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JOHANNESBURG, South Africa – Delivering on Africa’s Promise will be the theme of the World Economic Forum on Africa 2013 which will take place in Cape Town, South Africa, 8-10 May, with the participation of more than 1,000 leaders from business, government, civil society and academia.
The meeting, which convenes against a backdrop of significant economic growth and progress in reducing poverty in most parts of sub-Saharan Africa, features a programme built around three pillars: Accelerating Economic Diversification; Boosting Strategic Infrastructure; and Unlocking Africa’s Talent.
Led by President Jacob Zuma of South Africa and representatives from his government, other leaders that have confirmed their participation are: Benin, President Thomas Yayi Boni; Ethiopia, Prime Minister Hailemariam Dessalegn; Kenya, President Uhuru Kenyatta; Malawi, President Joyce Banda; Nigeria, President Goodluck Ebele Jonathan; Seychelles, President James Alix Michel; Swaziland, King Mswati III; Tanzania, President Jakaya M. Kikwete; Togo, President Faure Gnassingbé; Uganda, Prime Minister Amama Mbabazi; and Zimbabwe, Prime Minister Morgan Tsvangirai.
“Africa has an historic opportunity to take advantage of recent improvements in governance, as well as its massive youth bulge, to transform its economy and society. The World Economic Forum on Africa presents Africa’s leaders with a platform to build on these encouraging signs and work together to create innovative models, solutions and outcomes to tackle the region’s challenges and harness its great potential,” said Elsie Kanza, Director, Head of Africa, World Economic Forum.
In addition to a two-day public programme, there will also be a number of significant meetings on the fringes of the World Economic Forum on Africa. The Grow Africa Investment Forum, on 8-9 May, will attempt to build on its successes in 2012 by underscoring further commitment from both the public and private sectors. Another meeting is Shape Africa, organized by the Cape Town hub of the Global Shapers Community, a worldwide network of young leaders between the ages of 20 and 30, which takes place in the city on 6-7 May.
The Co-Chairs of the World Economic Forum on Africa are Frans van Houten, Chief Executive Officer and Chairman of the Board of Management and the Executive Committee, Royal Philips Electronics, Netherland; Mo Ibrahim, Chairman, Mo Ibrahim Foundation, United Kingdom; Mustafa Vehbi Koç, Chairman of the Board, Koç Holding, Turkey; Frannie Léautier, Executive Secretary, The African Capacity Building Foundation, Zimbabwe; and Arif M. Naqvi, Founder and Group Chief Executive, Abraaj Group, United Arab Emirates.
By Martha van der Wolf
ADDIS ABABA — The United Nations Development Program has released its 2013 Human Development Index. Despite recent economic growth, Ethiopia is still near the bottom of the index.
Ethiopia ranks 173 out of 187 countries in the Human Development Index 2013, unveiled by the United Nations Development Program, UNDP, on Friday.
The Index is part of the Human Development Report that is presented annually and measures life expectancy, income and education in countries around the world.
Since 2000, Ethiopia has registered greater gains than all but two other countries in the world – Afghanistan and Sierra Leone. But it still ranks close to the bottom of the Index.
However, Samuel Bwalya, an economic advisor for UNDP, says that not only the ranking is important.
“I think what matters in the index is how you’re moving, your own human development progress within the country, so you’re moving from 0.275 to 0.378, that movement is what matters,” said Bwalya. “It means that your country is making progress in human development. Now the ranking depends on how other countries are also faring.”
This year’s Human Development Report focuses on the major gains made since 2000 in most countries in the global South.
UNDP believes sub-Saharan Africa can achieve higher levels of human development if it deepens its engagement with other regions of the South.
But those countries must overcome many challenges, such as low life expectancy, high levels of inequality and the growing threat for environmental disasters that could halt or reverse the recent gains in human development.
Bwalya says that government policies are central to human development in Ethiopia:
“The most important is to continuously commit to two policy arenas: the economic program in the country is robust and the government should have continuous commitment to development,” he explained. “The second is that it should continue the social protection program that has been so important in reducing poverty.”
While the Human Development Report and Index celebrate improvements across the developing world, a hard fact remains – 24 out of the 25 lowest ranked countries are on the African continent.
Bethlehem Tilahun Alemu began SoleRebels as a way of bringing jobs to her community. When she migrated from the countryside in Gojjam to Addis Ababa in Ethiopia in search of ‘a better life’ and saw that there really wasn’t one – she took action. She made a commitment to not only create jobs for her fellow citizens which were EXCELLENT paying ones, but jobs which were FAR ABOVE what other local employers were paying for similar work. She also committed to providing local jobs which provide a decent standard of living for workers and their families. Her goal was to create wages for workers which are on average 4x the legal minimum wage and 3x the industry average for similar work.
Next on her ‘to-do’ list was to create sustainable production. Her equation looks something like this:
RECYCLING + LOCALLY SOURCED ORGANIC MATERIALS + TALENTED HANDS = LOW CARBON FOOTPRINT + ENVIRONMENTAL RESPECT + COOL PRODUCTS
Talk about a recipe for success. Bethlehem’s thinking was that, in Ethiopia, recycling things is a way of life. In fact, people have been recycling for years and years without ever calling it recycling. When there are limited resources everything is valued and valuable. Everything has its purpose – even if it is not the original purpose it was intended for. For Ethiopians, ingenuity + resourcefulness equals TRUE RECYCLING.
Bethlehem’s company has taken the traditional Ethiopian selate shoe (recycled tire shoe) and re-imagined it as a very hip, dynamic, eye-catching fashion. Her staff of hardworking Ethiopians regularly challenge themselves to find new uses for indigenous and recycled materials. Styles include camouflages put into peaceful use, ingenious arrays and uses of Ethiopian hemps, and on to the most wild use of tires and inner tubes you can imagine.
Preserving Ethnic Heritage
Part of the company’s success, in addition to its beautiful products and commitment to workers, is the way it leverages the uniquely Ethiopian heritage to build a global, market leading eco-ethical brand. Everything the company does is guided by applying the unique cultural arts practiced in Ethiopia for millennia. By preserving important cultural assets in fresh, fun, dynamic new fashions, it’s a win/win for both producer and purchaser.
Sole Rebels believes in building power for workers and their surrounding community. Every action the company takes is with community betterment in mind. Besides creating a myriad of employment opportunities and always looking to increase these, the company challenges themselves to do more, more, more! One example of the kind of giving back Sole Rebels does is their artisan education fund. This fund provides monies for the education of Sole Rebel artisan’s children and/or the children of close relatives. Like all Sole Rebel programs the artisan education fund is flexible and demand driven – meaning the workers get to decide where to allocate money.
Fair trade, fun fashions, eco-friendly materials, and well-made long-lasting shoes – what could be more joyful!
By Laurie Mazur for the Wilson Center
Certainly, the landlocked East African nation faces outsized challenges. One in ten Ethiopians is chronically food insecure, and nearly one in five go hungry in drought years. With almost half its people under the age of 15 and an average fertility rate of nearly five children per woman, Ethiopia’s population is the fifth fastest-growing in the world.
Given these challenges, does continued rapid population growth consign impoverished Ethiopians to chronic hunger? Some, in the spirit of Thomas Robert Malthus, would answer yes. Malthus famously argued in the 19th century that human numbers would inevitably outstrip food supply, because population grows geometrically while food supply can only increase arithmetically. Others, inspired by Ester Boserup, contend the opposite is true: population growth spurs invention that keeps supply ahead of demand.
A closer look at Ethiopia shows that neither the Malthusians nor the Boserupians quite get it right. The connections between population and food security are extraordinarily complex. Numbers matter, but so do other dynamics, such as migration and age structure. And context is paramount: the right policies are essential to encouraging – and reaping the benefits from – positive demographic trends, but those policies must be tailored to local circumstances.
Contrasts and Contradictions
Ethiopia is a land of stunning contrasts and seemingly contradictory truths.
Most Ethiopians live in brutal poverty, their per capita income among the lowest in the world. And yet, Ethiopia is one of the so-called “African lions:” its economy grew at a brisk 7.5 percent last year, more than twice the rate of emerging economies as a whole.
Ethiopia is a nation where small farmers struggle to eke out a living on tiny, degraded plots of land: in the densely populated highlands, roughly half the land is significantly eroded. Yet Ethiopia is also the target of aggressive “land grabs.” Since 2008, the government has leased or sold nearly 10 million acres of prime farmland in the less-populated lowlands to investors from China, India, Saudi Arabia, and elsewhere, according to Human Rights Watch.
How do we reconcile these contrasts?
First, national averages are of limited use in a country like Ethiopia, with its diverse topography and staggering inequities. Geographically, Ethiopia’s regions are as distinct as, say, Arizona and Minnesota – and the outlook for environmental quality and food security vary accordingly. There are also huge disparities between rural and urban Ethiopians. To understand the relationship between population dynamics and food security, then, it is helpful to remember that there are many Ethiopias.
It is also helpful to set aside any preconceived notions about population and food.
Malthusians argue that population growth inevitably leads to hunger, as the resource “pie” is divided into ever smaller slices. The most obvious flaw in this theory is that technology has thus far allowed the size of the pie to increase. Another is that food and other resources are not distributed equitably; some people get much larger servings than others. The pie as a whole may be big enough for everyone, but only the slices of the poor continue to shrink.
The Malthusian narrative doesn’t fit Ethiopia, where the areas with the highest population densities are not usually the hungriest. In The Demographic Transition and Development in Africa: the Unique Case of Ethiopia, Charles Teller found that “high density can either increase vulnerability or strengthen resilience,” depending on a host of other factors, including technology, infrastructure, education, urbanization, and effective implementation of population and development policy.
On the other hand, Boserupians would contend that population growth can actually diminish hunger, by forcing societies to modernize agriculture and improve productivity. But realities on the ground in Ethiopia don’t fit that narrative, either.
Tewodaj Mogues of the International Food Policy Research Institute said in an email, “The [Ethiopian] government’s various attempts at increasing agricultural intensification have not been very successful, therefore continued population growth creates substantial pressure on the land, especially in Ethiopia’s northern highlands.”
Of course, agriculture is modernizing in Ethiopia, but the benefits don’t necessarily accrue to the nation’s hungry. In the western lowlands, where land grabs are underway, tens of thousands of small farmers have been removed from their land to make way for agribusiness. According to Oxfam International, Ethiopia now supports the export of fruit, vegetables, and flowers worth $220 million a year. Those exports boost the nation’s foreign exchange, but they may also undercut the food security of poor farmers and reduce production for the domestic market. One displaced farmer told Human Rights Watch, “We want you to be clear that the government brought us here…to die….They brought us no food, they gave away our land to the foreigners so we can’t even move back.”
Beyond Malthus and Boserup
If the Malthusian and Boserupian explanations fall short, what are the root causes of hunger in Ethiopia, and how might they be addressed?
Mogues cited several “deep determinants” of hunger, including geography (for example, rugged mountainous terrain and a changing climate) and institutions (a broad term that includes the rule of law, governance, policies, investments and property rights). Many small farmers in Ethiopia lack secure land tenure, for example, which removes incentives to improve the land and discourages them from seeking employment off the farm, lest their land be taken away. The government’s ineffective aid to small farmers and concessions to agribusiness also fall under this heading.
Population dynamics matter too, especially at the household level. Mogues observed that high fertility rates affect food security in several ways:
In Ethiopia, women in rural areas play a key role in agricultural production, food purchases, non-production activities in the agriculture value chain, and in home preparation of food. Thus, high fertility rates mean that women are less able to devote time to these agricultural activities as they need to allocate more time and resources to child rearing, which has food security implications above and beyond the fact that produced or purchased food will have to be shared with household members in a larger household.
Age structures are also important. Nearly half of the Ethiopian people are “dependents” – under age 14 or over 65. This high dependency ratio diminishes productivity in agriculture and other sectors, because a lower share of the population is in the workforce.
Finally, migration – or the lack of it – plays a role. Government policies aimed at keeping ethnic groups in their home regions suppresses migration to cities and more productive rural lands. Freer migration could reduce pressure on overworked land, allow more appropriate division of labor, and energize development.
A Comprehensive Approach
How can the government and donors address the myriad causes of hunger in Ethiopia? With a “comprehensive approach to food security that includes attention to the full spectrum of population dynamics and geographic distribution,” said Charles Teller in an interview.
That means a robust safety net for the most vulnerable, integrated with ongoing programs to bolster nutrition and health. It means flexible migration policies and stronger rural-urban linkages, coupled with better planned urban development.
It also means agricultural policies that help small farmers improve their productivity, rather than displacing them. According to Ethiopian development expert Fantu Cheru, those policies can include foreign direct investment, as long as the government negotiates terms of engagement that are transparent and fair. For example, the proceeds from cash crops should be invested in improving production of staple foods through extension services, infrastructure, and better equipment for poor farmers.
And it means policies that support – and capture the benefits from – the transition to lower fertility. That demographic transition could improve food security in Ethiopia by freeing up women’s time and lowering the dependency ratio. But the transition is not automatic; it requires supportive policies, such as girls’ education, employment opportunities for women, and enforcement of laws against child marriage.
Importantly, it requires access to family planning and reproductive health services. Today, just 27 percent of married Ethiopian women use modern contraception. One in four have an “unmet need” for family planning – they wish to prevent or delay pregnancy but are not using an effective method of contraception. Addressing that unmet need would have important benefits for women and their families, and it could also help fight chronic hunger.
In this land of contrasts and contradictions, the causes of food insecurity are numerous and complex. Neither Malthus nor Boserup could fully capture that complexity, but both perspectives offer insight on the limitations of current policy – and help point the way to a less hungry future.
Laurie Mazur is a consultant on population and the environment for the Wilson Center’s Environmental Change and Security Program and director of the Population Justice Project.
Sources: CIA, Central Statistical Agency (Ethiopia), Food and Agriculture Organization, Human Rights Watch, Journal of Peasant Studies, MEASURE DHS, Overseas Development Institute, Population Action International, Population Reference Bureau, Rodrik (2002), Teller (2011), The Economist, The Global Mechanism, UN Population Division, U.S. Geological Survey, United Press International, World Bank.
Photo Credit: “Early morning in Lalibela,” courtesy of flickr user Dietmar Temps
Tiny Macau, number one among the world’s top-growing economies for 2012, proves that casino gambling is a more sustainable driver of growth than the purely financial variety. Prominent, too, are Libya and Iraq, two Arab countries in which reconstruction and stabilisation after the violent overthrow of authoritarian regimes will unleash growth. In Libya’s case, the surge is a bounce-back from an even more precipitous slump while war raged. War’s ravages are more distant for Iraq, but post-conflict chaos delayed the recovery, and performance in 2012 may mark the start of something more sustained. Also prominent is China; this is fortunate, since the demand generated by the world’s second-largest economy will counteract some of the drag from the troubled rich world. Mongolia is enjoying a mining boom, and investment in the sector will boost growth. Angola, Laos and Niger will all benefit from relatively high commodity prices, and Ethiopia and Rwanda are gaining from the gradual commercialisation of their rural economies.
from The World In 2012 print edition
Source: The Economist
By Sarah McGregor
(Bloomberg) — Ethiopia’s “highly distorted” monetary policy requires urgent reorganization because it is stunting growth and undermining macroeconomic stability, the International Monetary Fund said.
The Horn of Africa country’s five-year economic-development plan that starts in the fiscal year beginning July 8, 2010, and targets annual growth of 11.2 percent is “very ambitious,” the Washington-based lender said. The IMF projects output for the period will range from 6 percent to 8 percent a year.
“The main concerns stem from heavy financing needs that have not been secured, insufficient prioritization and the limited role envisaged for the private sector,” the IMF said in an e-mailed report today. “High and rising inflation and entrenched negative real interest rates also threaten Ethiopia’s macroeconomic stability.”
The coffee-producing nation’s commodity-dependent economy grew 8 percent last year, versus 10 percent in 2010, the fifth- fastest in sub-Saharan Africa after the Democratic Republic of Congo, Zimbabwe, Botswana and Nigeria, IMF data showed.
Expansion may slow to 6 percent in the fiscal year through July 7, 2012, from an estimated 7.5 percent last year, because of rising inflation, restrictions on private-bank lending and a difficult business environment, the IMF said on May 31. Unrealistic Ethiopia’s goal to reduce inflation to less than 10 percent, from 40.1 percent in September, won’t be easily achievable mainly because the central bank’s monetary policy is unsuitable to tackle rising prices, the IMF said today.
“Single digit-inflation projections in the plan appear unrealistic as long as a loose monetary policy and a heavy dependence of public-sector financing on bank credit continues,” the lender said. The development plan envisions Ethiopia increasing crop production, boosting infrastructure and improving electricity generation to meet its growth goals.
Ethiopia plans to ramp up debt offerings to finance its planned 5,250-megawatt Grand Ethiopian Renaissance Dam, after raising 7 billion birr ($407.5 million) in bond auctions in the past six months, Communications Minister Bereket Simon said on Sept. 27. The 80 billion-birr hydropower project to build Africa’s biggest power plant is being funded domestically to demonstrate how Ethiopia’s economy is reviving, Simon said.
By Aaron Maasho ADDIS ABABA (Reuters)
Ethiopia has proposed a record 117.8 billion birr annual budget for next year, aiming to build infrastructure, health and education services in one of Africa’s fastest growing economies. Although still one of the world’s poorest countries, the Horn of Africa nation says its economy has grown by an annual average of 11 percent over the past five years, one of the continent’s highest rates. Ethiopia devalued its currency by 10 percent in 2009 to boost foreign reserves. The first draft of the 2011/2012 (July 8-July 7) budget shows spending up by 22 percent from the $5.7 billion endorsed in 2010/2011. Domestic revenue accounts for more than 67 percent of the proposed budget, with the rest generated from external loans and grants, the draft says. Prime Minister Meles Zenawi and his council of ministers passed the proposal late on Friday and it will be presented first to a parliamentary committee, before Meles presents it to parliament for approval in early July, finance ministry spokesman Haji Ibsa told Reuters.
Addis Ababa has been attracting interest from investors, many from China and India, looking to its agriculture, oil and gas exploration and hydropower sectors. Opposition parties say the ruling party inflates the country’s growth figures to attract investment and that growth has not filtered down to the poor in a country where last year, 13 million out of 80 million people While the government forecasts
growth of 11.4 percent this year, the International Monetary Fund says it will be only about 7.5 percent. The Washington-based body predicts the figure will slow to about 6 percent in the 2011/12 fiscal year, due to high inflation, restrictions on private bank lending and a trickier business environment. Ethiopia’s year-on-year inflation rate surged for a second straight month to 29.5 percent in April, from 25
percent a month earlier. Of the total budget, 48.7 billion birr will be used to improve health, infrastructure and education services, according to the proposal. Ethiopia has spent over $3.6 billion on the construction of roads over the last decade. Regular spending is up by 35 percent to 23.3 billion birr. “We have a very efficient tax system now and we are confident we will hit the target,” said Melaku Fenta, Director of the Ethiopian Revenues and Customs Authority.
Once shunned by international investors outside of some core commodities, Africa is now high on the radar screens of many funds seeking good returns across the asset classes. But while money may be pouring in, how much is still pouring out? Capital flight has long been a scourge of the continent and one of the key reasons for its gut-wrenching poverty and lack of development. And there is plenty of
evidence that it remains a significant problem, exacerbated by global tax havens and the opaque nature of extractive industries, oil in particular.
A girl selling apples by the roadside outside the Angolan city of
Lubango. REUTERS/Finbarr O’Reilly
Take the case of oil and diamond-rich Angola, which rating agency Fitch on Tuesday upgraded to BB- from B+. We reported last month that $6 billion was spirited out of Angola in 2009, a
staggering sum worth nearly a sixth of its entire annual budget. The calculations, provided to Reuters by Washington-based anti-corruption advocacy group Global Financial Integrity (GFI),
suggested that the bulk of the flow was channelled abroad by a mechanism known as “trade mispricing”. In this case, the way it typically works is that Angolan importers pretend to pay foreigners more for imports than they actually spend. The difference provides cash that can be discreetly put into banks or other assets abroad.
Oil producers seem especially susceptible to this and other kinds of corruption and capital flight. Late last year, GFIestimated that in 2009 $27.5 billion flowed illicitly out of Nigeria, Africa’s largest oil producer and a country with eight times Angola’s 18.5 million population. Lubricating such flows are a network of tax havens whose secretive workings have been brought into the light by author Nicholas Shaxson in his book “Treasure Islands: Tax Havens and the Men who Stole the World” (A subject I blogged on here last month). And global efforts to curtail them, a subject we have written on before, have been largely ineffective. Still, there are promising signs on other fronts, including a U.S. drive to require oil and mining companies registered with the Securities and Exchange Comission to disclose their payments to foreign governments.
Those rules are still being finalised and could yet get watered down. And they might prove futile against things like trade mispricing. But they should still hopefully bring more transparency to the resource sector.Another promising sign is the fact that Africa is no longer just about resources, which was key a theme at the Reuters Africa Investment Summit in March. The expanding middle class on the continent for one is in turn sparking growth in areas such as banking and retail — one reason why U.S. goliath Wal-Mart is so keen to enter the region via its $2.4 billion bid for a majority stake in South African chain Massmart. And a diversified economy is not only more sustainable but may also escape the “resource curse” and the corruption linked to sectors such as oil. Still, these developments do not take away from the fact that there is strong evidence that some countries are losing billions of dollars a year. And things like capital formation and savings and investment will not get off the ground if
the continent continues to lose large sums of money illicitly.
What do you think? Can Africa end capital flight?
By Peter Heinlein
Britain has chosen Ethiopia to be its biggest recipient of development aid during the next four years. Several donor governments are ramping up assistance as Ethiopia sets ambitious goals for eradicating poverty and hunger.
Ethiopia will receive $2 billion in British development assistance in a four-year period.
Howard Taylor, head of the British aid program in Ethiopia, says the decision to boost assistance was based on need as well as evidence that the country has made major strides in recent years.
Ethiopia Prime Minister Meles Zenawi says his country’s economy has grown at a rate of 10 percent or more during each of the past seven years. International aid agencies question the method of calculating the figure. But Mr. Meles says that even double-digit growth would not be enough because Ethiopia’s population has increased faster than the country’s rate of economic growth. The population now stands at around 80 million people.
Taylor says that although the accuracy of the government data can be debated, there is no doubt that Ethiopia’s economic growth is accelerating. “The precision of the data is disputed, and we have an ongoing conversation ourselves with partners, including the government itself, about some of that data. But the headline issue, which nobody disputes, is that there has been from a low base tremendous development progress in Ethiopia over the last eight to ten years or so,” he said.
Taylor says recent studies show that Ethiopia receives far less aid than it needs – half as much in assistance per capita compared to other African countries. He attributes that partly to donor concerns about the killing of anti-government demonstrators following Ethiopia’s disputed 2005 election.
“It’s a fact that overseas aid to Ethiopia did decrease after the 2005 election. It has since increased. I think the size of the population in Ethiopia is a key factor in why the per capita aid is low because Ethiopia is so populous and still growing so fast,” he said.
A poverty index released by Oxford University and the United Nations last year ranked Ethiopia as the world’s second poorest country, after Niger. But the Ethiopian government’s latest five year economic plan includes the ambitious goal of achieving self-sufficiency in food.
Taylor says international donors are increasing their aid budgets, even as they struggle with their own economic troubles. “They’re certainly in the poorest 10 countries in the world. But I think that’s an obvious argument for continued support and increasing what we do here. We are trying to help the millions of very poor, very vulnerable Ethiopians improve their lives,” he said.
Britain and the European Union are among Ethiopia’s biggest aid donors.
The United States is the largest bilateral aid contributor to Ethiopia, averaging more than $1 billion in assistance per year since 2007. During that time, U.S. aid has included more than $1.5 billion in food aid to prevent famine and alleviate chronic food shortages.
Technology and development: A growing number of initiatives are promoting bottom-up ways to deliver energy to the world’s poor
AROUND 1.5 billion people, or more than a fifth of the world’s population, have no access to electricity, and a billion more have only an unreliable and intermittent supply. Of the people without electricity, 85% live in rural areas or on the fringes of cities. Extending energy grids into these areas is expensive: the United Nations estimates that an average of $35 billion-40 billion a year needs to be invested until 2030 so everyone on the planet can cook, heat and light their premises, and have energy for productive uses such as schooling. On current trends, however, the number of “energy poor” people will barely budge, and 16% of the world’s population will still have no electricity by 2030, according to the International Energy Agency. Read more: http://www.economist.com/node/16909923?story_id=16909923&CFID=150857954&CFTOKEN=86352136