged in business and less reliant on the government and hence they are less interested in joinging military regimes.
      Yes, some of us have to reconsider what we're doing in the western world. The earlier we return the better. That will happen naturally, what we're seeing happen in China and India – more and more Chinese and Indians returning to their home countries, respectively.
      If the people are less and less dependent on their governments but instead engaged in business activities, the western world's aid will become less important and economic partnerships will take hold.
      Africa is stable as a whole but we're made to think it's not. The chances of being blown apart in a hotel or club in Asia is greater than in Africa. There was a recent report from the World Economic Forum, Davos that discussed this – and concluded that Africa enjoys more stability than Asia. However, this positive reports on Africa do not make headlines in the media. What is even sad is the African media don't run with news like this. No, they want to report on Prince what engagement to Kate.

    • Brother 5:31 pm on November 17, 2010 Permalink | Reply

      Sky, you make a very good point. I'm struggling here in London reporting to young colleagues who have less than half my level of education. And looking at what' s happening in ghana, Nigerian, or SA, some of us will go back and still have Indian, Parkistani, or chinese as our bosses. The earlier we think about that, the better.

    • Sky 5:22 pm on November 17, 2010 Permalink | Reply

      my only fear is that, some of us will stay here and retire and go home only to realize that every opportunity over there is owned by a chinese or American, in our own land. And the cycle continues

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