President Donald J. Trump’s pursuit of a trade deal with Kenya marks a shift in U.S. policy toward Africa, which has not been a focus of his administration. The move is the latest of Trump’s aggressive pushes for more bilateral trade deals, and officials hope it could help counter growing Chinese influence on the continent.

What’s happening?

Trade talks with Nairobi were announced during a White House visit by Kenyan President Uhuru Kenyatta in early February. It would be the United States’ first free trade agreement (FTA) with a sub-Saharan African country and its second on the continent, after the 2006 FTA with Morocco.

The announcement came shortly before Secretary of State Mike Pompeo’s first visit to the sub-Saharan region, which he used to warn about the risks of Chinese investment.

What would a deal mean for U.S.-Kenya trade?

Trade between the two countries currently stands at around $1 billion annually, just barely putting Kenya in the United States’ top one hundred trading partners. While the United States is a major destination for Kenyan exports, Kenya’s total U.S. trade is dwarfed by that with other partners, especially China, from which it imports more than $3.6 billion worth of goods each year.

It’s unclear how much a new trade pact would move the needle. Kenya already has preferential access to the U.S. market through the African Growth and Opportunity Act (AGOA), a program started in 2000 that eliminates import tariffs on goods from dozens of African countries. Kenya is one of AGOA’s top five exporters to the United States, primarily sending apparel, cocoa, tree nuts, coffee, and tea. It imports American aircraft, machinery, agricultural products, and plastics.

AGOA’s goal is to foster development for its members; in a bilateral trade deal, Washington will likely look for increased benefits for U.S. firms. That could mean increased market access for U.S. farm and manufacturing exports, greater openness to U.S. investment, intellectual property protections, and domestic pro-market reforms.

What’s at stake?

Perhaps foremost among Washington’s concerns is China’s growing influence across Africa. While the U.S.-Africa trade has declined since 2008, African trade with China has soared. China is also devoting hundreds of billions of dollars to its Belt and Road Initiative, which comprises infrastructure investments across Africa, Asia, and Europe. That has included Kenya, with a $4 billion railway between Nairobi and Mombasa that opened in late 2019. The rail project—financed, built, and operated mostly by Chinese firms—raised domestic concerns about a debt trap.

China is not the only power deepening its ties to the continent. The European Union has launched a series of EU-Africa summits and is working on trade and investment agreements with most African countries.

Kenya is already a top U.S. foreign aid recipient and major U.S. partner in the region, particularly on counterterrorism, and is among the fastest-growing economies in sub-Saharan Africa. After three years in office, the Trump administration has put little effort into bolstering partnerships in Africa, but U.S. Trade Representative Robert Lighthizer has argued for changing that. For Trump, Kenya is a good candidate for his broader trade philosophy—one based on bilateral deals that he sees as more advantageous for securing concessions—and a deal with Nairobi could serve as a template for the rest of sub-Saharan Africa. Kenyatta, meanwhile, is eager to maintain access to U.S. markets in case AGOA—set to expire in 2025—is not renewed.

At the same time, some observers have cautioned that a bilateral approach could backfire for Africa. They argue that a U.S.-Kenya deal could undermine attempts to build a region-wide economic bloc, the African Continental Free Trade Area (AfCFTA).

What are the next steps?

Once negotiations are officially launched, final signatures on a trade deal could be years away. Negotiators will have to hash out the details on many thorny issues, including Kenya’s obligations to the AfCFTA (which remain unclear), purchases of U.S. agricultural goods, and environmental protections. And even after an agreement is reached, it will need to be approved by Congress, a process that has held up other major efforts by Trump, such as the revamped U.S.-Mexico-Canada trade deal.

https://www.cfr.org/in-brief/what-would-us-kenya-trade-deal-mean?utm_source=tw&utm_content=022620&utm_medium=social_owned

Source: COUNCILon FOREIGN RELATIONS

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As the paradigm shifted from a focus on social service support and grant-based official development assistance to one more driven by private sector development, countries have turned to development finance institutions to provide solutions to help create jobs, spur economic development, and reduce poverty. As a result, the number of institutions has proliferated.

The United Kingdom has directed a big influx of capital toward its DFI, the CDC Group. Canada created a DFI in 2018, and the U.S. Congress will launch a new DFI this year with more capabilities and double the investment capacity than its current institution. Other countries, notably Australia, are considering creating DFIs.

In 2017, bilateral DFIs were managing just over $65 billion in assets, according to data gathered by Devex, up from about $41 billion in 2012. That’s a roughly 57 percent increase in a five-year period.

Growth is clear in Europe, according to the Association of Bilateral European Development Finance Institutions, or EDFI. There were about seven active DFIs when the association for European DFIs was founded some 25 years ago; today there are 15. And the balance sheets of those DFIs tripled between 2005-2015.

“They did things that were relevant for development, but a number of them were financial institutions living a quiet life without any significant profile in any development policy of their countries,” said Soren Andreasen, the general manager at EDFI. “Many countries didn’t have economic development or private sector development policy as part of their aid strategy and none had [a] policy on how DFIs fit into private sector strategy.”

As DFI budgets grow and they play a more prominent role in development, they are also facing more scrutiny. DFI leaders are grappling with how to increasingly invest in the least developed or low-income countries, how to ensure they are collaborating rather than competing, and how to effectively mobilize private capital rather than crowd it out. Amid calls for them to be more transparent, and to prove their investments are achieving development results, they are also working on new ways to measure their impact.

Learn more: https://www.devex.com/news/development-finance-institutions-grapple-with-their-growing-role-94408

Source: Devex

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Microcredit is frequently touted as an effective policy tool to fight global poverty. Its global profile was elevated in 2006 when Muhammad Yunus and the Grameen Bank won the Nobel Peace Prize for pioneering microcredit. The industry is now estimated at $60-100 billion with as many as 200 million clients. It has been generally seen as a way to open credit markets to the poor and unleash their productive capacities.

The conventional microcredit model involves making small loans to some of the very poorest people in the world to enable them to start or run a small income-generating enterprise. Many organizations have used microcredit to target female clients and have made credit available to them while achieving high overall repayment rates, exceeding 90%.

Does microcredit benefit people?

However, questions remain about how much this approach ultimately benefits the people it is intended to help. Indeed, a series of careful, empirical evaluations in recent years have shown the little or limited impact of microcredit on household welfare in developing countries.

One analysis, for instance, looked at six studies that provided microcredit expansion through seven different lenders in six countries — Bosnia, Ethiopia, India, Mexico, Morocco, and Mongolia — during 2003-2012. It found a lack of evidence of the transformative effects of microcredit on the average borrower.

Another researcher studied the impact of access to microcredit on six indicators: Household business profits, business expenditures, business revenues, consumption, consumer durables spending, and spending on temptation goods. She found the average effects of access to microcredit on these outcomes are small and uncertain, probably around 5%. She also found a moderate to a high probability of zero impact.

New models for better outcomes

The problem is not a lack of microcredit programs or their execution, but something in the model itself. This leads us to ask: can we modify or extend certain aspects of the microcredit model to achieve better outcomes for recipients?

Learn more: https://www.theigc.org/blog/can-the-microcredit-model-be-improved/

Source: International Growth Centre

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A recent meeting of stakeholders of the Africa50 infrastructure fund warned countries that if they continue at the current rate of industrialization, and fail to invest in their knowledge economies, they will face 100m jobless citizens across the region by 2050.

“What we need to do as Africa is recognise that it’s not oil or gas or minerals that’s going to determine our competitiveness in the world, it’s knowledge and the ability to innovate and create mega-businesses that are going to be the Google and Facebooks of this world,” the president of the African Development Bank (AfDB) Akinwumi Adesina tells African Business at the Africa50 meeting in Kigali.

“It is passé to say that the comparative advantage of your country depends on the natural resources you have,” he says. “Today you don’t need to have any resources, but you do need very smart brains.”

In order to nurture homegrown talent, governments need to develop world-class innovation hubs, like the US tech capital Silicon Valley, he argues.

Around 440 innovation hubs and centers across the continent are providing a forum for entrepreneurs and startups to access the technology, industrial expertise and financial instruments needed to develop and scale up their businesses.

“Innovation hubs come into play when there’s an environment that allows them to prosper,” says Nathalie Munyampenda, the managing director of the Next Einstein Forum, which runs a series of conferences for Africa’s science and technology talent.

Innovation ecosystems require basic infrastructure, such as road networks and ports, digital infrastructure including cheap broadband, supportive business and regulatory environments, technology, and talented scientific and mathematical minds, Munyampenda explains. And in too many countries these basics are desperately lacking.

“Today, if we in Africa do not invest in these five pillars, if we do not create affiliations and consortiums that tap into private sector money, and have governments that are pushing ahead, we will be left behind,” she warns. “We are already 97% behind what we should be doing in terms of research and development.”

Financing the future

Rwanda is courting investors for a $1bn innovation hub, the Kigali Innovation City. Co-financed by the Rwandan government and Africa50, the project hopes to create over 50,000 jobs a year. But innovation hubs will lie empty without the talent to fill them, experts say.

“You cannot think about the fourth industrial revolution if you don’t have the pool of talent to participate in it and to support it,” says Africa50’s CEO, Alain Ebobissé.

Africa50 is drawing from a $871m fund to deploy early-stage risk capital to help lure local and global talent to Africa by giving early-stage startups and hi-tech ventures the financial freedom to grow.

Find out more: https://africanbusinessmagazine.com/sectors/infrastructure/africas-silicon-valleys-ripen-for-investment/

Source : African Business Magazine

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Growing awareness of these challenges is leading to calls by governments, the international development community and donors for an approach to development that takes account of these complex risks: that is risk-informed. Risk-informed development is a risk-based decision process that enables development to become more sustainable and resilient. It pushes development decision-makers to understand and acknowledge that all development choices involve the creation of uncertain risks, as well as opportunities.

This report highlights the need for:

• a move away from single hazard risk analysis to an explicit acknowledgment of the interactions between multiple threats, including economic and financial instability, geopolitical volatility, natural hazards, and climate change
• systematic assessments of complex threats and risks, opportunities, uncertainties, risk tolerances, perceptions and options to ensure that development is sustainable and  resilient
• identifying who has the responsibility to act upon risk management, with what resources, by when and how those actions are to be monitored
• analysis of the potential trade-offs of development policies and investment actions, including social and environmental impacts, feasibility and cultural and ethical outcomes
• the provision to policy-makers of a robust evidence base around the role that unsustainable development plays in creating risk
• understanding and acknowledging that all development and investment choices involve trade-offs.

https://www.odi.org/publications/11314-risk-informed-development-crisis-resilience

Source: Overseas Development Institute (ODI)

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5G is an upgrade of 4G technology with three main advantages. It can move more data faster than 4G, it is more responsive (quicker) and it can connect more devices at one time. But, it also requires a technological upgrade. Towns and cities will have to put up a greater number of small cellular units, known as short-range transmitters, which have smaller areas of geographic coverage than existing networks.

Because the transmitters are smaller, more are required. However, these new transmitters are more energy-efficient, and many of them will be built to integrate with the natural environment. Mobile phones will also need to be upgraded to connect to this new system of data transfer. At its heart, 5G technology is part of the “fourth industrial revolution,” one that is fusing the biological, digital and physical worlds.

What are the advantages?

The commonly cited benefits for consumers in western countries are faster connections. People can stand in the middle of the city and stream 4K videos on their phones with no interference. But, the benefits are more profound for many businesses and developing countries.

For business, fully developed networks will produce more reliable and lower cost data services, allowing higher rates of productivity and the potential for increased automation. For example, farmers could monitor smart self-driving tractors from a distance. However, many of the services are still to be developed and unforeseeable in the current era of the internet.

It is likely that 5G will be a platform for many of the next “Unicorn” companies, such as Uber or Snapchat, which are thriving in a 4G market. Furthermore, 5G could help improve industries that would benefit from greater integration of data. Healthcare, for example, could be streamlined by sharing patient data to help speed up diagnoses, which could be life-saving in areas with fewer doctors and longer wait times.

More holistically, the ability of 5G technologies to integrate systems and transmit data simultaneously could drive sustainability in all industries. For example, smart buildings can greatly reduce energy waste by as much as 70 percent in modern buildings by using sensors to switch off lights and heating when no one is inside a room. Due to increases in urbanization in developing countries, making sustainable buildings is an important strategy to manage the demand on energy sources and reduce the consequent pollution.

5G in Africa

A report published in February 2019 outlined the projected growth for 5G in Africa. Currently, there are around 50 million subscriptions to LTE (‘long term evolution’’ or 4G) in sub-Saharan Africa. But, given the growth in relatively young populations and the fast-growing economies, this number was predicted to grow by 47 percent between 2017 and 2023 when an estimated 310 million will have subscribed. The rapid development currently taking place in many parts of Africa is expected to push providers to invest in upgrading networks with the goal of connecting rural users high on the agenda.

High-tech businesses have already breached into regions of Africa and the developing world since the advantages are as plain as the challenges. South Africa’s new data-only network “Rain” launched the continent’s first 5G mobile network in limited regions in 2017. In partnership with Huawei, Rain is expecting to be available by mid-2019 to be ready for when 5G devices become available at the end of the year. This will help combat South Africa’s notoriously high data costs.

Find out more: https://www.borgenmagazine.com/how-5g-in-africa-could-shape-growth/

Source: Borgen Magazine

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Sluggish economic growth after the 2008 global financial crisis has seen a rise in populist nationalism in developed countries. Politicians are taking advantage of disappointing economic statistics and projections to paint a different picture that undermines the contributions immigrants have made to the various economies they have relocated to. A Citigroup report suggests that two-thirds of US growth since 2011 is directly attributed to migration. Also, more than half of US unicorns (startups valued at more than $1bn) were founded by immigrants, as were 40 percent of Fortune 500 companies.

While some developed countries are pursuing an exclusionary course, they are paying a hefty economic price. The Citigroup reports notes that if the UK had frozen immigration in 1990 so that the number of migrants remained constant, the economy would be at least 9 percent smaller than it is now. That is equivalent to a real loss in gross domestic product of more than £175bn over 15 years. While developed countries worry about the influx of immigrants, developing countries worry about brain drain. The number of well-trained individuals leaving their countries for greener pasture in developed countries denying their native countries the much needed human capital to solve some of their most pressing challenges resulting from emerging issues.

With populations aging and lower birth rates in advanced economies, immigration is now more necessary than ever. In 2018, Japan suffered its biggest population decline on record. According to the health and welfare ministry, the number of births fell to its lowest since the records began more than a century ago. The ministry had estimated 921,000 babies will have been born by the end of 2018. Combined with the estimated number of deaths – a postwar high of 1.37 million – the natural decline of Japans population by 448,000 was the biggest ever.

If existing research is anything to go by, cutting immigration is not the solution. This will widen the inequality gap and derail economic growth and development. Immigration benefits host countries since immigrants pay taxes. Immigrants also send money back to their relatives in their home countries. The funds received from abroad boost a country’s foreign reserve and also supports domestics investments.

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Across a continent where 80% of food is produced by smallholder farmers, digital technologies and innovations are a game changer in transforming African agriculture.

Digital services that provide targeted advice, including weather information on mobile phones or link farmers to markets, are helping smallholders feed a growing population in the face of a changing climate while also attracting more young entrepreneurs to agriculture.

A new report, which surveyed the market in Africa for the first time, found more than 33 million smallholder farmers were already registered with agricultural-related digital tools and services.

And with annual growth of around 45% since 2012, digitalization for agriculture (D4Ag) in Africa will likely reach all farmers on the continent by 2030 as more farmers adopt technology such as blockchain, artificial intelligence, drones and the Internet of Things.

Yet, digitalization in African agriculture is still in its nascent, competitive stages.

As revealed in The Digitalisation of African Agriculture Report, a large number of players make up this young market, with at least 390 distinct digital ventures in operation across sub-Saharan Africa. Of this, only 15 companies have reached a million users or more, with the majority finding the most success in bundling multiple services together.

Moreover, investment in digitalization for agriculture to date has been isolated, scattered and piecemeal, with efforts to scale-up being unnecessarily duplicated, causing inefficiencies and hampering large-scale, long-term growth.

There is enormous potential for digitalization to help achieve food security, nutrition, and resilience to climate change in Africa.

Initial figures suggest that farmers can increase their yields by up to 70% with support from digital tools that provide agronomic advice while others have seen their incomes improve by 20 to 40% by better linking them to markets to sell their produce or buy agricultural inputs.

But this potential will not be fulfilled by chance. At such a defining moment for this burgeoning market, we will only realize the true benefit of digitalization in African agriculture with strong, coordinated leadership.

This is why there is a need for those of us working for Africa’s development to collaborate and support the sector as it grows, and set the long-term agenda for the imminent digital transformation.

Source: euronews

https://www.euronews.com/2019/06/21/there-are-lessons-to-be-learned-to-ensure-technology-is-a-force-for-good-for-africa-s-farm

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Many Africans with advanced qualifications are finding their university degrees are just not enough to land a job in the current market.

Ruth Rono graduated from Chuka University, Kenya, in 2015 with first-class honors. Without a job after many years of trying, Ms. Rono was forced to take menial jobs such as working on people’s farms.

Down south, Banji Robert bagged a bachelor’s degree in economics and mathematics from the University of Zambia in 2016 and would have gladly accepted an entry-level job in one of those fields. Two years later, without success, a frustrated Mr. Robert is now a cashier in a grocery store.

“It is not easy to pay bills, let alone start a family,” Mr. Robert, 25, told Africa Renewal. “The pressure is too much when you have an education but no job.”

A graduate of development studies, Robert Sunday Ayo, 26, finds himself in a similar situation. “It is sad and very frustrating that it is not possible to find work, even with my kind of résumé,” he says regretfully, adding that he now drives a taxi in Abuja, Nigeria.

Africa Renewal interviewed dozens of young people across the continent who expressed dismay that their education is not propelling them toward their career aspirations.

Basic skills

One of the reasons for graduate unemployment is that “far too many youths across sub-Saharan Africa emerge from school without the basic skills to advance in their lives,” says Siddarth Chatterjee, the United Nations Resident Coordinator in Kenya. “It means there is something not working regarding investment in education.”

In general, some 60% of Africa’s unemployed are youth, according to the World Bank, and many are resorting to crime, radicalization, or the often-perilous migration journey across the Mediterranean to Europe in search of greener pastures, says Mr. Chatterjee.

And because of increasing automation, the situation for graduates could worsen in the coming years.

According to the Accra-based African Center for Economic Transformation, a policy think tank, almost 50% of current university graduates in Africa do not get jobs.

The root cause of the problem is a mismatch between the education they are getting and labor market needs, maintains Sarah Anyang Agbor, the African Union (AU) Commissioner for Human Resources, Science and Technology.

Source: Africa Renewal

https://www.un.org/africarenewal/magazine/april-2019-july-2019/preparing-africa%E2%80%99s-graduates-today%E2%80%99s-jobs

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And the challenges continue to escalate. The number of food emergencies – when disasters such as drought, floods, or war lead to food-supply shortfalls that demand external assistance – has risen from 15 per year, on average, in the 1980s to more than 30 per year since 2000.

The result is widespread food insecurity. According to the Food and Agriculture Organization, more than 820 million people worldwide lacked access to sufficient food in 2017; more than two billion people experience deficiencies of key micronutrients, and more than half of the people living in low-income countries are not sure where their next meal will come from. If current trends hold, the amount of food being grown will feed only half of the world population by 2050.

But these trends can be changed – and Africa is a good place to start. As Akinwumi Adesina, President of the African Development Bank and winner of the 2017 World Food Prize, has put it, “Africa in the future should not only feed itself but it must contribute to feeding the world.”

Source: World Economic Forum

https://www.weforum.org/agenda/2019/06/helping-africa-s-smallholders-feed-the-world/

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