Africa Forum: Challenges and Hope Empowering Approaches Toward Sustainable Development

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Africa Forum Challenges and HopeEmpowering
Approaches Toward Sustainable Development

• Robert C Byrd Center for legislative Studies
• Shepherd University
• West Virginia
• March 28-29, 2008
• Charles Chuka
• cchuka_at_msn.com

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Introduction

• In response to complaints that we only cover the
  NEGATIVE aspects of the news, here is a list of
  all the people in the world who were NOT killed
  today.
• Bizarro, by Dan Piraro, published in the
  Express, a publication of the Washington Post,
  09/22/05

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• With rare exceptions, the people I encounter,
  from all walks and stations in life, still think
  of Africa as the dark continent made darker
  still by the ravages of AIDS and the ongoing
  conflicts that occasionally produce enough
  carnage to merit a minute or two on a television
  newscast. But just as not all Africans are
  dark-skinned, neither is the continent a dark
  place. In fact, the continent of Africa is a
  multifarious place, comprising fifty-four
  countries, home to some 800 million people,
  encompassing a multitude of ethnicities and races
  and a complex range of eccentricities."
• Hunter-Gault, Charlayne, New News out of
  Africa, Uncovering Africas Renaissance, Oxford
  University Press, 2006

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• AFRICAS TIME HAS COME

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Outline

• Introduction
• New news
• Old news
• Role of business empowerment
• Some suggestions on way forward

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• THE NEW NEWS

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ACRONYMS

• SSA Sub-Saharan Africa
• HICs High-income countries
• LDCs Developing countries
• ECA Europe and Central Asia
• LAC Latin America and the Caribbean
• EAP East Asia and the Pacific
• SA South Asia
• MENA Middle East and North Africa
• GNI Gross national income
• GDP Gross national productivity
• FDI Foreign direct investment
• NOT Net official transfers
• NDF Net debt flows
• TFP Total factor productivity

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Expenditure on Education (Percent of GNI)
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Technological Diffusion(Years from discovery to
reaching 25 threshold)
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Figure Technological Diffusion in SSA(Years
from 5 to 25 threshold)
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Figure Foreign Direct Investment 2000-06
(Percent of GDP)
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Figure Inward FDI Flows 1970-2006(Percent of
Fixed Capital Formation)
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Figure Private Debt and Equity Flows (
Millions)
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Figure FDI Flows ( millions)
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Real GDP Growth 1994- 2008
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Figure Net Official Debt Flows
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Official Net Debt Flows and Transfers 1996-2006
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Official Debt Outstanding, Disbursements and
Repayments
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External Debt to GDP 1994-2008
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Consumer Prices 1994-2008
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• THE OLD NEWS THE TROUBLE WITH AFRICA

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Figure TFP By Income Group(Relative to US in
2005 Index US 100)
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Figure Total Factor Productivity (TFP) By
Region(Relative to US in 2005, Index US 100)
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Figure Technological Progress 1990-2005, By
Income(TFP annual growth)
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Figure Technological Progress 1990-2005, By
Region(TFP annual growth)
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WHY THE GAP?
The World Bank, in its Global Economic Prospects
2008, writes A central finding..is that most
developing countries lack the ability to generate
innovations at the technological frontier.
..Moreover, relatively thin domestic technology
sectors and much better economic and scientific
opportunities abroad mean that many nationals of
developing countries perform cutting edge
research in high-income countries. ..2.5 million
of the 21.6 million scientists and engineers
working in the US were born in developing
countries. An organization called The Share The
Worlds Resources (STWR) writes Africa trains
and sends 77,000 professionals abroad each year
to work in North America and Europe. There are
more Ghanaian doctors in New York than in the
whole of Ghana
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Populations Without Electricity 2005 (Millions)
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Access to Electricity, 2005(Percent of
Population)
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Figure Costs of Access to Technology(Percent of
monthly income in US)
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Total Per capita Wealth and Component 2005(
Thousands)
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Natural Resource Depletion (NRD) and Consumption
of Fixed Capital (CFC), 2005 (Percent of GNI)
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Adjusted Net savings, 2005(Percent of GNI)
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• CAN THESE CONSTRAINTS BE ADDRESSED?

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Are Empowerment Approaches a Solution?

• Well, that and perhaps a short prayer.
• A short prayer for new leadership as training is
  not the whole answer.
• Ronald Bailey wrote in The Wall Street Journal
  in 2007 The World Banks path breaking Where is
  the Wealth of Nations convincingly demonstrates
  that the main springs of development are the
  rule of law and a good school system. The big
  question is How can the people of the developing
  world rid themselves of the kleptocrats who loot
  their countries and keep them poor?
• Scaling up empowerment programs should help to
  eliminate unnecessary human suffering, stem civil
  conflicts and keep children in school.

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Role of Empowerment Approaches

• Every empowerment approach adds some value
  management approaches improving access to
  finance approaches community participation
  approaches and gender empowerment approaches
  income transfers approach, and so forth.
• And in some circumstances, affirmative action.
• To both keep children in school and address SSAs
  technological deficit, wo approaches deserve
  special attention
• Inclusive and Shared Growth Approaches
• South Africas experiment with Black Economic
  Empowerment
• Capacity Building and Supply Chains Approaches
• African Management Services Company (AMSCO) and
• The Strategic Partnerships approach of MOZAL.
• BHP Billitons company procurement system.

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Inclusive and Shared Growth Approaches (Cont.)

• Black Economic Empowerment (BEE)
• In its a Strategy for Broad-Based Black
  Empowerment, the South African Government states
  South Africa has enjoyed 10 years of consistent
  growth. Much has been achieved since 1994.
  Unfortunately, the extent to which this growth
  has been shared equitably amongst all South
  Africans is not yet adequate for the requirements
  of a stable, integrated and prosperous societywe
  need to take additional colleective actions in
  order to achieve our objective,..This .argues
  for the state to actively lead the development
  and implementation of a focused and coherent
  strategy to achieve broad-based black economic
  empowerment
• Mary Alexander wrote South Africas policy of
  black empowerment (BEE) is not simply a moral
  initiative to redress the wrongs of the past. It
  is a pragmatic growth strategy that aims to
  realize the countrys full economic potential.
  Black empowerment is not affirmative action,
  although employment equity forms part of it. Nor
  does it aim to merely take away wealth from white
  people and give it to blacks. It is simply a
  growth strategy, targeting the South African
  economys weakest point inequality.

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Inclusive and Shared Growth Approaches (Cont.)

• In 1998 Donald McNeil took a more critical look
  at BEE and said Black empowerment is the rage in
  the private sector and the law in the public
  sector. In the last four years, so many
  empowerment deals have been struck that blacks
  now control 28 companies worth a total of more
  than 13 billion, about 6 percent of the
  Johannesburg Stock Exchange. In general blacks
  and whites are surprised and pleased that it has
  gone so well. The leading black chip companies
  outperformed the Johannesburg Consolidated
  Investments Ltd., one of the countrys oldest
  mining houses. But there is growing
  dissatisfaction with mega-deals that enrich only
  a few fortunate and well-placed blacks.
• Later on in 2006, Jim Sutcliffe commented on the
  success of BEE It is pushing the growth rate on
  to a higher trajectory. It has helped the
  12-year-old democracy move ahead of India as a
  destination for foreign direct investment. The
  number of black people in the upper brackets grew
  30 percent and the proportion of blacks in the
  top income brackket is now 20 percent, up from
  close to zero a decade ago.

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Capacity Building and Supply Chains Approaches

• AMSCO
• The Africa Management Services Company (AMSCO)
  was established more than 15 years ago to provide
  African businesses with access to a range of
  training and professional management services
  that help them to become more sustainable,
  profitable and globally competitive
  organizations. Since then, the company has helped
  hundreds of companies in Africa to develop strong
  professional management teams and create
  sustainable businesses that provide employment to
  thousands of people.

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Capacity Building and Supply Chains Approaches

• MOZAL
• The management of Mozal wrote on their official
  website
• From the beginning of the Mozal start-up, there
  has been a drive to identify and develop local
  companies and make them competitive in a
  completely new business environment, that of
  aluminum production. A program was developed to
  educate and train the newly formed small and
  medium enterprises (SMEs) on a world-class
  tendering package, allowing them to compete with
  foreign companies. Work packages were exclusively
  allocated to local companies so as to enhance
  their development. This was done without
  compromising the principles of competitive
  pricing, compliance to specifications, timely
  delivery and safety. The Mozal Community
  Development Trust (MCDT) was established in
  August 2001 by the Mozal shareholders to develop
  ..five key areas small business development
  education and training health and environment
  sports and culture and community infrastructure.
  The targeted community includes those within 10
  km radius of the smelter. MCTDT believes that
  the community should take ownership of programs
  and play a proactive role in improving their
  lives.

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Capacity Building and Supply Chains Approach
(Cont.)

• Management on BHP Billiton has a similar approach
  in the implementation of BEE
• Our objectives are to provide access by black
  suppliers to the companys procurement
  activities, with a resultant greater
  participation in resource-related industries, and
  to ensure that all buying organizations within
  the group have the support to successfully
  achieve legislated procurement targets.
• Management on BHP Billiton has a similar approach
  in the implementation of BEE
• Our objectives are to provide access by black
  suppliers to the companys procurement
  activities, with a resultant greater
  participation in resource-related industries, and
  to ensure that all buying organizations within
  the group have the support to successfully
  achieve legislated procurement targets.

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Can Africa Make It?

• Yes, Africa can.
• New leadership is already emerging and hope is
  becoming a reality in a number of countries.
• Africa can lip-frog the digital divide to
  mitigate the problem of being land locked. Africa
  launched an e-Schools Initiative to fund internet
  access in 120 schools in 16 countries by
  mid-2007.
• Africa needs to focus on human development and
  spend more on primary and tertiary education.
• Africa should utilize its natural resources to
  invest in human development and institutional
  capacity building. Botswana is already doing that
  and the lessons can be replicated across the
  continent.
• Africas resource curse is curable Already 17
  countries are reported to have signed up to
  participate in the Extractive Industries
  Transparency Initiative (EITI).
• A little external help is needed to address
  regional infrastructure bottlenecks and expedite
  continental and regional integration. The
  continent needs to be made into a large domestic
  economy.

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• thank you