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Africa

Rising

Bradley Project on Africa Rwanda’s Economic Engine

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Women Leading Africa

By 2035, there will be almost no poor countries left in OUTLOOK the world. AMERICAN |1


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Table of Contents

Cover Feature Africa’s Changing Tide

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Income Defeats Poverty

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Women’s Empowerment: Key to African Development

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A Roadmap for Promoting Women’s Economic Empowerment

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Bradley Project on Africa The Bradley Project on Africa Bookshelf

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3 Myths that Block Progress for the Poor

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Rwanda Rising Africa’s Homegrown Development Solutions

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The Rwanda Model

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Doing Business in Africa

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Companies Traded on Africa’s Stock Exchanges

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Africa’s New Marketplace

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Winter 2014 Vol. 14, No. 1

Jay F. Hein Editor in Chief Wesley Cate Managing Editor Beverly Saddler Production Coordinator Designer Jonathan Haag Web Editor

In Focus: A Fortune 500 Company Finds Consumers in Africa

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Q&A: Zain Latif, TLG Capital

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China in Africa China in Africa: A New Model of International Development

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The African Lion and the Dragon in the East

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Dambisa Moyo on China in Africa

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China in Africa

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Singapore and Africa - Lessons from Singapore

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Sagamore Institute is an Indianapolis-based nonpartisan research group that brings policymakers and practitioners together to turn ideas into action. Letters to the Editor: Send all “Letters to the Editor” to editor@sagamoreinstitute.org

Sagamore Institute Board of Trustees

Promise of Africa

Chairman

The Promise of Africa

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Jerry D. Semler

The True Size of Africa

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Ret. VADM Michael Bucchi Jay F. Hein Dayton H. Molendorp James T. Morris Alex Oak Donald L. Palmer John R. Sampson Rebecca S. Skillman Stephen A. Stitle Will Weaver P. Douglas Wilson Jean Wojtowicz AMERICAN OUTLOOK | 5

Cover Photo credit: © Derek R. Audette

American Outlook is published by Sagamore Institute, 2902 North Meridian Street, Indianapolis, Indiana 46208. 317.472.2050 www. sagamoreinstitute.org. Copyright © 2014, Sagamore Institute, Inc. All rights reserved.

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Photo: Justin Ide © President and Fellows of Harvard College

Africa’s Changing Tide Democracy, Growth and Hope By Her Excellency Ellen Johnson Sirleaf, President of Liberia

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hen he addressed the Ghanaian Parliament in 2009, President Barack Obama reminded the people of Africa that the great men of the past would no longer shape the continent’s history. The future of all of Africa’s countries is now in the hands of a rising generation—young people, as President Obama said, “brimming with talent and energy and hope, who can claim the future that so many in previous generations never realized.” With few notable exceptions, Africa is no longer made up of countries with corrupt big men who rule with iron fists. It is no longer the Dark Continent in continual economic free fall, wallowing in debt, poverty and disease. Now, Africa is on the rise. There are a number of reasons for this changing tide. To begin, Africa’s governments are much more ac-

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countable. At the beginning of 2011, 17 elections were scheduled across our continent. In 1989, there were just three democracies in sub-Saharan Africa; by 2008, there were 23. The proliferation of elections is a significant improvement from the days when violence was the default means of transition. There are notable examples of the deepening of democracy in West Africa: The militaries of Niger and Guinea, for instance, oversaw their countries’ democratic elections then turned power over to their civilian governments. Afterwards, the militaries returned to their barracks. And despite the post-election violence in Côte d’Ivoire, the Economic Community of West African States (ECOWAS) and the African Union recognized a non-incumbent as the legitimate winner. That is progress.

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Cover Feature We also see evidence of a rising Africa in the economy. Over the past decade Africa’s economy has been growing at more than 5 percent. Moreover, a recent African Development Bank report measured the climb of the middle class in Africa, which is now comprised of 313 million people out of 1 billion Africans. The noteworthy beneficiaries of this exceptional growth include Ghana, Mozambique, Mali, Tanzania, Cape Verde, Botswana, Burkina Faso, and Rwanda. As a result of this middle class the face of Africa is changing. We are moving away from dependence on extractive industries and agriculture toward more diversified economies. Notably, Africa’s growing consumer class helped brace Africa during the global economic crisis. This fact is representative not only of the increase in the purchasing power of African households, but signifies that Africans can still feed their families when the rains fail. Of course, we can further amplify the effects of these trends by taking advantage of South-South partnerships with China, India, and Brazil. And as Nigeria and Ghana become more significant partners, cooperation with them will be crucial to Africa’s economic growth. To be sure, even as the African renaissance appears on course we must recognize that some of this progress is driven by the same rise in commodity demand that led to temporary gains four decades ago. Africa is a significant source of raw materials to India and China as well as the Western world, yet we generate the least profits from these exhaustible resources. Consequently, we remain vulnerable to external price shocks. To hedge against these dangers, Africans need to receive more transfer of technology and growth in related industries. At the same time, until we begin to make products to sell; build better road and rail systems; improve the flow of people and goods across our borders; or supply the engineers and geologists and marketers of our resources our middle class will remain stunted. In spite of these needs and the fundamental challenges of a resource-based economy, everywhere I travel in Africa I see signs of a continent rising. We are producing more, manufacturing more, trading more, and cooperating more. Words like accountability, transparency, and reform are not just the calling card of foreign donors. They are words that are beginning to adjudicate closeddoor decisions for those governments in Africa that seek re-election. There is a growing consensus on these issues, which gives me great optimism about the future of Africa’s common economy and democratic prospects.

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Ellen Johnson Sirleaf addresses the 2008 United Methodist General Conference on April 29 in Fort Worth, Texas. Sirleaf is a United Methodist and the first female head of state in Africa. A UMNS photo by Mike DuBose.

As a final word, I am excited about Africa’s future, and more so about Liberia’s. While instability and years of conflict have pushed us to the bottom in terms of the size of our middle class, we have stubbornly refused to accept the status quo. We are preparing a new development agenda that aims, through proper allocation of our natural resources, to graduate Liberia from development assistance in 10 years and propel us to a middle-income country by 2030. I am made more hopeful by our country’s second peaceful democratic transition in six years—a country that was riven by political rivalries, tribalism, and civil war for two decades. It is, nonetheless, with cautious optimism that we approach the future. Despite Liberia’s rebirth, our achievements remain fragile and reversible. And yet I have no anxieties. From a decades-long career in public service, I have learned to value hope and resilience. I was there in the early ’70s, a decade after the independence movement swept across Africa. Back then, the future appeared full of endless possibilities but was met with a descent into militarism, sectarian violence, and divisive ethnic politics. But overtime, I have been blessed with the opportunity to watch and participate as African countries rise out of the ashes of war. As we move forward, it is my hope that we will continue to lead Africa into reaping the dividends of peace. This article was adapted from President Sirleaf’s remarks to Harvard University’s graduating class of 2011.

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President Joyce Banda of Malawi. UN Photo/Paulo Filgueiras

Income Defeats Poverty By Her Excellency Joyce Banda, President of Malawi

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ecoming the second female head of state in Africa’s history is a great honor and responsibility. But mine is not a success story of an individual but rather a people. A peaceful and constitutional transition was not inevitable when my presidency began.  The people of Malawi made this possible: they have chosen democracy and pledged to work together to realize their destiny.  It is my people’s courage and determination that has taken me into the presidency and it is that same spirit that we will not apply to our national development.

Africa has suffered too many conflicts and the burden has been carried too much by our women and children. While there are many sources of this pain, I think that poverty is the biggest threat and therefore sustainable development must be our focus.  Too many Africans lack opportunity and hope.  We are a capable people.  But we must move our children from learning under trees and equip them with 21st learning tools and we must attack investments to build our economy. For decades, I have fought these issues in Malawi as a

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social justice and human rights activist and through my work at the grassroots. I have experienced the struggles of the poor and the suffering of a Malawian woman. I have championed the advancement of the oppressed and marginalized, fought for the rights of women and children, campaigned for the betterment of the rural and urban poor. Mr. President, I can attest to the fact that the experience of a poor and disadvantaged Malawian is intimately intertwined with that of Africans and indeed with that of the least developed countries. Now, as the President of the Republic of Malawi, I have a vision. My vision is to eradicate poverty through economic growth and wealth creation. Malawi aims to create wealth by transforming the structure of the economy, promoting the private sector in order to achieve economic growth, accelerate job creation and protect the vulnerable and the excluded within a decentralized and democratic environment. My vision, specifically, is to transform Malawi to become one of the fastest growing African economies in the next decade. For me, growth is not merely GDP growth. Growth is about wealth and prosperity for all, opportunity for all, happiness for all, political and economic freedom for all.

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Cover Feature Growth is also about growing the number of children in school, and young people in jobs. Growth is about increasing the number of mothers who give safe birth in a hospital, and of growing the number of families who have plenty of food. My government realizes that the potential of Malawi is great: the potential of our land, our resources and most importantly of our people. But this opportunity will only be seized through our own efforts. This is why my vision is not just hopeful words. Our willingness to take tough decisions does not end here. Our plans need to be translated into action. To this end, within my first 100 days, Malawi held an inclusive National Dialogue on the Economy to narrow down five priority sectors within our medium term national development framework (the Malawi Growth and Development Strategy (MGDS II). The five priorities are: Energy, Tourism, Agriculture, Mining and Infrastructure Development. Central to these priorities is our emphasis on delivery through partnership with the private sector. We will facilitate this by making changes that improve the business climate. My Cabinet has identified three specific projects within each priority sector and translated this into an implementation plan for the next two years. These projects range from completion of essential roads and rail lines, to setting up alternative energy sources, understanding business climate reform to attract investment into agro-processing and mining. These will set our country on a path of fulfilling its full potential. In addition, I have also launched two Initiatives; the Presidential Initiative on Maternal Health and Safe Motherhood; and the Presidential! Initiative on Poverty and Hunger Reduction to fast track the interventions needed to address the social needs of the disadvantaged groups especially women and youth. Malawi refuses to accept what others may consider to be our destiny: state of underdevelopment. Malawi is committed to change this perception. But in doing this, my government and indeed the People of Malawi know that we need to engage the rest of the global communi-

ty. That is why within days of taking office, I re-opened dialogue and engagement with our neighbors, with African leaders and indeed with the rest of the world. The People of Malawi are grateful for the goodwill that many have shown us and we are encouraged by the support of our partners. Malawi will continue to need global support in the short and medium term. We need this support to protect the rural poor from food shortages caused by prolonged dry spells in some parts of the country. Malawi is looking for partnerships to build its energy capacity. Malawi needs support to attract private investment for the rich potential we have in agro-processing and mining, among others. We are looking for partnerships to support the development of our transport and communications infrastructure in order to improve the market access to markets. Malawi is on a journey to change its trajectory.  The dark clouds of our troubled past are lifting and we have taken the onramp to a real change that fosters private sector growth and engages the global community.  Malawi is ready to take its turn to grow, not just wealth but more so the opportunities, hopes and freedoms for all the Malawian people.  The process of social, economic and political emancipation is continual and it must constitute an evolving act of self-definition. My government is committed to constructing a people-centered society guaranteeing the dignity of every citizen.  We seek a society that fosters a good quality life for every woman, man, and child without regard to tribe, gender, or political affiliation. And we will not rest until we enjoy a society where every citizen can realize their full potential. This job is too big for government alone.  It is a national task that calls for the mobilization of all our people.  I have challenged my people with a call for chaka chino ndi chaka chamayankho (a year of breakthroughs and favor).  This will require us to draw on the energy and ingenuity of all Malawians to give birth to a new future.

President Joyce Banda serves as chair of the South African Development Community. Here she is pictured with other regional heads of state. Photo by Freddy Maro

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Women’s Empowerment Key to African Development

By Charity Wallace During the next five years, Africa is expected to be home to seven of the world’s 10 fastest-growing economies. Work published in the Harvard Business Review estimates that at current growth rates, African consumers will purchase $1.4 trillion in goods and services in 2020. That’s right in line with spending projections in India — and in excess of projections in Russia. Unfortunately, this growth hasn’t proportionately benefitted women. Even though women make up more than 50 percent of Africa’s population, they’re seriously underrepresented in the workforce and are only just beginning to emerge as a serious consumer bloc. Women are the backbone of developing communities. This is certainly the case in Africa. Statistics show that the average man reinvests about 30 percent to 40 percent of his income into his family, whereas the average woman reinvests 90 percent. In New York City, Mrs. Laura Bush hosted a festive, small luncheon for eight African First Ladies, President

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Ellen Johnson-Sirleaf of Liberia, and several organizations that are working on the African continent to address education and health. Smart, targeted support for key social institutions, plus scalable private-public partnerships that empower women and girls, will help ensure that Africa continues its path toward prosperity. Investing in women entrepreneurs is a critical step in that path. Successfully starting a business helps women become self-sufficient, and provides more flexibility for their families. The Global Entrepreneurship Monitor reports that in two African countries, Ghana and Nigeria, women start businesses at a greater rate than men. Those models can and should be replicated across the continent. One of the best ways to increase female entrepreneurship is to improve access to credit. Most women just need a small amount of startup capital to execute their business ideas. Already, international financiers are

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Cover feature catching on to the fact that supporting developing world entrepreneurs is a smart investment. The Development Credit Authority, the venture wing of the United States Agency for International Development (USAID), has turned $82 million in investment in 64 developing countries into $2.3 billion over recent years. In order to reach their full potential, women in Africa also need access to improved health services. Every two minutes, a woman dies from childbirth — and 99 percent of those deaths are in developing countries. Right now, in a century of miraculous technological advancement and global prosperity, the average girl in Chad is still more likely to die in childbirth than attend secondary school. And among those women who survive, two out of every 10 suffers a complication, like fistula, that permanently hampers their work productivity. Across the developing world, and particularly in sub-Saharan Africa, cervical and breast cancers are leading causes of cancer deaths among women. Roughly 85 percent of all women diagnosed with cervical cancer every year live in low-income countries — and more than half of those diagnosed with the disease will die from it. There are innovative public-private partnerships designed to effectively combat female cancers in Africa. The George W. Bush Institute leads an initiative called Pink Ribbon Red Ribbon, which takes a community-centric, results-oriented approach to expanding access to cervical and breast cancer treatments in the developing world. Over the last few years, Pink Ribbon Red Ribbon partners have supported 41,100 pre-cancer screenings and more than 100,000 HPV vaccinations throughout Africa.

George W. Bush Presidential Center

Even minor investments in women’s education will reap massive economic rewards. It’s estimated that each additional year of primary schooling boosts the average African girl’s future wages by 10 percent to 20 percent. Successfully completing basic education makes her three times less likely to contract HIV/AIDs. During the First Ladies Summit in Tanzania, many of the brightest minds in development teamed up with some of the most powerful people in Africa to develop new, more effective ways to invest in women. As we collectively work together, Africa will be sure to continue its remarkable rise and reach its full potential.

Finally and most critically, the global aid community should invest in African women by improving primary and secondary education. Too many girls do not get enough schooling to acquire even the basic skills needed to secure steady employment. Indeed, one in four women globally are still illiterate — and most of them live in Africa. And in 47 out of 54 African countries, girls have less than a 50 percent chance of completing primary school.

Wallace serves as the director of the Women’s Initiative at the Bush Institute. A version of this essay was originally published in the San Diego Union-Tribune.

Lead Photo: Former U.S. First Lady Laura Bush convened a summit of African First Ladies in Dar es Salaam, Tanzania on July 2-3, 2013. Titled “Investing in Women: Strengthening Africa,” the event focused on strategies to empower women that lead to greater stability and prosperity in their families thereby strengthening their communities and nations. First Ladies across Africa are playing an increasingly larger role in advancing education, health and economic opportunity strategies.  Mrs. Bush, on behalf of the Bush Center in Dallas, is dedicated to equipping them for larger and more sustainable impact. George W. Bush Presidential Center

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A Roadmap for Promoting Women’s Economic Empowerment By Wesley Cate Foundation teamed up to help catalyze program and policy action for women’s economic empowerment. The resulting “Roadmap for Promoting Women’s Economic Empowerment” was built off of a rigorous research program comprised of 18 different studies across four crucial categories of intervention: entrepreneurship, farming, wage employment, and young women’s employment.

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f the world’s 1.6 billion workers, females are paid on average less than men. Moreover, women are disproportionately employed in low-productivity, low-paying jobs. As a result of women not achieving their full potential in society, households, communities, and countries suffer. Just taking basic economics into account, empowering an unproductive segment of society can lead to economic growth. But more so, when women earn they can invest in their children’s education and health, giving the next generation a leg up. So while the impact economically empowered women can have on development is widely recognized, the means and methods for closing the disparity have remained elusive. But in early 2012, the United Nations Foundation and the ExxonMobil

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The key lessons learned in each category provide a more complex picture of workable interventions than conventional wisdom suggests. For instance, regarding entrepreneurship “capital alone, as a small loan or a grant, is not enough to grow women-owned subsistence-level firms.” Other lessons learned include: · “Business training improves business practices but has few measurable effects on the growth of women-owned subsistence-level firms.” · “Formal ownership and control over farmland improves women’s productivity and economy security. But the success of land tenure interventions depends on paying attention to social and local contexts.” · “Single agricultural services, rather than a full suite, may be enough to increase productivity of women with larger sized farms, more assets, and more control over those assets.”

· “Access to electricity increases rural women’s productivity and earnings.” · “Access to childcare increases women’s wage employment levels and earnings, but design and delivery matter to ensure quality, affordable and cost-effective care.” · “Demand-oriented skills training, combined with on-the-job training and wage subsidies, increase young women’s employability and earnings, if social restrictions against hiring young women are not binding.” From these and other lessons learned, the Roadmap for Action, charts out a framework to help channel the efforts of the private sector and public private partnerships. Recognizing that a one-size-fits-all model won’t provide adequate solutions, the framework can be used in different economic contexts with women in different circumstances. The interventions are even tiered according to their effectiveness: proven, promising, high potential, and unproven. Moreover, the framework accounts for conflict-affected economies and resource-rich/small island nations. The result is matrices that can help development workers discern the appropriate intervention according to context. Perhaps with these tools, half of the world’s population can be mobilized for development.

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Source: A Roadmap for Promoting Women’s Economic Empowerment: Highlights. United Nations Foundation and ExxonMobil. 2012.

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“The best way to help Africans today is to help them stand on their ~Ngozi Okonjo-Iweala, former

The Bradley Project on Africa Bookshelf T

he nature of foreign aid has changed. What was once a conversation solely for the world’s governments has become democratized through private philanthropy, remittances, personal networks, local nonprofits doing global work and of course trade, business and investment. Indeed globalization has raised questions concerning the meaning and nature of foreign aid. In particular: What works? What doesn’t? And how can private forces be harnessed for growth and development? In 2010 the Lynde and Harry Bradley Foundation tasked Sagamore Institute with answering these and other questions through the Bradley Project on Africa. The project, which can be viewed at www.bradleyafrica.org, is a virtual literature review that captures the conversation surrounding the changing nature of foreign aid and showcases how it has played out on the African landscape.

In Africa, there is perhaps no greater living case study of this new approach than Rwanda. Nineteen years out from genocide, Rwanda has emerged as the leading model for economic development in Africa. But the country’s performance has been impressive by almost any metric: least corrupt and most stable country in Africa, sustained 8 percent growth, 1 million people lifted out of poverty, dropping infant mortality rate, improved infrastructure, improved access to education. Not to mention this “land of a thousand hills” has been hailed as the world’s best-kept secret for business by Forbes magazine.

In particular, the literature review found that the old approach to foreign aid through government-to-government flows has failed to produce any meaningful development. And that these failures are by-and-large a consequence of an improper paradigm that treats development as though it were relief.

To elevate the conversation and amplify the Rwanda model, the Bradley Project morphed into a free-market think tank called ISOKO Institute. Located in Kigali, Rwanda, ISOKO Institute was inaugurated in 2011 by Rwandan President Paul Kagame, investment banker Dale Dawson, advisor to President Kagame Michael Fairbanks, and Sagamore President Jay Hein. Building on the foundation laid by the Bradley Project on Africa, ISOKO’s agenda is threefold: building an entrepreneurial base, attracting foreign direct investment, and creating a policy environment that supports both.

Relief is concerned with directing emergency assistance to areas affected by war or natural disasters. In these circumstances, aid inflows are effective to “stop the bleeding” and help a society recover. Development, however, is a long-term process of cultivating institutions that lead to human flourishing. A relief mentality manifested in the use of foreign aid applied to development has not worked. Definitively, development is a byproduct of good governance coupled with market forces—and aid supports neither.

In the following pages you’ll catch a glimpse into the development debate that laid the foundations for ISOKO Institute through the Bradley Project on Africa: the tensions that exist between aid vs. trade; top-down vs. bottom-up solutions; market forces vs. central planning; and human freedom vs. entitlement. The left side of the fold “dismantles” the pre-existing foreign aid paradigm by exposing its weaknesses. The right side of the fold offers a new framework built on the works of leading development thinkers.

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Bradley Project on Africa

own feet. And the best way to do that is by helping create jobs.” Nigerian minister of finance Dismantling what doesn’t work In her seething critique of the foreign aid regime Zambian Economist Dambisa Moyo decries the West’s attempts at development as not only unhelpful, but caustic—Aid inhibits economic growth, creates dependence and promotes corruption. According to Moyo, none of the developing countries—Asian Tigers—that have seen remarkable economic growth over the last 50 years have done so with the help of foreign aid. William Easterly flips the foreign aid paradigm upside down by calling attention to the many entrepreneurs—who he calls Searchers—in the developing world who are capable of developing piecemeal solutions to the problems of daily life. Like Moyo, Easterly denounces foreign aid on the grounds that development is too complex for “Planners” to bring in top-down solutions and best practices. The foreign aid regime hasn’t worked because it relies on outside prescriptions to local challenges. Jeffery Sachs represents the best intentions of the foreign aid regime. Unlike the other thinkers, Sachs believes that the world’s poor requires more, not less, aid. For him, the increased aid needs to be channeled into pre-made solutions for the poor such as water-purifications systems, mosquito nets, and contraceptives. Sachs’ approach is a call to the world elite to bring in outside solutions and money to solve the problems of the poor for them. Collier’s Bottom Billion diagnoses the problem of the world’s poorest as a series of interlocking traps: Conflict, Natural Resources, Being Landlocked (with bad neighbors), and poor governance. These traps create a vicious cycle that prevents any country—mostly African—from pursuing meaningful development. For Collier, the aid-driven agenda of the G8 and celebrity activists has been little more than a “headless heart.”

Aid may be well intentioned, but its effects have been lackluster at best. To date, aid has been misdirected toward government programs—which breeds corruption—and to NGOs, which create no real wealth for a society. For Hubbard, aid isn’t the problem as much as how it has been distributed.

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Embracing what does In Easterly’s dichotomy of Planners vs. Searchers, it is the Searchers who are the key to development. Through piecemeal solutions, these entrepreneurs can, in the aggregate, bring about the growth necessary for development. Easterly’s points to the meteoric rise of the first Asian Tiger, Japan, as an example. Realizing their need to advance the Japanese took a pragmatic approach to development by searching for what worked in the West and pairing it with indigenous solutions. Development came about in Japan because of an earnest commitment from a cadre of Searchers who solved problems using what worked for them. Easterly’s approach has gained a great deal of traction. Operating from the assumption that the world’s billion poorest people are stuck in a web of traps, Collier prescribes better policies. In particular, Collier’s tools for repair are aid, security, laws and charters, and trade. An appropriately calibrated combination of these tools can free countries from their traps. Highlighting the success of the Marshall Plan, Glenn Hubbard argues that aid should be directed to local businesses in developing nations—not governments, not foreign companies. The Marshall Plan that rebuilt Europe channeled loans to the private sector through a national fund. When the businesses repaid their loans to the fund, the governments would use the money to build infrastructure and institutions leading to growth. Hubbard suggests the same could be true of developing countries today if aid was treated properly. In her 2007 TED Talk, Nigeria’s first female minister of finance, Ngozi Okonjo-Iweala explains the merits of investing in Africa. The narratives that have marked Africa’s past—corruption, conflict, disease, and famine—are no longer appropriate. The Africa of the 21st Century is a place of opportunity, improved governance and economic growth.

Speaking to the world’s investors, Jacqueline Novogratz recommends investing what she calls “patient capital.” Traditionally, investors operate with the expectation of a quick return on investment, maximum profits, and the primacy of the shareholder. Investors of patient capital, on the other hand, may forgo immediate returns in favor of long-term social impact, tend to value customers over shareholders, and be willing to take greater risks. Moyo’s work isn’t just about deconstructing aid. It also provides a way forward. Governments in the developing world governments should pursue private sources of capital in commercial markets, attract FDI, encourage entrepreneurship, expand their trading networks, and improve domestic banking.

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In dealing with poverty here and around the world, welfare and foreign aid are a Band Aid. Free enterprise IS A CURE. - Bono

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Boris Roessler/dpa/picture-alliance/Newscom


3 MYTHS

THAT BLOCK PROGRESS FOR THE POOR by Bill Gates

By almost any measure, the world is better than it has ever been. People are living longer, healthier lives. Extreme poverty rates have been cut in half in the past 25 years. Child mortality is plunging. Many nations that were aid recipients are now self-sufficient. You might think that such striking progress would be widely celebrated, and that people would rush to figure out what is working so well and do more of it.

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But they’re not, at least not in proportion to the progress. In fact, I’m struck by how few people think the world is improving, and by how many actually think the opposite— that it is getting worse. I believe this is partly because many people are in the grip of several myths—mistaken ideas that defy the facts. The most damaging myths are that the poor will remain poor, that efforts to help them are wasted, and that saving lives will only make things worse.

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Bradley Project on Africa The belief that the world is getting worse, that we can’t solve extreme poverty and disease, isn’t just mistaken. It is harmful. It can stall progress. It makes efforts to solve these problems seem pointless. It blinds us to the opportunity we have to create a world where almost everyone has a chance to prosper. If people think the best times are in the past, they can get pessimistic and long for a return to the good old days. If they think the best times are in the future, they see things differently. When science historian James Burke wrote about the Renaissance in The Day the Universe Changed, he pointed to one source for many of the advances that happened in that amazing period: the shift from the belief that everything was decaying and getting worse to the realization that people can create and discover and make things better. We need a similar shift today, if we’re going to take full advantage of the opportunity to improve life for everyone. In all five of the annual letters I have written so far, I have discussed our foundation’s activities, showing where we’re making progress and where we’re not. This year, Melinda and I chose not to focus on the foundation specifically. (The foundation’s annual report, which comes out later this year, will do that.) Instead, we wanted to focus this year’s letter entirely on three myths that keep the world from accelerating success against poverty and disease. I wrote about the first two myths, which relate to poverty and aid, and Melinda decided to write about the third one, because it is related to her expertise in reproductive health. We hear these myths raised at international conferences and at social gatherings. We get asked about them by politicians, reporters, students, and CEOs. All three reflect a dim view of the future, one that says the world isn’t improving but staying poor and sick, and getting overcrowded.

I understand why people might hold these negative views. This is what they see in the news. Bad news happens in dramatic events that are easy for reporters to cover: Famine suddenly strikes a country, or a dictator takes over someplace. Good news—at least the kind of good news that I have in mind—happens in slow motion. Countries are getting richer, but it’s hard to capture that on video. Health is improving, but there’s no press conference for children who did not die of malaria.

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We’re going to make the opposite case, that the world is getting better, and that in two decades it will be better still. But that future isn’t pre-ordained. To achieve it, we’ll need to apply human ingenuity and act on our compassion. That starts with removing the barriers that undercut our confidence and slow our momentum. That’s why in this year’s letter Melinda and I take apart some of the myths that slow down the work. The next time you hear these myths, we hope you will do the same.

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When we visit poor countries, we see first-hand that the world is getting better.

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Bradley Project on Africa MYTH

01

POOR COUNTRIES ARE DOOMED TO STAY POOR

by Bill Gates

I’ve heard this myth stated about lots of places, but most often about Africa. A quick Web search will turn up dozens of headlines and book titles: “How Rich Countries Got Rich and Why Poor Countries Stay That Way,” “Why Do the Poor Stay Poor?” etc. Thankfully these books are not bestsellers, because the basic premise is false. The fact is, incomes and other measures of human welfare are rising almost everywhere, including in Africa. So why is this myth so deeply ingrained? I’ll get to Africa in a moment, but first let’s look at the broader trend around the world, going back a half-century. Fifty years ago, the world was divided in three: the United States and our Western allies; the Soviet Union and its allies; and everyone else. I was born in 1955 and grew up learning that the so-called First World was well off or “developed.” Most everyone in the First World went to school, and we lived long lives. We weren’t sure what life was like behind the Iron Curtain, but it sounded like a scary place. Then there was the so-called Third World—basically everyone else. As far as we knew, it was filled with people who were poor, didn’t go to school much, and died young. Worse, they were trapped in poverty, with no hope of moving up.

States for checkups to make sure the smog wasn’t making them sick. Today, the city is mind-blowingly different. Its air is as clean as Los Angeles’s (which isn’t great, but certainly an improvement from 1987). There are high-rise buildings, new roads, and modern bridges. There are still slums and pockets of poverty, but by and large when I visit there now I think, “Wow, most people who live here are middle-class. What a miracle.” These photos illustrate a powerful story: The global picture of poverty has been completely redrawn in my lifetime. Per- person incomes in Turkey and Chile are where the United States was in 1960. Malaysia is nearly there, as is Gabon. And that no-man’s-land between rich and poor countries has been filled in by China, India, Brazil, and others. Since 1960, China’s real income per person has gone up eightfold. India’s has quadrupled, Brazil’s has almost quintupled, and the small country of Botswana, with shrewd management of its mineral resources, has seen a thirty-fold increase. There is a class of nations in the middle that barely existed 50 years ago, and it includes more than half of the world’s population. Here’s a way to see the transition: by counting people instead of countries. (BELOW) So the easiest way to respond to the myth that poor countries are doomed to stay poor is to point to one fact: They haven’t stayed poor. Many—though by no means all—of the countries we used to call poor now

The statistics bear out these impressions. In 1960, almost all of the global economy was in the West. Per-capita income in the United States was about $15,000 a year. (That’s income per person, so $60,000 a year for a family of four.) Across Asia, Africa, and Latin America, incomes per person were far lower. Brazil: $1,982. China: $928. Botswana: $383. And so on. Years later, I would see this disparity myself when I traveled. Melinda and I visited Mexico City in 1987 and were surprised by the poverty we witnessed. There was no running water in most homes, so we saw people trekking long distances by bike or on foot to fill up water jugs. It reminded us of scenes we had seen in rural Africa. The guy who ran Microsoft’s Mexico City office would send his kids back to the United

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have thriving economies. And the percentage of very poor people has dropped by more than half since 1990.

look skeptically at anyone who treats an entire continent as an undifferentiated mass of poverty and disease.

That still leaves more than one billion people in extreme poverty, so it’s not time to celebrate. But it is fair to say that the world has changed so much that the terms “developing countries” and “developed countries” have outlived their usefulness.

The bottom line: Poor countries are not doomed to stay poor. Some of the so-called developing nations have already developed. Many more are on their way. The nations that are still finding their way are not trying to do something unprecedented. They have good examples to learn from.

Any category that lumps China and the Democratic Republic of Congo together confuses more than it clarifies. Some so-called developing countries have come so far that it’s fair to say they have developed. A handful of failed states are hardly developing at all. Most countries are somewhere in the middle. That’s why it’s more instructive to think about countries as low-, middle-, or high-income. (Some experts even divide middle-income into two sub-categories: lower-middle and upper-middle.)

I am optimistic enough about this that I am willing to make a prediction. By 2035, there will be almost no poor countries left in the world. Almost all countries will be what we now call lower-middle income or richer. Countries will learn from their most productive neighbors and benefit from innovations like new vaccines, better seeds, and the digital revolution. Their labor forces, buoyed by expanded education, will attract new investments.

With that in mind, I’ll turn back to the more specific and pernicious version of this myth: “Sure, the Asian tigers are doing fine, but life in Africa never gets better, and it never will.”

A few countries will be held back by war, politics (North Korea, barring a big change there), or geography (landlocked nations in central Africa). And inequality will still be a problem: There will be poor people in every region.

First, don’t let anyone tell you that Africa is worse off today than it was 50 years ago. Income per person has in fact risen in sub- Saharan Africa over that time, and quite a bit in a few countries. After plummeting during the debt crisis of the 1980s, it has climbed by two thirds since 1998, to nearly $2,200 from just over $1,300. Today more and more countries are turning toward strong sustained development, and more will follow. Seven of the 10 fastest-growing economies of the past half-decade are in Africa. Africa has also made big strides in health and education. Since 1960 the life span for women in sub-Saharan Africa has gone up from 41 to 57 years, despite the HIV epidemic. Without HIV it would be 61 years. The percentage of children in school has gone from the low 40s to over 75 percent since 1970. Fewer people are hungry, and more people have good nutrition. If getting enough to eat, going to school, and living longer are measures of a good life, then life is definitely getting better there. These improvements are not the end of the story; they’re the foundation for more progress. Of course, these regional averages obscure big differences among countries. In Ethiopia, income is only $800 a year per person. In Botswana it’s nearly $12,000. You see this huge variation within countries too: Life in a major urban area like Nairobi looks nothing like life in a rural Kenyan village. You should

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But most of them will live in countries that are self-sufficient. Every nation in South America, Asia, and Central America (with the possible exception of Haiti), and most in coastal Africa, will have joined the ranks of today’s middle- income nations. More than 70 percent of countries will have a higher per-person income than China does today. Nearly 90 percent will have a higher income than India does today. It will be a remarkable achievement. When I was born, most countries in the world were poor. In the next two decades, desperately poor countries will become the exception rather than the rule. Billions of people will have been lifted out of extreme poverty. The idea that this will happen within my lifetime is simply amazing to me. Some people will say that helping almost every country develop to middle-income status will not solve all the world’s problems and will even exacerbate some. It is true that we’ll need to develop cheaper, cleaner sources of energy to keep all this growth from making the climate and environment worse. We will also need to solve the problems that come with affluence, like higher rates of diabetes. However, as more people are educated, they will contribute to solving these problems. Bringing the development agenda near to completion will do more to improve human lives than anything else we do.

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Bradley Project on Africa

Making Government Aid Get Results

Foreign aid helps refugees like Nikuze Aziza feed their families and stay healthy (Kiziba Camp, Rwanda, 2011).

A growing number of countries in Africa are building community health systems, which are extremely costeffective (Accra, Ghana, 2013).

Children who have a healthy start in life kick off a virtuous cycle of development (Dakar, Senegal, 2013). All photographs and infographs are ŠBill & Melinda Gates Foundation.

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Young Presidents Organization meet President Kagame- London, 19 May 2013 Photo: Urugwiro Village

Africa’s Homegrown Development Solutions By His Excellency Paul Kagame, President of Rwanda

A

frica today has the opportunity to play its rightful role in the global arena. But to do so the continent needs to speak with one voice and be competitive in all aspects. This, in turn, demands radical socio-economic transformation. Of course, none of that can happen until Africa’s people lead dignified lives and can take full charge of their development agenda. To that end, African countries need a new kind of leadership—one that has vision, passion and commitment for rapid development as well as for the well being of its people. In a word, leadership that is transformational. These leaders—ones focused on securing Africa’s prosperity and ensuring its relevance—must be confident, assertive, innovative and committed to promoting and defending the continent’s interests. Above all, these leaders should be prepared to seek solutions from within the philosophies and practices of their societies, and to develop ideas that propel their countries forward even if it means embracing the unorthodox. But let me be clear: no individual leader or country acting alone will achieve a continent-wide qualitative change or play a significant global role. These benefits can only come

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about if leadership seeks and promotes cooperation across Africa on a wide range of issues. The need for change and for the agents that can bring it about signifies that Africa has not lived up to its full potential. The question, then, is: What do we need to do to correct the situation? In the words of an eminent Nigerian, “we must first find out when the rain started beating us.” Though Africa is not where it should be, it is certainly not because of a lack of resources or human capital. Indeed I have no doubts about the intellectual and entrepreneurial potential of the continent. Rather than capability, the issue has been that we do not have enough leaders across a variety of fields with the ideas to change our societies, the capacity to mobilize our people, or the vision and drive to spur innovation and competitiveness. Of course, Africa has had leaders—some of them great— over the last fifty years of independence. But despite the liberation and post-independence ideals, visions were only partially realized. Africa lost decades in terms of its much-needed development. To be fair, Africa’s shortcomings cannot be entirely attributed to its leaders. Other

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Rwanda Rising factors contributed to the lack of development, such as the mostly-deficient colonial structures that we inherited and external control of the development processes.

Most importantly, the initiative restored Rwandans’ pride in their cultural values as a source of remedies to current challenges, innovation and approaches to development.

Nonetheless, in the last two decades, Africa has started to move again. It has entered a new phase. Its leaders are no longer looking externally for solutions to internal issues because homegrown ideas are providing answers. Answers not only for development but also for the restoration of our dignity.

Similarly, the Government of Rwanda initiated the Girinka (one cow per poor household) program adapted from the traditional Rwandan solidarity practice of giving each other a cow as a pact of friendship and support in the event of misfortune or dire need. In its modern application, Girinka addresses several issues at once: improved nutrition, income generation and increased agricultural productivity. This initiative, together with other efforts, has contributed to a 12% reduction in poverty from 56.9% to 44.9% between 2005 and 2010. Furthermore, it raised one million people or 10% of the population out of poverty.

All of this, of course, means change. Now, change of any sort is a journey into the unknown, and unacceptable conditions alone cannot provide sufficient drive to venture ahead. Transformational leaders—agents of change—should bring everyone along with them. To do so, they must use practices and beliefs that people identify with, which can help remove fear and help them embrace change, own it and even build on it. The collective wisdom that results from both the use of culture, as well as participation, makes people shareholders in the enterprise that is their country. And shareholders want and expect good dividends.  Looking ahead, Africa’s transformational leadership will face adversity. Those who have historically treated Africa as a continent of followers rather than leaders will want to halt the development of such homegrown ideas. Some will do so out of sheer ignorance; however, more often than not they will disrupt progress with subversive intent. But this cannot deter us because success built on internally generated ideas breeds confidence and fosters dignity. Let me offer an illustration from Rwanda. In Rwanda we have consciously drawn from our history and culture to drive our social, political and economic development for the simple reason that it works.  In the aftermath of the genocide in 1994, Rwanda was faced with a huge problem. Considering the large number of perpetrators and the need to give victims justice as well as restore social harmony, conventional political and justice systems were totally inadequate for the task. So we opted for Gacaca, a traditional conflict resolution mechanism. In a decade, Gacaca tried close to two million cases at a cost of less than $1 billion USD compared to the 60 cases tried by the International Criminal Tribunal for Rwanda that cost about $2 billion dollars. But the significance of Gacaca goes beyond the number of cases and their cost. Because it was the first homegrown policy solution successfully applied to a seemingly intractable problem, it inspired and empowered Rwandans to seek and use similar initiatives for broader national development. In fact, Gacaca’s success catalyzed a generation of ideas and values crucial to national development: resilience, self-reliance, confidence and social cohesion.

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What works internally may have applications across the continent as well. This is especially important to keep in mind as we focus on greater cooperation and integration. Our shared trade and investment efforts can help us keep up with the emerging and strong economies and will guarantee the individual and collective strength of our countries ultimately contributing to our relevance. Looking at an example from East Africa is instructive. As a result of the economic integration of the five member states of the East African Community, the region’s total trade with the rest of the world more than doubled between 2005 and 2010, rising from $17.5 billion to $37 billion dollars. Foreign Direct Investments also rose from $683 million in 2005 to $1.7 billion in 2011. Greater cooperation also extends to peace and stability. Today, African leaders are investing in continent-generated solutions to issues of political stability and conflict resolution. The results so far are encouraging: Somalia is re-emerging as a viable country. Sudan and South Sudan are on the road to peaceful co-existence. And in the Democratic Republic of Congo, regional efforts hold the greatest promise of an enduring resolution to the conflict there. In conclusion, I submit that Africa’s position and relevance in an increasingly competitive global environment will be ensured by leaders and people that refuse to be second best and that stand up for their shared interests. Looking ahead, leaders across Africa must focus on dignity - individually and collectively - and on our culture and history as a source of solutions for our development needs. As a final word, for Africa to have a bigger voice in world affairs, it is imperative that the momentum the continent has gained is maintained and even fast-tracked. That duty falls on those in charge of our countries today, but more so to those who will pick up the baton from them. We have no other option.  This article was adapted from President Kagame’s remarks to Oxford University’s Said Business School on May 18, 2013.

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t is an excerp This article da, Inc. from Rwan

The Rwanda Model: Focus on Poverty, Entrepreneurship, Human Capital, Institutions, and Accountability By Patricia Crisafulli and Andrea Redmond

T

here is a joke among residents and frequent visitors to Kigali, the capital city of Rwanda, that if you blink twice, you will see a building that wasn’t there just the other day. What seems like pure exaggeration became a reality for us over numerous trips made to this tiny, landlocked country in eastern Africa. Each time we arrived, there was something else to see. Tower cranes sprouted in new places along the skyline. A multistory hotel to be operated by a leading international hospitality brand went from a construction shell to near completion. Even traffic light installations began to tame Kigali’s chaotic and sometimes heart-stopping traffic patterns. As authors exploring the economic development of Rwanda and the leadership principles and governance structures that have brought it into being, we found evidence virtually everywhere. All around Rwanda, a new narrative is unfolding; one of self-determination and increasing self-reliance, and of a country in a hurry to get where it wants and needs to be. Now, twenty years after the genocide—a human-induced tragedy of catastrophic proportions, when a million or more people died in 100 days—the rebirth of the country adds another chapter to Rwanda’s story; out of the proverbial ashes, a nation of hope and possibility has arisen, taken root, and begun to flourish. Of all the measures of progress, the most impressive is in poverty reduction. With overall real GDP growth that has averaged around 8 percent per year, the country has reduced the percentage of its population living in poverty to 44.9 percent in 2011, from 56.9 percent in 2006. That translates into 1 million people, out of a

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total population of about 10.7 million, emerging from poverty in just five years. In addition, the number of people living in extreme poverty fell to 24 percent from 37 percent over the same period. The Los Angeles Times called the poverty reduction a “remarkable achievement for Rwanda,” and reached out to Paul Collier, director of the Center for the Study of African Economics at Oxford University, to comment on the numbers. Asked by the newspaper if there were any doubts about the veracity of the data, Collier stated, “No doubts; I know the economics professor who did the data analysis, and he is highly experienced and painstaking, so it is genuine.” Beyond the numbers, there we found powerful images of the “Rwanda Model” for poverty reduction, a strategy of private sector-led development, decentralized government, transparency, and accountability at all levels. Implementing that model includes specific objectives: raising the bottom of the socioeconomic pyramid—through agriculture, education, and health care—and developing infrastructure, especially energy and large-scale transportation projects. We found evidence of the model in action in a tiny rural neighborhood known as an umudugudu, where a shiny slab of sheet metal caught the midday sun. The flash of silver stood out among the mostly one- and two-room houses in the settlement known as Sunzu in the Northern Province, where typical roofs made of low-quality, locally crafted tile do a passable job of keeping out the torrential rains. In other, less rainy parts of the country, roofs have been commonly made of thatch, which is

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Rwanda Rising being phased out by the government because of health hazards associated with leaking, dampness, mold, and the insects that live in the grassy material. More than any architectural statement, the new roof on this modest house in an economically disadvantaged area sent an important message about Rwanda: someone in the umudugudu had come into some money to afford that piece of corrugated metal sheeting, perhaps by selling part of a harvest or maybe a goat, which was beyond what the family needed to feed themselves. In a country chronically gripped by poverty, the shining metal roof is an undeniable sign of progress at the lowest socioeconomic tier.

A Model for the Developing World In a world of failed economic models, Rwanda stands apart. Through strong leadership, decentralization to empower the grassroots, free markets, private sector development, managing and aligning the activities of nongovernment organizations (NGOs) with the Rwandan government’s priorities, and active courting of foreign direct investment—all enhanced by cultural values and traditions—Rwanda has become a model for the developing world. Rwandan President Paul Kagame preaches a gospel of economic self-reliance, turning the country, especially the younger generation, into a nation of believers. Rwanda also boasts a willing cadre of civil servants to execute the plans and objectives as espoused in the country’s blueprint for economic, social, and political development—Vision 2020. Of course, Rwanda’s progress has not been made in isolation; the country has received significant help from the outside, including NGOs, which provide assistance, training, and knowhow. But rather than pouring money into their own pet projects, NGOs in Rwanda must conform to the government’s agenda and priorities. Otherwise, an NGO is likely to find its help is no longer wanted. Implementing the Rwanda model of economic development has required more than government action. It demanded a complete change in perspective, all the way down to the local level. “The thinking here was totally different,” Kagame told us. Previous regimes made people completely dependent on the government. Regular handouts from above, including jobs or admissions to the university, reinforced corruption as well as ethnic discrimination and regional favoritism, which in turn stoked the fires of hatred that erupted with the genocide. From a purely economic point of view, when people are

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In the River They Swim is a compilation of essays from some of the world’s leading development thinkers and practitioners. Now in its second edition, the book focuses on enterprise and technological solutions to poverty. Contributors include Rick Warren and President Paul Kagame among many others. The book is edited by Michael Fairbanks, co-founder of ISOKO Institute, founder of the SEVEN Fund, and member of Rwanda’s Presidential Advisory Council.

not productive, the government cannot draw resources from them, such as tax revenues. Then, all the government can do is to rely on foreign aid. “[When that happens] the government has nothing because it cannot get anything from the people,” Kagame explained. “It only ends up begging donors to come in, and then they provide everything. Then the donors [in effect] become the government.” But not on Kagame’s watch. He has called dependence on foreign aid dehumanizing and believes Rwanda can do for itself. Rwanda has benefited a lot from aid, and still receives aid, but its ambition is clear: in time Rwandans will provide for themselves and stand on their own. The only way to cut dependence on foreign aid is private investment from local and foreign business interests to create jobs and opportunities—and generate tax revenue. Today, paying taxes (arguably not a favorite activity of citizens anywhere) is celebrated in Rwanda to raise awareness and encourage compliance. The Rwanda Revenue Authority presents certificates each year to the best taxpayers, recognizing those who pay the most (the Rwandan brewery Bralirwa has been a past honoree, along with a foreign-owned telecommunications company) as well as those who are the most compliant. But it is not enough for economic development to move the needle only at the top. The Rwanda Model emphasizes economic growth that is “pro-poor.” In order to truly make a difference in the country, growth must be demonstrated in the rural areas, where the vast majority of the country’s population lives. Admittedly, there is a sharp contrast between Kigali, which has a cosmopolitan flair, and the umudugudu of Sunzu, which is very humble (although breathtakingly beautiful, surrounded by emerald green hills and a large lake). That’s why the

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President Kagame arrives at the Rwanda Inc. book launch and is received by Minister Louise Mushikiwabo and Rwanda Inc. authors, Andrea Redmond and Patricia Crisafulli - Kigali, 18 January 2013 Photo: Urugwiro Village

shiny new roof in Sunzu is so important—a reminder that development cannot leave any group or region behind.

Pillars of the Model Rwanda has been deliberate in its pursuit of economic development that mirrors the East Asian “tiger” economies such as those in Hong Kong, Singapore, South Korea, and Taiwan, all of which achieved very high economic growth from the early 1960s through the 1990s. In fact, it has set its sights on becoming the “Singapore of Africa.” Its roadmap toward that goal is Vision 2020, which identified six pillars for Rwanda’s development: good governance; transformation of agriculture into a productive, high value, and market-oriented sector; development of an efficient private sector; human resources development through education, health, and technology skills; infrastructure development including transportation, energy, water, and information and communications technology (ICT) networks; and promotion of regional economic integration and cooperation. The first pillar, good governance, recognizes the role of the state in fostering an environment in which human capital development and wealth creation become possible. Today Rwanda is determinedly following a path of decentralization to push authority and accountability down to the local level. Empowering the grassroots means giving people a say in what they need in their local communities and the responsibility to get it done. In order for decentralization to be effective, skills must be developed. In public and private sectors alike, human

28 | AMERICAN OUTLOOK

resource development is a critical need. A lack of qualified people to produce results quickly is a weak spot in the Rwanda model. People, particularly in the public sector, may be afraid to make mistakes; therefore, there can be little incentive for them to take initiatives on their own. Hesitancy to make decisions is rooted in the fear of what would happen if they are questioned; if there is even a hint that something done could be interpreted as corrupt or against the rules, they likely would be investigated and then carry the stigma, even if allegations proved false. Rwanda’s policy of zero tolerance for corruption is a huge positive for the country, but the unintended consequence can be frustrating delays due to bureaucracy.

Fortunately, Rwanda recognizes this need and has welcomed partners who are interested in building its human resource capacity, particularly within the public sector. The assistance Rwanda values the most is training—giving high-potential people the hands-on development and experience they need to become more competent. Central to governance in the Rwanda model is accountability. Kagame holds a strict standard for his team, particularly at the ministerial level. Detail-oriented and execution-driven, Kagame keeps close tabs on projects, making sure things get accomplished. Execution requires commitment, turning words into actions and plans into projects. In order to foster accountability, Rwanda has turned to a cultural tradition known as imihigo, a kind of performance contract that goes back to precolonial times when people would publicly state their goals before tribal elders, and others in the community were then expected to support them. Failure to deliver was seen as a dishonor. Another factor in the Rwanda Model is the development of strong institutions with good governance; as Kagame explained, institutions that will outlive any individual. Within these institutions, accountability and transparency are enhanced by a system of checks and balances. In many ways, the Rwanda Model mirrors a large decentralized corporate structure, in which individual strategic business units are accountable for their results, performance, and deliverables. For Rwanda to achieve its economic vision, it must foster private sector-led development, which is embedded in the Rwanda Model. In addition to foreign

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Rwanda Rising direct investment in businesses and industries, private sector development relies upon entrepreneurship among Rwandans to open a business, generate income, pay taxes, and provide jobs for themselves and others. Examples of homegrown entrepreneurship abound, from vendors who sell fruits and vegetables or baskets in a marketplace, to the younger generation that is looking for a foothold in Rwanda’s economy. In order for Rwanda to transform itself into a middle-income country, it needs continuous infrastructure expansion, encompassing a variety of projects and priorities. It must upgrade its transportation systems, including improved roads and highways, a potential rail link to a seaport located 1,600 kilometers away, and a new international airport to expand the country’s capacity to handle both passenger and cargo traffic. Of Rwanda’s infrastructure needs, clearly the most urgent is energy, which remains a top priority. As of 2012, current available electrical generating capacity was estimated at about 100 megawatts, while the country’s eventual needs are pegged at 1,000 megawatts. To improve distribution of electricity, Rwanda is exploring a variety of generation projects, which will require strategic investment from foreign entities with financial, human capital, and technology resources.

Aspiration and Pragmatism Throughout the Rwanda Model runs a thread of aspiration and pragmatism—to strive to achieve as much as possible but with a clear-eyed view of the problems that need to be addressed. Given what Rwanda has accomplished, especially in terms of poverty reduction, it seems logical that other countries can learn from its example. Kagame, however, was reluctant to elaborate on what those lessons might be. “We don’t want to tell other people what they can learn. We are doing it for ourselves,” he told us. And that, perhaps, is the most valuable lesson of all in the Rwanda Model: do for yourself, remain independent-minded and self-determining, and forge strategic partnerships with those who support your vision. That’s how a country moves itself forward and instills pride and hope in its people. Adapted from Rwanda, Inc. by Patricia Crisafulli and Andrea Redmond. Copyright © 2012 by the authors and reprinted by permission of Palgrave Macmillan, a division of Macmillan Publishers Ltd.

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B2R Scholars

Rwanda President Paul Kagame believes that this country will realize the promise of becoming a mature democracy with a thriving economy through the combination of two forces: aggressive foreign direct investment and business creation and excellent educational opportunities for their children. Bridge2Rwanda is a strategic partner achieving results in both of these directions including the Bridge2Rwanda Scholars program educating today’s best students for the best jobs in Rwanda’s future. The 2014-15 academic year introduces the fourth class and five of the participants have been offered Ivy League scholarships. One of them, a boy named Justus, gives evidence to the remarkable journey these students have taken. Justus lost his parents in the genocide when he was 3 years old. He miraculously survived and lived in a Red Cross relief camp until he was about seven. For the next several years he lived on his own as a street kid at the Kigali trash dump. He never went to school and only spoke Kinyarwanda during this time. When Justus was 11 years old, an American woman visiting Kigali asked him what he wanted most in life. His response was simple: “I want to go to school.” Like the Good Samaritan, she found him a place to stay and paid for him to go to private school through high school. In five years, he went from being unschooled to speaking five languages. Now he’ll continue his education at Harvard University on a full scholarship.

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Companies Traded on Africa’s Stock Exchanges The interactive map is available at map.isoko-institute.org

A

mature financial sector is crucial to any modern economy. Financial systems provide capital to entrepreneurs, encourage individual savings, minimize risk and increase liquidity. Stock markets in particular support economic growth by improving domestic savings and increasing both the quality and quantity of foreign and domestic investment. Moreover, companies can raise capital at a lower cost without having to rely on financing from a bank.

is sub-Saharan Africa’s largest and one of the world’s 20 biggest exchanges. And yet like Africa’s countries, the size and performance of the exchanges varies considerably. Rwanda’s stock exchange, still in its infancy, trades only five companies. In 2012, ISOKO Institute mapped all of the companies currently traded on stock exchanges in sub-Saharan Africa. As users zoom in, they can see where the companies are clustered to an increasing level of detail. Users can filter the compa-

nies according to industry sectors. Additionally, there is an additional “layer” that outlines where the stock exchange states are located. As Africa continues to push forward, many hope that its image of old will be cast aside. According to Ernst & Young’s Africa Attractiveness Survey the “time for Africa is now” but “we need to bridge this perception gap by telling new stories about Africa, stories of economic growth and opportunity.” This map is an attempt to help close that perception gap.

Today sub-Saharan Africa has 15 active stock exchanges. In 1989 there were only five. Some of these exchanges are still in their infancy; nevertheless, the proliferation of stock exchanges and the growing number of companies being traded on them is a bellwether of progress being made on the continent. As investors from Brazil, China, the Middle East and increasingly the West consider the sub-Sahara as part of their portfolio, African countries have risen to the challenge by developing more sophisticated financial systems to accommodate investments. Sub-Saharan Africa’s exchanges are comprised of 22 countries and feature some of the world’s top performing exchanges, including Kenya, Tanzania and Botswana. The Johannesburg Stock Exchange 30 | AMERICAN OUTLOOK

INDEX NAME S&P Africa Frontier BMI [US Dollar]

PRICE RETURN 1,478.49

5 YR ANN. RETURNS 4.31%

The S&P Africa Frontier is a comprehensive benchmark including stocks from Botswana, Cote d’Ivoire, Ghana, Kenya, Mauritius, Namibia, Nigeria and Zambia. The five-year annual return is near 5% while the one year return is 27% and the three year is 10%. www.americanoutlook.org


DOING BUISNESS IN AFRICA

Global Reports

Map South and West Clusters

It’s apparent that most of the 1025 companies traded on Africa’s stock exchanges are clustered in South Africa, and West Africa. Still, the map displays that there are other companies located in Canada, Europe, Australia and the Arabian Peninsula.

Financials

Consumer Goods

Despite the repeating narrative that most of the continent’s economic activity centers around primary resource commodities, the three maps above show a different narrative. As can be seen, financials and consumer goods are sectors that are more widely traded than basic materials.

Report Level The map bridges the macro and micro story of the companies traded on Africa’s exchanges. Users can zoom in down to the individual company and pull up its report. Eventually, each report will contain historic, biographical and performance information for companies.

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Stock Exchange States Africa is home to 15 active stock exchanges, which are outlined in the on the map above. While most exchanges are centered on one country, the BVRM is a regional exchange comprised of eight participating countries. AMERICAN OUTLOOK | 31


90 million

African households have joined the consuming class in just over a decade

382 million in Africa’s workforce

37 million

new jobs created over the last decade

42%

employed outside of agriculture

253 million

mobile phone users as of June 2013

5%

GDP growth

2007

extractive industries represented 8% of FDI projects and 26% of capital invested in Africa

2012

mere 2% projects and 12% capital 32 | AMERICAN OUTLOOK

Source: McKinsey Global Institute; Ernst and Young Photo: Mark Darrough

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DOING BUISNESS IN AFRICA

Africa’s New Marketplace:

from Donor Target to Investment Opportunity Historically, the West has viewed Africa as little more than a target for philanthropy. Even today sub-Saharan Africa continues to be the largest recipient of aid from the OEDC and the largest recipient of U.S. foundation money, according to the Hudson Institute’s Index of Global Philanthropy and Remittances. But while the good intentions behind these charitable flows may be laudable, their impact has been less than desirable. Fortunately, thanks to real changes taking place in Africa, the continent’s narrative has shifted from donor target to investment opportunity.

due to its high growth markets. And according to the Wall Street Journal, U.S. companies invested more than $48.5 billion in Africa in the decade through 2011, more than companies from any other nation did. This recent activity has come about thanks to increased political and economic stability in the region. According to Oxford economist Paul Collier, Africa’s situation began to change in 1995 when, “macroeco-

nomic reforms tamed inflation and opened economies to international trade.” In 2007, Nigeria’s former finance minister Ngozi Okonjo-Iweala echoed Collier’s assessment in a TED Talk, saying that there has been a clear upward trend in governance in 28 African countries and that

key thing is ... the great “Thegrowth story of Africa. ” Dr. Kamal, Bhattacharya, Director of IBM Research – Africa

Lionized as the last investment frontier and one of the fastest-growing economic regions in the world, Africa is breaking from its tumultuous past. Western businesses have historically avoided investing in African markets, deterred by poverty, corruption, and conflict. But the winds seem to have changed. Driven by systemic changes and favorable economic trends, businesses the world over are taking notice of opportunities in Africa. Proctor and Gamble, Cummins, IBM, General Motors, and General Electric are all expanding their operations in Africa

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Africa at about 2% of “ourWithindustrial revenue, I think that points to an opportunity. But there’s a different context to consider. Africa for GE is bigger today than China was 10 years ago.

Jeff Immelt, GE CEO in African Business Magazine 2012

the number of civil conflicts had declined from the 1990s dropping from 12 to three or four. More recently, the 2013 Mo Ibrahim Index of Africa Governance reported that 94% of people living in sub Saharan Africa live in a country where governance has seen an improvement since 2000. Consequently, the continent has gained upward economic momentum at 5 percent average growth. The African economy even remained remarkably resilient through the global recession. African growth slowed briefly to 2 percent growth before recovering to pre-recession levels. Today, Africa is the second fastest-growing economic region in the world next

to Asia, and its robust growth rates are now higher than the OECD average. GDP levels continue to rise with projections likely to approach 6 percent growth in the near future and 10 years out are expected to top $2.6 trillion. Most of this growth has been fueled by Nigeria and South Africa, which account for 56 percent of sub-Saharan Africa’s GDP and are growing at 6.5 and 2.5 percent respectively. Still, McKinsey Global Institute pointed out that 28 percent of countries have achieved

growth rates at or above 6 percent with 60 percent holding rates of over 4 percent. Among sub-Saharan Africa’s top performers are Republic of Congo, Ethiopia, Botswana, Mozambique, Nigeria, Tanzania, Malawi, Ghana, Rwanda, Zambia, Uganda, and Seychelles. Regionally, West Africa has seen the highest growth rates at 6.5 percent followed by East Africa at 6.4 percent. Such robust growth rates remain competitive with (and in some cases outperform) the BRICs.

offers Siemens vast “Africa opportunities for growth, ”

–Siemens President and CEO Löscher, 2010

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DOING BUISNESS IN AFRICA are very bullish about the “WeAfrican continent . . . the continent will soon have a billion people, and while admittedly income levels are very low, they are rising.

– Frits van Dijk, Executive VP Nestlé in Bloomberg, 2011

Looking forward, economists believe that Africa’s growth levels will continue to rise and rival even the Asian Tigers. However, in order to sustain these growth rates, Africans will have to continue to build infrastructure, implement responsible economic policies, foster political stability, and curb disease as well as poverty. Nevertheless, Africa’s recent economic growth has helped prime an environment ripe for business. According to a 2013 report by Ernst and Young, sub-Saharan Africa’s global share of FDI increased from 3.2% in 2007 to 5.6% in 2012. It should also be noted that Africa now ranks ahead of five other regions (former Soviet States, Eastern Europe, Western Europe, the Middle East and Central America) in terms of investor perceptions according to the same report. These encouraging numbers must be approach with some caution, however. Each of Africa’s countries, according to Johannesburg banking executive Euvin Naidoo, “have a unique value proposition—You can make money; you can lose money.” One particularly promising prospect is Nigeria, which has emerged as one of Africa’s top reformers.

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Prior to 2003, a single Nigerian telecom firm was able to develop only 4,500 landlines during its entire existence, but after liberalizing reforms were implemented the number of GSM landlines jumped to 32 million. Today, Nigeria’s telecom market is the 2nd fastest growing in the world next to China’s and is attracting $1 billion a year in telecom investments. Nigeria has made headway with its fiscal policy as well. The country detached its budget from the volatile oil prices, and as a result, Nigeria increased its monetary reserves. In fact, the country was able to save $27 billion. Moreover, Nigerians have since reduced their inflation rate from 28 percent to 11 percent. Another top reformer in Africa is the Western business darling, Rwanda. This Land of a Thousand Hills, has been hailed by Foreign Policy as the “world’s best-kept secret for business.”1 Overcoming incredible odds, Rwanda is emerging as a leading model for economic development in Africa. Rwandan president Paul Kagame’s commitment to stabilize Rwanda’s 1 http://blog.foreignpolicy.com/posts/2009/04/10/ the_world_s_best_kept_secret_for_business_rwanda

politics, develop its economy, and strengthen its society is creating impressive results. In 2009, government-led efforts to improve business conditions enabled Rwanda to surge 76 spots up the World Bank’s Doing Business ranking. Moreover, this small, landlocked, and densely populated country has sustained economic growth levels around 7 percent from 1999-2009. Today, Africa offers high rates of return and exciting opportunities for investors with the future offering long-term paybacks accentuated by recent trends. And while Africa may not be the place for conservative investors, returns in Africa do outweigh the risks. Africa’s marketplace not only satisfies investor appetites, but also increases and distributes much needed capital across the continent. African entrepreneurs and foreign investors alike will face obstacles alongside the continent’s coming prosperity, but investments in Africa offer returns unlike anywhere else in the world (65-70 percent higher than Asia by some estimates). And in this case, the investments are not only economic, but social as well. But, possibly for the first time in “Africa’s history, the continent has a chance to achieve transformative growth that is widely shared. It is now up to Africa’s leaders, both public and private, to seize this opportunity.

- McKinsey Global Institute, 2012

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Photo by Mark Darrough

In Focus:

A Fortune 500 Company Finds Consumers in Africa

Procter & Gamble—the World’s Largest Consumer Products Company—Shifts Focus to Emerging Markets By Mark Darrough Procter & Gamble has traditionally sold its huge array of consumer products in US and European markets. But when the global recession stalled growth rates and lowered consumer demand in developed countries, P&G shifted its global strategy to emerging markets. In South America, India, Russia and Africa hundreds of millions of untapped consumers represented a new frontier for P&G to maintain its ambitious growth targets.

CEO looks to emerging markets When Bob McDonald became CEO of the 172-yearold company in 2009 he said, “We’re going to focus even more on winning with consumers in emerging markets . . . There’s no question that the basic demographics are going to take the center of gravity of our business to Asia, to Africa—where the people are, where the babies are being born.” Even amid worsening performance in its traditional markets, P&G announced “the most ambitious expansion plan in company history”—to add 1 billion new consumers by 2015, and dou36 | AMERICAN OUTLOOK

ble its sales ($80 billion in 2009) over the next 15 years. To accomplish this feat P&G readjusted its strategy to sell new products to new, lower-income consumers by using “reverse engineering” to first research what consumers could afford, then adjusting the features and manufacturing processes to meet pricing targets. P&G also began producing smaller package sizes to make their products more affordable. Moreover, they invested heavily in R&D to understand a new type of consumer—the low-income, high frequency shopper. Of course, P&G’s emerging market sales were already on the rise. In 2004, emerging markets accounted for $13 billion of its annual sales. By 2009 that number had risen to $27 billion or 34 percent of annual sales. P&G has forecasted that by 2020, half of its revenue would come from these markets.

P&G targets Africa’s low-hanging fruit Although a dominant leader in its developed markets, P&G has lagged behind its European competitor, Uniwww.americanoutlook.org


DOING BUISNESS IN AFRICA

lever, in emerging market sales. More than half of Unilever’s sales come from emerging markets. To compete in markets like Africa, P&G Global Vice Chair Dimitri Panayotopoulos says it will first target “low-hanging fruit”—that is, it will introduce products in categories that its competitors don’t dominate before bringing in competing products. P&G has also adapted its core strategies to tap the unique potential of a growing African market: • The continent’s middle class is growing (an African Development Bank study found 1 in 3 Africans to be middle income). These consumers are the focus of P&G’s sales strategy. • P&G also targets the aspiring middle class by combining street-level marketing, public health education, and word-of-mouth promoting. • The products are developed according to the African environment. Ariel detergent, for instance, is designed to lather quickly and cuts out one step of the washing process. This is a necessity for consumers with a limited water supply. Moreover, P&G is looking to improve the lives of people through health education while educating them on how to use their products. Always sanitary pads are helping solve a problem found in Africa: girls typically skip school while menstruating. P&G’s Protecting Futures program demonstrates the superior protection of the Always brand while providing menstrual hygiene education. Furthermore, P&G’s hospital programs and mobile clinics demonstrate the superiority of Pampers in keeping babies dry through the night while educating mothers about infant health.

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P&G’s Three-Region Focus Plants and distribution points in East, West and South Africa currently represent the core focus of P&G’s African operations. Strategies are fine-tuned for a different set of challenges in each region. The $50 million Kempton Park Plant in South Africa epitomizes P&G’s “low-hanging fruit” strategy. P&G originally entered South Africa with hair, beauty and hygiene products because Unilever had already dominated the laundry detergent market. The new plant will expand its market share in the same way. Along with Pampers diapers (which has a 40 percent market share in South Africa), it will also manufacture products in categories that competitors have yet to capture. In West Africa, P&G established a plant 75 miles from one of the world’s fastest growing cities in Lagos, Nigeria. This plant serves at the hub for P&G’s West African expansion. Oil-rich Nigeria is quickly developing, and a second plant is being planned in order to supply the demands of the region’s ballooning middle class. P&G launched a fighter brand in the East African detergents segment in 2010, Ariel, signaling its intention to capitalize on the region’s growth opportunities. The rapid projected growth rates signal a powerful reason to compete with Unilever’s established Omo line of detergents. As a final word Panayotopoulos recently told CNN that Africa’s “ . . . population is growing, the economies are getting more and more stable, so [there are] huge opportunities here.” AMERICAN OUTLOOK | 37


Q&A

Zain Latif, TLG Capital

On Investing in African Markets

By Mark Darrough By 19, Zain Latif had graduated from Cass Business School with a Masters of Finance. Then with HSBC in London he spearheaded an effort to bring Nigeria’s first bank to the international market. At 23, he became VP of emerging markets at Merrill Lynch and quickly engineered a number of groundbreaking deals in sub-Saharan Africa. Soon after he joined Goldman Sachs as executive director in the emerging markets division, where he led the bank’s focus on sub-Saharan Africa. In 2009, Latif founded TLG Capital – a private equity fund dedicated to the belief that commercial and social returns go hand-in-hand in frontier markets. Explain your initial involvement in QDarrough: African markets and the creation of TLG Capital. My initial involvement in sub-Saharan Africa ALatif: (SSA) came about eight years ago. I was at HSBC at the time, and there was this great opportunity in SSA where investors were looking for higher yielding assets. Through my work at HSBC, and later at Merrill Lynch and Goldman Sachs, I became quite successful in bringing large-scale African corporations to these western capital markets. But such capital-heavy banks are focused on the top-tier segment of the market. They’re focusing on those companies or sovereigns that can actually absorb over $100 million of financing. Now, if you take away Nigeria, and possibly Kenya and Ghana if you’re really stretching it, there are very few businesses in SSA [excluding South Africa] that can sustain that sort of capital. And if you take out traditional sectors like oil and gas, mining, and infrastructure, you find very few opportunities in the more mainstream consumer-driven industries. I think this is a very lucrative space in these markets. And that was how TLG was born. TLG was born of the idea that there is a whole segment of consumer-driven industries that has not been able to attract the necessary level of capital, despite an overwhelming demand that I believe exists. What has created this demand for QDarrough: investment in consumer-driven markets?

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It goes down to the perception issue. When people ALatif: think of measurements of wealth, or when they think about how rich a country is or how big the middle class is, they look at a very oft-used statistic called GDP per capita. GDP per capita is not an accurate measure of wealth in Africa. Look at Ghana, which is a leading economy in West Africa. Ninety percent of Ghana’s workforce is in the informal economy. And in Uganda, less than five percent of the people have a bank account. So you have a situation where all the informal activity of a nation simply isn’t captured in those official figures. Therefore, if a country has a GDP per capita of $500 per year, you have a feeling that they won’t be able to afford many of the consumer products that we in the West take for granted. Now let’s take a look at something that is very fascinating: the telecom revolution. In 1995, Africa had fewer mobile phones than New York City. Fifteen years later, the continent had as many phones as North America. This incredible, world-leading growth came from a population that many thought could not afford mobile phones. In a place like Nigeria for instance, a low GDP per capita says that Nigerians can’t afford mobile phones. Yet there are over 60 million mobile subscribers in Nigeria. Obviously something doesn’t add up. So our philosophy is that there is a huge demand for consumer-driven industries; industries like information technology, health care, water bottling, and agro-processing. But the demand exists only if you can provide the right price and the right quality – the two strategies that made the telecom industry so successful. How do you compare the rewards of QDarrough: Africa to the rewards of more advanced emerging markets, markets like India and China? In India and China you’re paying for the growth ALatif: that has already taken place. Most Chinese and Indian

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DOING BUISNESS IN AFRICA

Photo by Mark Darrough

companies are already valued with this growth in mind. So when you look at a place like Uganda, at places like Tanzania and Rwanda, the valuations are far lower simply because there’s not that much access to capital. At this early stage of the game, your ability to go in and determine the valuation is that much higher. Your ability to go in and say, “This is what we want to do, this is how we want to do it,” is much more flexible. The opportunity, therefore, to get better deals – just on a valuation basis – is simply incomparable to places like India and China. So it depends on the risk-side of an investor. In our view we feel that the risks, especially when compared to India and China, are vastly overstated in Africa. We feel that there are businesses here that are also much simpler to employ. What are such risks that exist in the QDarrough: African marketplace, and how can investors mitigate these risks?

A

Latif: Of course there are challenges in Africa, as much as there are in other emerging markets. The very definition of an emerging market says that its commercial risk is as equal to its political and stability risks. And that’s what makes it different to more developed markets like Europe and the U.S. But you can learn to mitigate those risks using tools that are widely available, tools like the World Bank’s MIGA risk guarantee. If you do experience some sort of political instability, where the government decides to nationalize your assets or does something that is non-contractual, MIGA gives you the ability to recover your investment.

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What’s fascinating is that in the past 25 years, the World Bank has only paid out on these guarantees five times. So people need to understand that the reality of these markets differs from what is portrayed by the international media. There are very real risks here, but there are also ways in which you can mitigate those risks. And that’s what we try to do, and that’s what I think is going to be a winning philosophy going forward in these markets. Reports like Lions on the Move are QDarrough: showing that SSA has experienced unheralded growth in the past decade. Investors now have the choice of getting in while there are opportunities for high returns. What is your final argument for these potential investors, especially at such a crucial stage of the game? When you look at the macroeconomic situation of ALatif: a place like Uganda, where they recently found 2 billion dollars worth of oil, you must recognize the increasing interest that will occur over the next 5 to 10 years. With all the proceeds that will come into the country and have a trickle-down effect into various sectors, it’s going to become much more difficult for an investor to be involved. So the ability to come in now – to understand the situation, to build those relationships, to figure out where one wants to play in the various sectors that are open to an investor – is critical. And for us that’s a decision we’ve made, that we’re going to enjoy first-mover’s advantage. And we’re going to build our relationships here, so that down the line the people, the countries and

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the governments will appreciate the fact that we were with them from the beginning. And that to us is very important. And how can this relate to an overall QDarrough: economic impact? We’re in this to see strong development. The ALatif: ability to impact people’s lives here, with the amount of capital that we’re employing, is incredible. Our ability to give people an avenue for job creation and prosperity, through the private sector, is vitally important. What is happening right now is when a person graduates from college, their best choice is to work for the government. They feel that’s where they can have job security, where they can probably get their best monetary returns; and

that needs to change. That will only change when there is enough capital to build up dynamic, driven, and sustainable businesses. For us, and for people who want to see development in Africa, this is where you start. The pharmaceutical plant that we’ve helped finance in Uganda, the Quality Chemicals plant, employs over a thousand people both directly and indirectly. That sort of job creation gives the people an income, gives them a chance to climb up the ladder, and is something that I’m very proud of. That to me is another very important reason why Africa cannot be ignored, and why investment in consumer-driven industries should considered the surest way to ensure prosperity. Not just for the community, or the country, or the region; but for the entire world.

Today sub-Saharan Africa has 15 active stock DOING BUISNESS IN AFRICA exchanges. Prior to 1989 there were just five. These exchanges boast 1025 listed companies trading in excess of $1.22 trillion USD.

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China in africa

China in Africa:

A New Model of International Development By Deborah Brautigam

O

nce upon a time, a very large, poor, but resource-rich country emerging from a period of intense conflict decided to focus on development. “We need to modernize our infrastructure,” they said. “We need to develop our power plants.” And soon they were visited from a wealthy Asian country that was already a major consumer of their oil. This Asian country said to them: “We’ll make you a bargain. We’ll give you a line of credit worth $10 billion and you can use that credit to improve your infrastructure and power plants. You can import technologies from us, and our companies can help you develop your mines.” Now many people in the poor country were very concerned about this offer. It was quite controversial and the negotiations went on for several years. But eventually they agreed, and the work began. Now you probably have some idea of which countries I’m referring to. China is one of the countries. But China was the large, poor country with oil, and the wealthy Asian country was Japan. The time was the 1970s when China was just emerging from the Cultural Revolution. When the controversial negotiations began, Mao was still in power, but they were concluded under Deng Xiaoping. I tell you that story because it shows how East Asians think about development partnerships. Japan’s outreach to China was not foreign aid. It was a commercial loan put together by the Japanese government alongside a consortium of banks with the intent of benefitting Japan. But even as the deal would benefit Japan, it would benefit China as well. At the time, the Chinese were hungry for modernization, but they didn’t have the technology or the capital to make it happen. No international bank would lend to them, they had no credit rating, and they were Communist. But Japan was willing to take the risk because they

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saw profit and potential. They knew that the more China developed, the more they could do business there. This is the essence of the mutual benefit approach the Chinese are taking in Africa. It’s not about aid. It is a different set of relationships. On hearing of one major Chinese deal in the Democratic Republic of the Congo, an editor at the Financial Times wrote, “Beijing has thrown down its most direct challenge yet to the West’s architecture for aiding Africa’s development.” The project valued about $9 billion and involved building infrastructure. Moreover, the Chinese would help set up a mine whose profits would then repay the infrastructure loans. That’s not to say that China’s emergence in Africa doesn’t come without challenges. It does. There are opportunities, but there are challenges as well. To start, the arms trade is a problem. Chinese companies that once were under the Ministry of Defense have been detached and are now out to make a profit. If they can sell arms to two countries that want to fight each other, they will. And they did with Eritrea and Ethiopia. They’ll also sell largely unregulated arms into any conflict in Africa. The second area is in environmental protection. Many governments in Africa are trying to conserve their resources. Timber, hard woods, fish along the coasts, abalone in South Africa, elephant ivory, and rhinoceros horn, for example. At the same time, because the Chinese do not have a well-developed sense of conservation, there is a big market in China for all of these products. And again, this activity isn’t well regulated. Finally, the Chinese government will engage with any government in Africa that will grant them diplomatic ties. This means that they can undermine Western dipAMERICAN OUTLOOK | 41


lomatic pressures such as sanctions or other tactics. Sudan is perhaps the best example, where for many years Chinese diplomatic engagement was directly counter to Western goals, which I think were right in that case. But I think the biggest challenge is this: That Africa is rich, and we in the West have not figured out how to link Africa’s riches to its development.

Africa is rich, and we in the West have not figured out how to link Africa’s riches to its development. Make no mistake; the West is very interested in African resources. We’ve been investing there all along. But our interest in profitable investments and our interest in African development seem to be totally separate. There is nothing in between to link them together except for a few social corporate responsibility initiatives. But the Chinese are actively trying to link Africa’s resource wealth with its development. They are not doing it because they are benevolent. They are doing it for the same reason that Japan invested in China in the mid 1970s—because it made sense. African companies are capital poor and have enormous needs. If they can secure a loan with payments from an export stream funneling into an escrow account then they can borrow more. Then, of course, they can invest that in infrastructure that will be built by Chinese companies. That’s the benefit for the Chinese. That’s why the loan. The Chinese ambassador in Niger put it very well when he told the Financial Times in 2010, “[Niger] has already seen uranium extraction for nearly 40 years, But when one sees that the direct revenues from uranium are more or less equivalent to those derived from the export of onions each year, there’s a problem.” And as a matter of fact, the reason why their earnings were so low was because French companies had locked in a low price for that uranium. The Chinese offer African countries other options. So what are the drivers of Chinese engagement in Africa today? Natural resources of course are important, but there are a few other things: Strategic diplomacy. Taiwan, Tibet, and votes in the U.N. For the Chinese, Africa represents 54 votes or 54 possible coalition partners for initiatives they might want to pursue in the World Trade Organization on a multilateral basis. As a result, a lot of Chinese aid is directed to this kind of strategic diplomacy. Business is also important and the primary interest. 42 | AMERICAN OUTLOOK

We know that Chinese trade is very large in terms of Chinese inflows, but African trade is not very big. It’s only about 4% of China’s global trade. But for Africa the engagement is much larger. China is Africa’s largest trading partner. It’s well over $120 billion a year in twoway trade. Also, in 2010 Chinese companies recorded $35 billion in revenues from infrastructure contracts across the continent. Now a lot of that activity was in North Africa; nevertheless, this is a huge amount of business, which fits very neatly into African needs. The World Bank estimates that African governments should be spending about $90 billion a year on infrastructure. They are spending far less than that, but much of the spending they are doing, the Chinese are carrying out. To conclude, Beijing’s approach to Africa is fundamentally different than the Wests’. One of China’s five core foreign policy principles is that relations between countries should be based on mutual benefit. And therefore, the concept of altruism and foreign aid is not one that’s consonant with how they think about international relations. For them, it should be much more of a partnership, not one-way transfers. They also believe in non-intervention in the internal affairs of other countries. They are very uncomfortable with trying to change politics or impose conditions. They don’t know what other countries need to develop, and they don’t offer recipes. China approaches Africa saying: You tell us what kind of assistance you want, and we’ll go in that direction. But that’s not how we approach development in the West. We say: We know what you need to do, and you should do it, and we’ll put conditions on you until you do. The Chinese also think differently regarding development and governance. Despite China’s communist regime, they are doing fairly well economically. Consequently, they don’t think countries need to be democratic to develop. They believe development starts with infrastructure. There is a saying in China: “If you want to become prosperous, first build a road.” Finally, China thinks like an East Asian developmental state. They use numerous instruments to generate different outcomes, whereas the United States mainly uses aid. All of this to say, China’s approach offers lessons for engaging with Africa, but these lessons must be tempered with the apparent challenges that China faces on the continent. This article was adapted from a talk Dr. Brautigam gave at Sagamore Institute on April 26, 2013. www.americanoutlook.org


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The African Lion and the Dragon in the East “I’ll love you dear, I’ll love you till China and Africa meet, and the river jumps over the mountain and salmon sing in the street.” –W.H. Auden China’s interest in Africa raises tough questions the world over. Maybe most pressingly for the United States: What does China’s pragmatic, multifaceted agenda on the African continent mean for African democracy, especially in light of the failures of Western aid? Time will provide the answer, but in the meantime westerners need a new way to approach Africa. Perhaps ironically the West can learn from China on how to better engage with Africa: in 2009 China exceeded the U.S. as Africa’s largest trade partner; more than 2000 Chinese companies have invested so far in Africa; and between 1956 and 2006 some 160 Chinese officials visited Africa while 524 African officials made 676 visits to China. The Dragon of the East’s engagement on the continent should certainly come with a healthy dose of skepticism, but the sheer level and diversity of interaction merits consideration beyond the West’s largely aid-based approach to the continent. From these factors alone, it should be clear that trying to buy development with aid alone must become an idea of the past. Over the last 30 years, China’s meteoric growth has catapulted it from a third world country to one of the world’s heavyweights. Today China boasts the second largest economy in the world with a GDP of $7.3 trillion. In the process, 600 million of its people have been lifted out of poverty. At the same time, China’s extraordinary rise has caused concerns in other parts of the world, and despite its assurance of a peaceful ascension, questions remain: Is China a competitor or a partner? Are they a threat, a nuisance or an opportunity? What does China’s rise mean for international relations as the world encounters a new great power? And what does China’s growth model mean for democracy and freedom? Questions like these are playing out in bold colors on the African continent. China’s interest in Africa over the

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last twenty-some years has caused both head scratching and hand wringing in the West. In a hearing on “China’s influence in Africa” before the House of Representatives in July 2005, Rep. Donald Payne of the House Committee on International Relations stated succinctly, “China’s economic and political pursuits appear to be undermining United States success in alleviating poverty and expanding US influence [in Africa].”1 For their part, Africans have welcomed China with a healthy dose of skepticism: Is this neocolonialism? How do African countries seize opportunities and mitigate harmful interests? With China’s increasingly muscular ties to Africa, the answers to questions like these will no doubt be complicated. China’s involvement on the continent stretches back centuries and includes business, government, military, immigration, and a myriad of other linkages. All of this to say, “China in Africa” is a topic teeming with complexities, and the intertwining of Dragon in the East with the African Lion brings with it equally as complex benefits, opportunities, challenges and troubles.

Chinese Interests on the Continent Unlike China’s ideological agenda that drove its interaction with the continent during the Cold War, the country’s current interests on the continent are more varied. They are threefold and are embedded in their stated policy of mutual benefit, respect and non-intervention:2 China’s most prominent interest in Africa is resources. Writing in “China in Africa: Savior or Self Interest?,” Ambassador David Shinn notes that, “China obtains about one third of its oil imports from African countries and significant mineral resources: for example about 90 1 U.S. Africa Policy Beyond the Bush Years: Critical Challenges for the Obama Administration. Ed. Jennifer G. Cooke and J. Stephen Morrison. CSIS 2009: pg 154. 2 This framework is borrowed from Amb. David Shinn writing in Great Decisions 2012 “China in Africa: Savior or Self Interest?”

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percent of its cobalt, 35 percent of its manganese and 30 percent of its tantalum.” Africa is so significant in this regard that Shinn attests, “It would be difficult for China to meet all of its mineral needs from non-African sources.” Secondly, China’s interests are driven by its expanding export market. Africa’s population of nearly 1 billion people and huge labor force provide a huge opportunity for China to grow its exports. In fact, between 2000 and 2010 China’s exports to Africa grew by a factor of thirteen. Overall according to 2011 measures, China’s exports to sub-Saharan Africa are triple those of the United States.

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On April 26, 2013 Sagamore Institute and the Confucius Institute hosted a symposium called “China in Africa: A new model of international development?” The event featured the foremost experts on the topic to discuss tough questions about Africa’s development from Western, Chinese and African perspectives. The event’s keynote speakers included Dr. Deborah Brautigam, author of The Dragon’s Gift: The Realm Story of China in Africa and Professor of International Development at Johns Hopkins SAIS; as well as Michael Fairbanks, co-founder of the SEVEN Fund, the OTF Group, ISOKO Institute and Senior Economic Advisor to President Paul Kagame. These two experts offered their insights on this pressing topic. Dr. Brautigam’s talk drew out the contrasts between the Western aid-based approach to development in Africa and China’s multifaceted engagement on the continent. Writing as a strategist cum academic, Michael Fairbanks dispelled myths about China so as to reduce strategic errors among nations, governing institutions, and multinational corporations.

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of aid are perhaps best demonstrated by the fact that China wrote its first white paper on foreign aid in 2011, many decades after Western power considered foreign aid as a policy tool.3 Nevertheless, the Beijing has distributed $37.7 billion in aid, of which $15.6 billion comes from grants, $11.25 billion from zero-interest loans, and $10.8 billion from concessional loans. In the same white paper, the Chinese government stated that its foreign aid had grown 29.4% annually between 2004 and 2009. Most noteworthy is that 45.7% of Chinese aid was directed to Africa, significantly larger than its next biggest recipient, Asia, which totaled only 32.8%.4 This percentage reflects China’s fierce interest in the African continent. Of course, these numbers must be viewed in the context of other significant aid flows. According to figures from the OECD, China gave $1.2 billion in ODA in 2008, compared to $4.1 billion from the World Bank, $7.2 billion from the U.S., and $2.6 billion from the U.K.5 Source: Li, Jackie. “Regional Focus: China-Africa.” The China Analyst. The Beijing Axis. Jan 2010. <http://www.thebeijingaxis.com/tca/editions/the-china-analyst-jan-2010/74>

Third, Africa is crucial to China’s geopolitical strategy. China’s accession to the UN Security Council is a prime example of the essential role African countries have provided to China. In 1971, China succeeded in unseating Taiwan from the Security Council with heavy support from African countries. Currently only four African countries still recognize Taipei, and China is interested in completely eliminating recognition of Taipei on the continent. Though China does not attach conditions to its aid, it has historically required African governments to recognize the one-China policy in exchange for assistance. Of course, these are state-level interests. China’s basis for interaction with Africa is much more complex than Western caricatures tend to depict.

Extent of China’s Involvement with Africa Foreign Aid. Chinese “aid” does not fit squarely into the Western assistance paradigm. Chinese grants and loans qualify as ODA, but most of China’s public finance transfers to and from Africa do not. These conflicting definitions

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Immigration.

China’s history of immigration into Africa dates back to the Ming Dynasty, as Chinese international trade spread throughout the Indian Ocean region. The longest-standing Chinese populations are found primarily on Africa’s eastern coast in South Africa, Reunion, and Madagascar. On the other hand, there have never been significant populations of sub-Saharan Africans in China, neither in the past or the present. But in recent years the level of people-to-people interaction has increased noticeably. In 2006, Hu Jintao proclaimed that China aimed to train 15,000 African professionals over a three-year span.6 A growing number of African students see China as a way to expand their academic and professional careers in light of contracting opportunities in Europe. A less significant push has been made to compel working African adults to travel to China. Nigeria, for instance, has established expatriate communities in the Middle Kingdom. Like in other parts of the world, sub-Saharan Africans face 3 Brautigam in Rising China, 207-211. For further discussion of the discrepancies between Chinese and OECD reporting, see Sven Grimm’s “Transparency of Chinese Aid: An analysis of the published information on Chinese external financial flows.” 4 Grimm. 31. 5 Brautigam in Rising China, 211. 6 Brautigam, Deborah. “China’s African Aid: Transatlantic Challenges,” pg. 3.

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China in africa

Kermeliotis, Teo. “Is the West Losing out to China?” Marketplace Africa. CNN. 9 Sept 2011 <http://edition.cnn.com/2011/BUSINESS/09/08/america.losing. influence.africa/index.html>

racism and discrimination in China; yet this has not prevented them from seeking out the vast landscape of opportunity that China holds. The exact numbers of Africans in China and Chinese in Africa are unclear. One source estimates that, “The Chinese community in [Africa] has surged from 80,000 in the 1980s to an estimated 350,000 in 2006, though overall migration to Africa is declared by Beijing to be only 750,000 (with other estimates higher).”7 Even “Chinatowns” have appeared in cities such as Dakar, Lagos and Cape Town.8 While these numbers may seem insignificant in a country of billions, they represent a depth of interaction unseen from the West.

Trade and Investment. The Chinese trade relationship with Africa is growing in size and significance. “Between 1995 and 2000 commercial exchanges [between China and Africa] more than doubled from 4 billion USD to 10 billion USD, having quadrupled in the following five years (42 billion USD in 2005) and the figure surpassed 106 billion USD in 2008.”9 According to the Heritage Foundation, China’s non-bond transactions—a form of foreign investment—reached $31 billion from 2005 7 Alden, Chris. “The Changing Dynamics of China’s Engagement in Africa,” pg. 190. For other estimates see Politzer or the African-Caribbean Pacific Observatory on Migrations, “South-South extraregional migration: An overview of emerging trends.” 8 David Shinn. China in Africa: Savior or self-interest. Great Decisions. 2013 9 Alden. pg. 190

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to 2010 to Sub-Saharan Africa, compared with 29.7 billion for East Asia, 36.7 billion for Europe, and 22.9 billion for the US.10 In 2011, China’s total foreign direct investment reached $14.7 billion, though the number is believed to be closer to $40 billion.11 Additionally, more than 2000 Chinese companies have invested in Africa. To provide some perspective, China’s investments may outweigh that of the U.S. or any single European country, but the cumulative investment of the West exceeds what China has contributed. 12 With $166 billion in trade, China has surpassed the U.S. as Africa’s largest trading partner. According to 2010 figures, China exported about $60 billion to Africa consisting primarily of machinery, textiles, and transportation equipment. At the same time, China imported just over $60 billion worth of goods—over 80% of which are minerals. The trend has been upward. China’s total trade with Africa grew from $6.3 billion in 1999 to $166 billion in 2011. Chris Alden, African foreign policy expert at London School of Economics notes that, “While Africa’s share in Chinese exports grew from 1.7% in 1996 to 2.7% in 2006, the share in imports expanded from 1% to 3.6% in the same decade.”13 The results have not been homogenous, however. Africa’s oil exporters generally have large trade surpluses while the poorer 10 Scissors, Derek. “Tracking Chinese Investment: Western Hemisphere Now Top Target,” pg. 3 11 Shinn. 2013 12 Shinn. 2013 13 Alden. pg. 185

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Above: Source: Durden, Tyler (alias). “’The Beijing Conference’: See How China Quietly Took Over Africa.” zerohedge.com. 8 Aug 2012. <http://www.zerohedge.com/news/ beijing-conference-see-how-china-quietly-took-over-africa> Image source from China Business Review from open-source material. Right: Source: Li, Jackie. “Regional Focus: China-Africa.” The China Analyst. The Beijing Axis. Jan 2010. <http://www. thebeijingaxis.com/tca/editions/the-china-analyst-jan-2010/74>

countries tend to run deficits. Overall, the results seem to be positive. Brautigam explains, “Before trade with Chinese picked up, African consumers did not really have much choice of things that they could buy at the low end … I think African countries are happy that they have a diversity of trade partners, that they do not have their trade locked into their former colonizers and that they do not have it going in just one direction.”14

State-to-State Relations The early years (1960-2000) of Chinese foreign relations with Africa occurred largely in the context of Sino-Taiwanese tensions. But in 2000, China established the Forum for China Africa Co-operation (FOCAC) as part of its “go global” strategy. The forum occurs every three years, alternating locations between China and Africa, and serves as a platform to announce new Chinese lending programs, development projects, or debt forgiveness. While such events are becoming more and more commonplace in the 21st century, LSE’s Alden sees in FOCAC a certain “dynamism lacking 14 http://www.chinaafricaproject.com/deborah-brautigam-discusses-the-us-and-chinas-relations-with-africa/

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in many other trans-regional initiatives.”15 This may be due to the fact that China often reserves revealing its policy initiatives until such conferences, whereas Western powers decide aid packages in congressional proceedings at different times and locations than official announcements of new aid or trade packages. At one FOCAC meeting held in November 2009 in Sharm El Sheik, Egypt, Wen Jiabao revealed a “10 billion USD package of concessional loans, commitments to raise African agricultural productivity, to reduce or eliminate tariff barriers for Africa’s poorest countries, build hospitals and schools, new or expanded training programmes to address human development, provisions for 100 clean energy projects and greater support for peace and security.”16 The fifth, and most recent, FOCAC was held in July 2012, and included the creation of Afreximbank—Africa’s trade finance bank. Most representative of the level of Sino-African engagement are the number of official visits exchanged between continents. Over the last 50 years, some 160 Chinese dignitaries have visited Africa and 524 Africans with the rank of minister of higher have made 676 visits to China.17 President Hu has been to Africa six 15 Alden. 194 16 Alden, 191 17 Shinn. 2013

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China in africa times during his tenures as vice-president and president. All U.S. presidents combined have taken eight trips to sub-Saharan Africa.

Challenges and Opportunities. Jane Golley and Ligang Song, eds., Canberra: Australia National University Press (2011): 203-223.

Conclusion

Frontani, Heidi; and Anna McCracken. “China’s Development Initiatives in Ghana: 1961-2011.” Journal of Sustainable Development in Africa, 14, no. 8 (2012): 275-286.

This overview of China in Africa just scratches the surface. Sino-African interactions also include intermarriage, military training exercises, and black markets to name a few. China’s interaction with Africa is rife with opportunities and troubles in equal measure, but it does represent the movement of a continent out of the margins of global politics and economics. China’s presence on the continent, like that of other world powers, comes with its own suite of problems. There are saddening tales of the decimation of the African elephant from the illegal ivory trade (in part fueled by Chinese demand), and arms transfers that have found their way into conflict zones. Finally, China in Africa is not a monolithic story, but rather a complex array of interactions. Time will judge the ultimate intentions of China in Africa, but the responsibility falls on Africans themselves to manage and mitigate their own interests against the interests of other state-actors.

Sources:

Ajakaiye, Olu. “China and Africa: Opportunities and Challenges.” Presentation at the African Union Task Force on Strategic Partnership Between Africa and the Emerging Countries of the South, Addis Ababa, Ethiopia, (September 11-13, 2006). Alden, Chris. “The Changing Dynamics of China’s Engagement in Africa.” “Special Issue: Africa and the Indian Ocean.” Journal of African Development, 13, no. 1 & 2 (2011): 143-196. Asche, Helmut and Margot Schüller. China’s Engagement in Africa: Opportunities and Risks for Development. Eschborn, Germany: Gesellschaft für Internationale Zusammenarbeit (GIZ) (2008). Belligoli, Serena. “The EU and the US: Visions of China’s rise and of China’s growing presence in Africa.” Note d’Analyse 14. Université Catholique de Louvain, Belgium. (February 2011). Brautigam, Deborah. “China’s African Aid: Transatlantic Challenges.” Washington, D.C.: The German Marshall Fund of the United States (April 2008). Brautigam, Deborah. “Chinese Development Aid in Africa: What, where, why, and how much?” Rising China: Global

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Carayannis, Tatiana; and Nathaniel Olin. “A Preliminary Mapping of China‐Africa Knowledge Networks.” Working Paper for The Conflict Prevention and Peace Forum. Social Science Research Council (January 2012).

Giovannetti, Giorgio; and Marco Sanfilippo. “China’s Economic Cooperation with Africa.” “Special Issue: Africa and the Indian Ocean.” Journal of African Development, 13, no. 1 & 2. (2011): 143-196. Grimm, Sven. “Transparency of Chinese Aid: An analysis of the published information on Chinese external financial flows.” Publish What You Fund and Centre for Chinese Studies at Stellenbosch University (August 2011). Kagame, Paul. “Why Africa welcomes the Chinese.” The Guardian. 2 November 2009. Web. <http://www.guardian. co.uk/commentisfree/2009/nov/02/aid-trade-rwandachina-west > Kagire, Edmund. “China comes to Rwanda’s rescue as aid cuts begin to hurt economy.” The East African. 29 December 2012. Web. < http://www.theeastafrican.co.ke/ news/China-comes-to-Rwanda-rescue/-/2558/1653960/-/ x18sbrz/-/index.html> Le Belzic, Sébastien. “China’s Exim bank: Africa’s largest financier looks for an even bigger role.” The Africa Report (25 October 2012). Webpage. <http://www.theafricareport. com/North-Africa/chinas-exim-bank-africas-largest-financier-looks-for-an-even-bigger-role.html > “Looking East: China-Africa Relations, Ghana Case Study.” African Center for Economic Transformation (ACET): Accra, December 2009. “Looking East: China-Africa Relations, Liberia Case Study.” African Center for Economic Transformation (ACET): Monrovia, December 2009. “Looking East: China-Africa Relations, Rwanda Case Study.” African Center for Economic Transformation (ACET): Kigali, December 2009. Melander, Ingrid. “China rivalry pushes EU to hold Africa summit.” Reuters. (27 September 2007). Webpage. <http://www.reuters.com/article/2007/09/27/us-eu-zimbabwe-summit-analysis-idUSLAU75760420070927> UN Database accessed at <http://focusafrica.gov.in/ Liberia_international_trade.html> Politzer, Malia. “China and Africa: Stronger Economic Ties Mean More Migration.” Migration Policy Institute (6 August 2008). Webpage. <http://www.migrationinformation.org/feature/display.cfm?ID=690 > “Reading Of Economic Cooperation And Trade Promotion Measures Announced At The Fifth Ministerial Conference Of The Forum On China-Africa Cooperation” 28 August 2012. Last Updated on 26 January 2013. New Liberia Newspaper. Scissors, Derek. “Tracking Chinese Investment: Western Hemisphere Now Top Target.” Web Memo No. 2952 for The Heritage Foundation. (8 July 2010). “South-South extraregional migration: An overview of emerging trends.” Background Note ACPOBS/2012/BN08 for the ACP Observatory on Migration (2012). Tan-Mullins, May; Giles Mohan, and Marcus Power. “Redefining ‘aid’ in the China–Africa context.” Development and Change, 41, no. 5 (2010): 857–881. Tull, Denis M. “China in Africa: European Perceptions and Responses to the Chinese Challenge.” SAIS Working Papers in African Studies. Johns Hopkins University’s Paul H. Nitze School of Advanced International Studies. (2008). ***DIDN’T QUOTE, BUT HAS USEFUL SUMMARIES OF EURO-CHINA-AFRICA DYNAMICS

Dambisa Moyo on China in Africa Amidst her critique of the Western aid regime in her 2009 book Dead Aid, Dambisa Moyo looked east for answers to Africa’s development questions. “China’s African role is wider, more sophisticated and more businesslike than any other country’s at any

UN Department of Economic and Social Affairs, Population Division, “World Population Prospects: The 2006 Revision, Highlights.” Working Paper No. ESA/P/ WP.202.The United Nations. (2007). http://www.gao.gov/ assets/660/652041.pdf

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time in the post-war period,” Moyo writes in her chapter “The Chinese are our friends.” For Moyo, and others like her, Africa’s future is not in aid but in the language of the marketplace: trade, entrepreneurship, investment, FDI, etc. “ . . . in a strange way it’s exactly what we need in terms of delivering economic growth and meaningfully reducing poverty,” Moyo told CNN. “We need jobs, we need investment, we need trade, we need foreign direct investment, whether investment domestically but also from the outside.” Today China is emerging as one of the pre-eminent market forces on the continent—something the West has noticed, but through a competitive lens. For Moyo, China’s coloring as an imperial power or neo-colonial force is rubbish. Language like that, according to her, is more a function of great power politics. In a New York Times op-ed she explained, “Since China began seriously investing in Africa in 2005, it has been routinely cast as a stealthy imperialist with a voracious appetite for commodities and no qualms about exploiting Africans to get them. It is no wonder that the American government is lashing out at its new competitor—while China has made huge investments in Africa, the United States has stood on the sidelines and watched its influence on the continent fade.” In the same article Moyo explains that China’s true interests on the continent are driven by domestic needs: To satisfy China’s population and prevent a crisis of legitimacy for their rule, leaders in Beijing need to keep economic growth rates high and continue to bring hundreds

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Ultimately, the responsibility of how China engages in Africa is really at the domain of the African governments. of millions of people out of poverty. And to do so, China needs arable land, oil and minerals. Pursuing imperial or colonial ambitions with masses of impoverished people at home would be wholly irrational and out of sync with China’s current strategic thinking. In much the same way that China’s demographics destined it to expand into Africa, Africa’s youthful population and growing middle class has spurred the continent’s interest in China. “Remember, 70% of the population of these places is under the age of 24,” Moyo told CNN in a recent interview. “There is no escape: we have to create jobs.” While some Africans might chafe under the prospect of inviting another great power into the region, Moyo (herself from Zambia) says that most Africans view China’s presence on the continent as a good thing. Citing a 2007 Pew Research Center survey in her op-ed, Moyo points out that “in Senegal, 86 percent said China’s role in their country helped make things better, compared with 56 percent who felt that way about America’s role. In Kenya, 91 percent of respondents said they believed China’s influence was positive, versus only 74 percent for the United States.” The Pew statistics display a more amiable China; hardly the resource-hungry leviathan Western caricatures make China out to be. In her book Winner Take All: China’s Rush for Resources and What it Means for the Rest of the World

Moyo addresses the role of China’s voracious appetite for hard (metal and minerals) and soft (timber and food) commodities. Her analysis includes, of course, China’s interests in Africa. Always even-handed, Moyo displays how China’s myriad trade and investment interactions with the African continent have far outweighed the weak-tea outcomes of Western aid. It’s not that Moyo is a China fanatic; she’s just looking at China in Africa with economic sense: Economies grow when they increase the use of land, labor and capital through changes in productivity. Africa is doing that (ten of the fastest growing economies in the world are in sub-Saharan Africa) and China is helping. Moyo explained to CNN, I’m not saying that China should be given a red carpet, carte blanche, to come into Africa or, indeed, anywhere in the world, and do that they like. We do need the investment, we need job creation and we do need actual trade in these places. But I think what’s really essential is to focus on what China can do for Africa, we well as what Africa can do for China. While much for the dialogue gets its exposure in the Western and Eastern media circles, the conversation ultimately belongs to Africa. Driving home the point Moyo said, “Ultimately, the responsibility of how China engages in Africa is really at the domain of the African governments.”

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China in africa

By Mthuli Ncube and Michael Fairbanks Myths and realities about China’s ambitions in Africa abound: China is monolithic, mired in stale ideology, subverting the Bretton Woods system, and unwilling to provide global public goods. Another is that China has no “soft power,” that is, the ability to engage almost one billion Africans by persuasion, attraction, and market relations rather than brute economic and military force. These myths, which cause some to conclude that China is interested in a “resource grab,” or aiming to displace the West, may cause strategic errors by other nations or the global governing institutions. It hurts the interests of Africans who have made great strides to eradicate poverty, build democratic institutions, and integrate into global networks of trade and investment.

China’s History in Africa China’s involvement in Africa, which dates as far back as 618 A.D., is seen as a unique advantage (see Figure A). It may be divided into three periods. The first period leading up to 1949 is the episodic phase where The T’ang (618-907 A.D.), Sung, and Ming dynasties traded tusks and horns, slaves, and light-manufactured goods, respectively. In the late nineteenth century, the first wave of Chinese immigrants came to Africa, especially after the Boxer rebellion in 1899. The second wave of immigrants came to Africa after the formation of the People’s Republic in 1949.

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The second period is the ideological or “symbolic phase” and began in 1960 and lasted until 1989. This was characterized by open conflict and competition with the Soviet Union and the West, and the beginning of the Cultural Revolution in 1966. Other salient events of the time included the construction of the Tan Zam railway (1970-1976), China replacing Taiwan on the UN Security Council with African support in 1971, and in 1982, when the Communist Party of China (CPC) defined the principles of “Mutual Respect and Non-interference.” The third or “symbiotic phase” began in 1990 and persists to the present. It is characterized by the modernization of the People’s Liberation Army, the restructuring of State Owned Enterprises, and the development of the “Socialist Market Economy.” China went from oil exporter to oil importer, and in 1996, China’s acquisitions in Africa take off. Consequently, a “Third Wave” of Chinese immigrants to Africa begins. Comprehending the history of China in Africa is fundamental because it forms the basis of China’s identity in Africa as another developing nation, a benign not colonial presence, which sets the foundation for their espoused strategy of “mutual benefits,” and non-interference in sovereign issues.

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Demographics drive Strategy

China’s strategy in Africa may be partly linked to its demographics. The greatest challenges facing China are aging population, gender disparity, migration to cities, rural health care, and income inequality. Poverty declined from over 60 percent to less than 7 percent since 1978, eradicating more poverty than in the rest of human history. China has been the world’s most populous nation for many centuries. Its national population density (137/ km2) is not very high. The overall population density of China conceals major regional variations; that is, the western and northern areas have only a few million people. China now has an increasingly aging population; it is projected that 11.8 percent of the population in 2020 will be 65 years of age and older. Health care has improved dramatically in China since 1949. Many major diseases have been brought under control. Life expectancy has nearly doubled. According to the 2010 census, males account for 51.3 percent of China’s 1.34 billion people, while females make up 48.7 percent of the total. In most western countries the sex ratio at birth is around 105 boys to 100 girls. In some parts of China, the number may be as high as 128 boys to girls. China’s internal migrants can be divided into those with and without local residency rights. There will be an increase of almost 400 million migrants to the major cities over the next 15 years. In 1979, the year Deng Xiaoping introduced sweeping economic reforms, the rural health-care system started to disintegrate. Subsidies disappeared, and local hospitals were sold to the private sector. As a result, the proportion of rural residents covered by the government’s medical cooperative system fell from 90% to 9.8% by 1985, where it remains today. The incidence of cancer, heart disease and tuberculosis has increased and become a serious social issue between the governing elites and rural poor. China’s Gini coefficient has climbed to 0.5, from less than 0.3 before Deng’s reforms. The government plans to conduct a nationwide income survey in 2012 to help it calculate wealth inequality. Premier Wen Jiabao is signaling that curbing pollution, inequality, and the risk of financial instability are more important than economic growth. They may be moving the economy to greater

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consumption and away from exports and investment, a shift that may mitigate global imbalances blamed for the last financial crisis. Some social scientists suggest that a Gini coefficient of around 0.4 predicts a large degree of social unrest. Mass incidents, including strikes and riots doubled to at least 180,000 in 2010 from 2006. In February 2012, one analyst projected the figure in 2012 to be 300,000 incidents. Chinese leaders are concerned over how to manage changing demographics and technological and political innovation. China has a history of bottom-up rebellion that is unmatched in the history of the world. A number of questions betray inherent contradictions and threats to their current model. For example: How can the Chinese see their own history as a force for unity when it is replete with recurring cycles of economic turmoil and peasant revolts? How can the leaders of China embrace information technology as a force for positive change, and be the world’s biggest censor? How can China speak of its unity while brutally suppressing ethnic groups? How can they decentralize power while corruption at local levels is so great? How can China keep the military leaders happy while entrepreneurs become more important? Chinese demographics undergird China’s strategy in Africa. Africa represents oil and minerals to fuel employment and growth at their thousands of factories, a place to send young men to work (some say there are 500,000 Chinese workers in Africa), and a place to invest some of its excess liquidity to keep domestic inflation down.

China—the Principle Beneficiary of Globalization? China was once a revolutionary force bent on overturning world order. It has now become the principle beneficiary of globalization, and a member of most international regimes: the Nuclear non-proliferation Treaty, World Trade Organization, the United Nations Security Council, and founding member of the G-20. China has not formulated a view of how it would contribute global public goods (cyber space, climate change, and regional security). This is a source of frustration to many. It is probably because it is struggling to reconcile its double identity as a developing nation and global economic power.

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China in africa Twenty organizations make international strategy in Beijing. They use the broadest range of instruments of any nation: diplomatic instruments, financial incentives for infrastructure investments, Special Economic Zones, development assistance, military cooperation, and peacekeeping. One thing is certain, however. Growth was always the main goal of China’s globalization strategy. Gross domestic product expanded 9.2 percent last year, down from a 10.4 percent gain in 2010. China’s economic growth will slip to 8.59 percent this year due to Europe’s problems; inflation will decline to 3.3 percent; the pace of the Yuan gains will decelerate this year due to a declining trade surplus and slowing capital inflow. Growth in imports will outpace exports, according to a Xiamen University and National University of Singapore joint forecast. Liberalizing the economy on a massive scale is what kept the Chinese Communist Party (CCP) in power over the last two decades. But it also created problems and asymmetries: coastal areas grew faster than the interior, and inner cities are characterized by social disparity. The elites are sometimes viewed as exploiting the poor, and local authorities can be corrupt. These, together with the cyclical overheating of the export-based economy, are the side affects of miracle growth. China’s approaches to wealth creation should resonate in the West—China boasted the largest economy in the world for two thousand years. The interruption, which is often referred to as “The Century of Humiliation,” began with the Opium War of 1842 when Britain forced concessions on China for trade and foreign settlement. They see growth as their natural trajectory. The new theory of the state is the “socialization of individual happiness.” Wealth is part of a narrative of social cohesion and destiny, proof of Chinese exceptionalism. Deng Xiaoping, the leader widely credited with China’s “Going Global Strategy” said, “To get rich is glorious!” China intends to get rich by looking for more influence in global governance and participating in vision of a “harmonious” world order. China places a heavy emphasis on multilateralism, some say, a greater emphasis than the United States does. It views the United Nations as the primary framework for legitimizing collective action, and the preferred platform for multilateral responses to common challenges. It also sees the United Nations as the only way to constrain American unilateral behavior. Within this context, China intends to slowly remake the world order, not just geopolitically, but normatively, as non-western ideals and beliefs compete with western

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liberalism. Its relationship with Japan is not an easy one, and its relationship with the United States—complicated by arms sales to Taiwan, the Dalai Lama’s White House visit, and the value of the Yuan—has been difficult.

China’s Strategy for Africa China’s explicit state-to-state strategy in Africa is based on “Mutual Benefit” and Constructive Engagement. The principles are: “Sincerity, equality and mutual benefit; solidarity and common development.” Premier Wen has said, “Hegemony is raising its ugly head,” and that relationships with African nations will be “without political conditions.” He stated on other occasions that China’s broader strategic purpose was “to counter western dominance.” China’s engagement strategy in Africa is rooted in its rise as a world economic power, but it employs a broad scope of diplomatic instruments, financial incentives in the forms of infrastructure investments, and development assistance, as well as peacekeeping and military cooperation. China has a strategy of engaging with three types of African nations, in order of increased political problems: democracies with diversified economies (South Africa), weak democracies that hold sub-soil assets in abundance, and some countries considered to be pariah states in the eyes of the west. It is important to comprehend that China’s approach with the latter are fundamentally opportunistic. China is sensitive to western criticism that it enables regimes that violate international norms. It sees its strategy as constructive engagement and argue that military force and sanctions are ineffective, most controversial issues are domestic, and that their concrete economic and political interests offer the opportunity for softer forms of persuasion. In a couple of decades, China has made Africa into a proving ground for its diplomacy and international businesses. It has broken the western aid monopoly in Africa without engaging in the intricate dance of western conditionality, which some Africans view as a menace to their sovereignty. Sino-African trade increased from US $125 billion in 2010 to US $155 billion in 2011. More than 2000 Chinese private businesses are in Africa. China’s share of Africa’s total exports has increased from 1 percent to about 15 percent in a decade.

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The improvement in Africa’s terms of trade, which has increased by 4.3 percent on average between 2000 and 2008, may be attributed to China’s demand. China’s exports to Africa enable access to inexpensive manufactured goods: electronics, toys, and even cars. This raises purchasing power and improves the quality of life. China’s industries have caused pollution, but not more than western investments. Labor disputes exist, but some evidence suggests they treat workers the same in China, and are willing to improve this. China’s low-cost manufacturing exports have undercut some local manufacturing firms, especially clothing and footwear. But, they have also helped develop manufacturing by investing in infrastructure and increasing their imports. And, there is a vast potential for Africa’s agricultural goods in China. China’s foreign direct investment in Africa reached US$ 5.5 billion in 2008, up from only US$70 million in 2003. Many observers think it is based on extractive industries, but since 2003, resource-rich nations have received only 37 percent of Chinese investment. China’s official foreign aid has increased from US$800 million in 2005 to US$1.4 billion in 2009, but when one takes into account concessionary loans, export trade credits and other mechanisms, it compares favorably with the World Bank’s annual flow. Coordination between the United States and China would be valuable since so many complementarities exist between the two nations. US aid to Africa goes toward democratization efforts, public health programs, counterterrorism cooperation, and improved regulatory regimes. It often comes with stipulations or conditionalities. The Chinese invest in infrastructure and enterprises, and are less interested in exporting their beliefs and values. Though this might change as their stakes on the continent rise. The Chinese also invest in countries with a high credit risk rating such as Sudan, Zimbabwe, and Sierra Leone. This is not due to their desire to invest in difficult political circumstances. It is because there is less competition for new Chinese multinational corporations, they need to fuel their growth at home, and because they strongly adhere to the principles of non-interference in sovereign issues. This frustrates many in the international community and in Africa, and there has been some flexibility of late. China’s firm-level strategies follow a clear path in Africa: First, they must find commercial success in the Chinese domestic market, and then scale it; second, find

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access points to global supply chains through trade; third, raise funds in the global capital markets; fourth, pursue mergers and acquisitions to gain global economies of scale; and fifth, develop and obtain global management expertise and technology to compete globally. China does not have a competitive edge over many Western firms in globally open markets. But in inward looking markets, like in Africa, Chinese companies are able to gain from state-to-state or bilateral influence. They have an explicit willingness to work with any state, to be the low cost bidder based on lower wages for workers and managers, and to bundle diplomatic attention, support for prestige projects, and low interest loans and outright grants to beat the competition. The result is that over 800 Chinese state-owned businesses are now working in Africa. China’s strategy has hurt some small business people in Africa. China has brought new goods closer to consumers, but threatened established retailers. It is not just the importation of light-manufactured goods that have out-competed indigenous manufacturing, (that is, in Nigeria, 250,000 workers have been laid off because 80 percent of the textile factories have been closed); the emergence of new Chinese retailers all across Africa have squeezed out indigenous entrepreneurs. The Chinese entry strategy is basic: an initial entrepreneur, perhaps some one who left a state-sponsored construction job, opens a shop and sells merchandise through superior access to Chinese goods. He uses family labor and sells a very broad scope of products. Other Chinese see the success and open similar shops. Profits are driven down, which drives diversification and focus. Africans are hired to do menial work, but the Chinese retailers use a form of indentured servant and family members for higher ordered work, which increases the supply of future Chinese business people. If the local authorities tighten regulations, they find it difficult to enforce given these lucrative investments. The problem is bound to increase; the Chinese are now exporting refrigerators, air conditioners, and even vehicles. Emigration from China is no longer limited to a few segments of society. It is an option for those who live and work all across China, and it has rapidly become a reasonable aspiration. Tens of thousands of African entrepreneurs attend business festivals in southern China, Nigerian primary students are learning Chinese, Confucian institutes, which are the equivalent of the Alliance Francaise and Goethe Institutes, are springing up.

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China in africa Western fears have reduced China to caricatures

As with all caricatures, they are reminiscent of the truth, but incomplete. And in the high stakes world of trade and development, possessing part of the truth is dangerous. The Aggressor, China, is interested in a resource grab, which takes little account of local needs or desires. They see Africa as a dumping ground, are callous to environmental and human rights concerns, which negate African developmental gains. The Hegemonist: China’s new relations with Africa, since 1996, are aimed at displacing the West, forging relationships with autocrats and elites under the banner of south-to-south solidarity, and can only result in a form of political control over the continent.

ate poverty in Africa than anything ever attempted by western colonialism or the initiatives of the multilateral institutions. China has an Africa strategy, but Africa does not have a China strategy. Leaders throughout Africa are addressing this. But those outside the continent that are mired in myths, old assumptions, and the self-sealing logic of ideology will remain flat-footed, flummoxed, and miss the opportunities that China sees in Africa. As one European official said recently, “Thanks to China, we have discovered that Africa is not a continent of crises and misery, but one billion new business partners.”

The Partner: China is a partner in Africa as part of longterm strategic commitment to the global poor. It is driven by China’s economic needs, but also a commitment to convey its historical experience on the periphery to the global system with all African nations, as well as a desire to build effective partnerships across the developing world. Cardinal Peter Turkson, a Ghanaian Cardinal of the Catholic Church said, “Many Africans believe that the West has had it chance.” Many outside observers agree that “China will act as an alternative model to the West, embodying a very different kind of political tradition, a post-colonial, developing country, a communist regime, a highly sophisticated statecraft, and an authoritarian-Confucian rather than democratic polity.” Paul Romer, a Fellow at the Center for Global Development, says, “A world in which many countries provide development assistance is better than a world where the U.S., Europe, and the World Bank are the only game in town. Even if countries like China or Brazil pursue self-interested assistance strategies, as the existing players do, recipient countries will benefit from the ability to choose among a richer menu of options.” Michael Kremer, a leading development economist at Harvard, says, “The policy discussion over China is simplistic. China is more people to do business with, their purchases create jobs, and their products create value.” Despite the existence of these Western characterizations, one thing is for certain: the relationship between Africa and China is evolving. Grand statements and gestures have given way to practical experiences that have built trust in some cases and skepticism in others. It is probably true that Africa is more important to China than it is to the West, and that China, without the explicit goal of altruism, has done more to allevi-

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Singapore and Africa – Lessons from Singapore

By Donald L. Cassell, Jr., AIA, Senior Fellow, Jordan Clark, Research Assistant, Sagamore Institute

W

hen Singapore gained its independence from Great Britain in 1965, it was considered a “basket case.” Wealth was scarce at $400 GDP per capita, unemployment was high (14%), and sanitation and education services were poor. Lacking in natural resources and possessing almost no land space in which to grow, it was plagued by a depleted treasury, tense labor standoffs, and widespread social indiscipline. This instability earned Singapore a reputation as one of the world’s riskiest places for investment, with some even fearing a communist takeover. Fast-forward fifty years and the island city-state bears almost no resemblance to its former self. It boasts the world’s third-highest GDP per head, and ranks second on the Global Competitiveness Report. Singapore has become a top-tier global exporter with a sterling business reputation, having developed with astounding

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speed and efficiency into an economy that thrives on exports in consumer electronics, IT products, pharmaceuticals and the financial sector. But Singapore’s rise wasn’t alchemy. The country’s transformation from backwater to business hub is attributed to its leaders’ pragmatic blend of posture and prioritization. Singapore is a completely urbanized state with no hinterland. Its 276 square miles (716.1 square km) contain a dense and diverse population of Chinese, Malay, and Indian. Its government mostly functions as a Parliamentary democracy, a legacy from its British colonial past as an entrepot. Its sole natural resource remains its deep-water port. Its land constraints are even more acutely felt given its population growth. Singapore’s case is no doubt unique, but an examination of its ascent can provide valuable insights for the leaders of Africa’s developing countries.

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China in africa In 1965, Prime Minister Lee Kuan Yew took the helm of the newly independent state of Singapore that was widely expected to fail. After nearly a century and a half of British rule and an unsuccessful merger with neighboring Malaysia, the tiny nation was on its own. Understanding the limits inherent in Singapore’s precarious position, Lee Kuan Yew identified and prioritized the country’s most pressing needs, while cultivating an administration of practical problem-solving. His non-ideological approach to statecraft, rooted in a firm grasp of the landscape and an espousal of innovative policy solutions, has been dubbed “strategic pragmatism.” Given regional tensions and its own dearth of resources, Lee concluded that Singapore needed to attract substantial foreign investment, and towards that end, it must present itself as the most efficient, best-equipped partner in the region. Lee would later write: “We had one guiding principle for survival that Singapore had to be more rugged, better organized, and more efficient than others in the region.”

Performance In formulating a strategy for economic development, Lee sought outside advice and studied successful models worldwide. His economic team tailored an approach compatible with Singapore’s idiosyncrasies and goals. Lee insisted upon the need “to create a new kind of economy, try new methods and schemes never tried before anywhere else in the world, because there was no other country like Singapore.” In his own words, Lee was focused on “getting the basics right.” He identified the country’s top priorities: defense and security, law and order, the economy, and people. Lee bolstered Singapore’s defenses against its hostile neighbors by forging friendly international ties beyond its neighborhood. Its international partnerships allowed it to build a defense and security apparatus from scratch. Lee’s government also passed legislation that curbed the effects of potentially destabilizing domestic forces. Abandoning failed ventures in input substitution, the government shifted to export-oriented growth by attracting American multinational corporations (MNCs). These MNCs would bring technology, new jobs, advanced technical and managerial training, and, ultimately, marketable goods for export. Singapore attracted the attention of American MNCs by offering perks like cheap labor, tax relief, and stability, and by displaying an aptitude for speed and efficiency. Believing that the country’s tiny economy could not afford to wait for homegrown industries to grow up on their own,

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Lee’s team decided on a heavy use of foreign direct investment (FDI) to generate rapid growth domestically. Essentially internationalizing the local economy by courting FDI, Singapore’s leaders fashioned an outward-looking society and tied the country’s success to international trade and commerce. Singapore has been able to be the sort of nimble, resilient partner that attracts outside investment in large part because of the robust, catalytic role of the government in economy. Its Economic Development Board (EDB) was responsible for identifying and recruiting MNCs, and making the investment process a smooth one. Lee made eliminating corruption an early priority, and gave the Corrupt Practices Investigation Bureau wide authority to pursue and strictly punish corruption in all sectors. To further disincentivize corruption, and to attract top-level talent, Lee’s team remunerated civil servants well. Top government positions garner salaries comparable to those of top private sector earners. Moreover, bonuses and many departmental budgets were tied to the country’s GDP performance. Early policies were enacted to encourage a more orderly, stable, and cleaner state in what commentators have referred to as a Confucian bargain between the Singaporeans and their leaders. The true root of the success of the Singaporean state, of course, lies in its people. In the words of historians Will and Ariel Durant, “Man, not the earth, makes civilization.” The city-state has clearly been blessed with talented, visionary leaders who have shown remarkable incorruptibility and pragmatism in handling Singapore’s political, economic, and educational priorities. They have proved a determined and inventive force capable of both casting and implementing a coherent vision for the success of the whole. Leadership, moreover, is reflective of the community. Lee Kuan Yew’s strong, disciplined approach to governing aligns with (and largely works because of) the values embraced by Singapore’s people. Though not a monolithic bunch, Singaporeans can be said to share the standards of hard work, discipline, obedience, self-sacrificing, thrift, and purposefulness. There exists a profound respect for hierarchy and education, and responsiveness to competent leadership, a strong commitment to the family unit, and an appreciation for the greater good. In their ability and willingness to perpetually strive for excellence, it is the people who are ultimately responsible for making Singapore the center of continued growth and learning that its leaders have envisioned. Wealth creation requires a cultural context.

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© jo - Fotolia

Lee Kuan Yew and his team imagined a Singapore that would become a first-world oasis in a third-world region. In Lee’s own words: “We did not measure up as a cultivated, civilized society and were not ashamed to set about trying to become one in the shortest time possible. First we educated and exhorted our people. After we had persuaded and won over a majority, we legislated to punish the willful minority.” This is a bold and somewhat hyperbolic statement that must be understood in a broader context. It reflects Lee’s single-mindedness in seeking solutions to overcome Singapore’s depressing conditions and go beyond the heritage of their ancestors. It is important to note that Lee’s government has had a constant reputation for transparency, efficiency, and responsiveness. The muscular Singaporean regime, in practice, is one that provides stability, safety, and opportunities for the population and not exploitation. Nevertheless, for Singapore’s “miracle” to persist, the leadership and its people must remain in harmony, embracing respect and the larger concerns of the community.

Conclusion In fostering an atmosphere that emphasizes order, hard work and ingenuity, Singapore has been able to turn its fortunes around and create a space filled with opportunities for its citizens. Its leadership, with a grasped of local and international trends, has formulated economic policies that helped open doors to rapid advancements

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in the education, health, and wealth of its people. Its intolerant stance toward corruption plays a major role in luring investment, sustaining a competent meritocracy, and fostering the popular confidence necessary to maintain legitimacy. Singapore thrives because of these core values: industriousness, discipline, purposefulness, thrift, and respect for competent authority, education, and the needs of the community as a whole. African leaders would do well to find lessons in the Singaporean “miracle.” This does not imply a simple copy-and-paste procedure. Rather, Africa’s leaders must take stock of their countries’ assets and liabilities (both physical and societal), and prioritize accordingly. The larger lessons of Lee’s “strategic pragmatism” are eminently translatable to the African context. Transformation requires thorough and sustained effort. A firm, competent, and creative leadership, governing with transparency, honesty, and a clear commitment to the people’s wellbeing, results in a more stable society where people can flourish and add value to the state. As in the case of Singapore, postcolonial resentment ought not to undermine potentially advantageous international relations. There is value in reconciliation and partnership. An emphasis on education and ethical standards is imperative. As Africa learns from Singapore, she will do well to remember that men and women do not live by bread alone. For humankind, there must also be a sacred fire to tend.

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Promise of Africa

The Promise of Africa

With 54 countries, over 1000 languages, and nearly 800 million people, Africa is a complex and vibrant place. And the world is taking notice. Along with Africa’s economic rise, buzz about the continent has expanded into blogospheres, news media, and pop culture more than ever before. From the Wall Street Journal to TED, major media outlets are changing how people think about Africa. Below is a best-of-the-web selection as it relates to Africa’s rise.

Africa in the News WSJ: Small Factories Take Root in Africa By Peter Wonacott

“Some small manufacturers are making things, from shoes to hot sauces, in places where multinationals fear to tread.”

Harvard Business Review: Seven Reasons Why Africa’s Time is Now By Jonathan Bermann

“Africa’s economy is growing faster than the economies of all other continents.”

The Economist: Africa’s Hopeful Economies “The continent’s impressive growth looks likely to continue.”

Forbes: Africa is Rising Fast By Hannes van Rensburg

“Africa is changing for the better”

New York Times: Africa on the Rise By Nicholas Kristof

“So here’s another way to think of Africa: an economic dynamo.”

Foreign Affairs: Africa’s Economic Boom By Shantayanan Devarajan and Wolfgang Fengler

“Skeptics fail to grasp the extent to which Africa’s recent growth is a result of economic reforms.”

Special Features BBC’s The Story of Africa:

Description: The Story of Africa is an online, interactive history of the African continent told from an African perspective. From early civilizations to independence, this treasure trove provides an excellent

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primer for those curious about the African story. Site: http://www.bbc.co.uk/worldservice/africa/ features/storyofafrica/

PBS’s Africa:

Description: In tandem with National Geographic, PBS produced an eight-part series that explores Africa’s various regions as well as its people. The eight-part series also has an interactive online companion that includes resources for the classroom. Site: http://www.pbs.org/wnet/africa/index.html

PBS’s Wonders of the African World

Description: Africa’s story has too often been painted as dire—rife with disease and war. But PBS’s Wonders of the African world retells the continent’s story in a different light. It examines the vivid past of Africa’s kingdom’s, people, and culture. Site: www.pbs.org/wonders/index.html

Business:

African Business Magazine

Description: African Business Magazine is the publication of choice for Africa’s business, government and nonprofit elite. Anyone curious about the leading personalities, firms and issues facing Africa’s business community should read this monthly magazine. Site: http://www.africanbusinessmagazine.com/

African Banker

Description: An offshoot of African Business Magazine, African Banker provides the finance community with insights into banking, finance, currency and insurance. Moreover, African Banker offers analysis on the continent’s stock and capital markets. Site: http://africanbusinessmagazine.com/african-banker

Forbes Africa

Description: In 2011 the international business authority, Forbes, released a magazine dedicated

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entirely to African business. Forbes Africa maintains the same trusted reputation that its American version developed and even released two additional magazines in 2013—Forbes African Woman and Africa Forbes Life. Site: http://www.forbesafrica.com/

African Business Review:

Description: Through its website and online magazine, African Business Review features news, analysis and commentary on the continent’s business and finance community. Site: http://www.africanbusinessreview.co.za/

How We Made it in Africa

wait longer for returns in the hope of social, as well as economic, growth. The Acumen Fund Blog, then, explores how patient capital is helping to eradicate poverty in the world. Site: acumen.org/blog/

Maker Faire Africa

Description: Maker Faire Africa embodies the best of entrepreneurship on the continent. Each year the continent’s best innovators and inventors gather to showcase their creative talents. In between events, Maker Faire maintains a blog that spotlights the work of Africa’s creative class. Site: makerfaireafrica.com/blog

Description: This publication is directed at business people as well as foreign investors. Through profiles of successful business leaders, entrepreneurs, and foreign investors, How We Made it in Africa shows that not only can business be done successfully on the continent, but that it has been done there for hundreds of years. In 2011, How We Made it in Africa won the Diageo Africa Business Report Award in the Media of the Year category. Site: www.howwemadeitinafrica.com

Culture and Travel

Ideas:

The Travel Channel – Africa

TED Africa

Description: Over the years, TED (Technology. Entetainment. Design) has brought in some of the world’s leading thinkers regarding Africa’s past, present and future. Some of the figures that have graced the TED stage include Dambisa Moyo, Nigeria’s Ngozi Okonjo-Iweala, and Ghanaian economist George Ayittey. Site: www.ted.com/topics/Africa

Aid Watch

Description: Though its last blog post was written in 2011, this blog captured the best of the aid debate in real-time. Aid Watch was operated by William Easterly at the New York University Development Research Institute and still contains a vast wealth of information about bottom-up development Site: http://aidwatchers.com/

Acumen Fund Blog

Description: The Acumen Fund was established by Jacqueline Novogratz, proponent of “patient capital;” that is, capital willing to bare more risk and

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AfroPop Worldwide

Description: Launched in 1988 by NPR, Afropop Worldwide covers the best music coming from the African continent and the Diaspora. Alongside a blog that covers the global Afropop phenomenon, audio of the music-rich radio broadcasts is available as well. Site: http://www.afropop.org/

Description: The Travel Channel – Africa offers guides and articles as well as advice on where to stay and what to do for would-be travelers. From wine road trips and private African Safari’s, the Travel Channel charts out potential luxury adventure spots from Cairo to Cape Town. Site: http://www.travelchannel.com/destinations/ africa

The Lonely Planet – Africa

Description: The Lonely Planet travel guides are unrivaled. The story is no different for LP’s coverage of Africa. LP advises travelers with and without a budget where to stay, what to do, what to see, and how to get there, creating a rich experience no matter the cost. Site: http://www.lonelyplanet.com/africa

National Geographic – Africa Description: The most striking photography of people, culture and nature from Africa’s 54 countries. Site: http://travel.nationalgeographic.com/travel/ continents/africa/ www.americanoutlook.org


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