IOA Position Papers

Value-added manufacturing: A cure for many African economic maladies

Analysis in brief: Instead of African countries shipping out raw commodities, a host of benefits derive from locally transforming these natural resources into consumer and industrial products, which are now being manufactured overseas. Governmental policies are finally favouring this common-sense economic reality.

End of the “resource curse”

Africa’s “resource curse” has inflicted the continent for centuries. Diamonds, gold and other valuable minerals have attracted colonisers, marauders, war-lords and neo-colonial exploiters. Endless conflict has resulted, with the great historical irony that Africans that should have been enriched by these resources were made more impoverished as their countries were destabilised by these exploiters. From its independence in 1960, the Democratic Republic of Congo (DRC) has not known a day’s peace as militant groups, greedy dictators and foreign mercenaries compete to loot the country of what would make it one of the world’s most prosperous countries: its natural resources.

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Africa’s new push for a fair share of its mineral wealth

Analysis in brief: African countries seek what they feel is a more equitable share of what is taken from their lands.

A new era in mineral exploitation

A more equitable period of mineral wealth profit sharing appears to be at hand, and hopefully will replace a history of conflict over Africa’s minerals. Such conflict is presently exemplified by the warfare over the Democratic Republic of Congo’s rich mineral resources. For thousands of years, African nations went to war with each other to possess gold deposits. European explorers came in search of gold and diamonds, some specifically to locate the fabled King Solomon’s mines. The colonial powers’ 19th-century “Scramble for Africa” divided Africa into spheres of influences based on the mineral wealth each foreign nation sought. When African countries achieved their independence, some mining companies took advantage of corrupt government officials to acquire favourable terms for the extraction of precious metals. Countries with honest governments were hamstrung by a lack of technical capacity and financial capital needed to start mining operations of their own, and many needed to yield to the terms of multi-national mining firms if they were to obtain any value for their minerals at all.

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Africa’s ports improve, boosting national economies

Analysis in brief: The link between good seaports and booming export economies is well known. African coastal nations are almost uniformly investing in better seaports, sometimes in competition with neighbouring countries. Just as a rising tide lifts all ships, better ports lift national economies.

Africa’s port landscape is improving with upgrades and new facilities

This past decade in Africa has been a ceaseless series of port launches – either the rehabilitation and expansion of existing port facilities or the construction of wholly new ones. Some coastal nations are motivated by a desire to retain or boost their market share of regional shipping business. In other cases, ports by necessity must be dredged to be made deeper to accommodate the ever-increasing size of cargo ships. Whatever the motivation, port upgrades have been followed by an increase in sea shipping through those facilities and a concomitant rise in shipping revenues, jobs and overall economic growth for host countries.

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Africa’s informal economy: The role of digitalisation and fintech in promoting financial and economic inclusion

By Chipo Maziva

Analysis in brief: Africa’s largely informal economy is digitalising. Given the growth of the informal sector, forward-thinking businesses and startups tapping into this space are establishing digital systems and platforms to innovatively address product and service gaps, such as financial inclusion and sustainable business models for informal businesses and workers. Businesses are progressively finding success when financial services are tailored to the informal sector – undoubtedly the driving force in developing economies.

The prevalence of women and the youth in Africa’s growing informal sector

Informality has not diminished. Rather, it is rapidly increasing in many developing and emerging economies. About 50% of Sub-Saharan Africa’s GDP and 85% of its jobs1 come from the informal sector, making it a crucial source of employment and the backbone of economic activity. The majority of informal workers are women (92.1%) and youths (95.8%)2 who have no alternative to the informal economy for their survival and livelihood, stemming from a lack of inclusion and lack of access to formal financial services. Providing previously marginalised people with access to basic financial services and networks is integral for financial security and growth for their businesses.

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The Crisis in Remittances: More than monetary gifts sent home

Analysis in brief: The amount of remittances sent by Africans working abroad to their home countries is so great that they are a factor in nations’ economic growth. But high transaction costs and customer accessibility are troubling these financial lifelines. While remittances to Africa were up in 2022, the rate of growth for these transactions is being hindered.

The importance of remittances will only grow

Remittances are defined as financial transfers made by migrants to their friends or family members back in the places from which they originated. Usually, remittances are country-to-country transfers. However, in-country remittances are also important, as workers in one part of the country, often under contract or perhaps employed by the UN or an NGO, send home portions of their earnings. Remittances are an important and, in some cases, essential source of household income for citizens of Low- and Middle-Income Countries (LMIC) – a definition that incorporates all African nations except for Mauritius. Remittances are lifesavers when it comes to mitigating the impact of disasters faced by the sender’s relatives, who have little or no income, and act as a social safety net for family members living in underdeveloped areas.

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Boosting Africa’s Cold Chain to transport refrigerated items is a matter of economic and medical necessity

Analysis in brief: With half of agricultural production wasted due to rotting and essential drugs spoiled from a lack of refrigeration, the need for a sustainable cold chain from field to market is now recognised by the private and public sectors. Action is being taken by innovative pilot projects for small farmers, and there is massive investment in shipping preservation.

Investment in preservation devices is no trivial matter

Cameroonian entrepreneur Anastasie Obama was recognised by the UN in 2021 as a “Food Hero” for adding revenue to prawn exports by using a family recipe of smoking the seafood to make a value-added product. Her business has grown since that recognition, thanks to improvements in a system that allows her company to mass-produce their tasty product. That system is a better cold chain infrastructure. A cold chain is a temperature-controlled supply chain that preserves agricultural products – fruits and vegetables, fish and meat, dairy and cut flowers – from the moment of harvest to the items’ arrival at stores and markets. Some of these markets are overseas. However, by the time a perishable product has reached a port or airport, the cold chain infrastructure available there is usually well-developed. It is on the farm itself and transportation links from farm to shipper where problems arise.

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Illegitimate African elections are worse than no elections

Analysis in brief: Africans’ desire for democracy continues to be challenged by autocrats, and much of the struggle centres on how to secure the legitimacy of the essential element that makes democracy work, and that necessity is a free election.

An election offering no choices is a danger to national security

Democracy is being undermined globally – and not just in Africa. Corrupt elections are one major encumbrance to democratisation, but illegitimate elections mounted by autocratic governments create a vicious circle. These choiceless elections are held in the name of ‘democracy’, and when they fail to deliver change, they are then used by autocrats as reasons why democracy is not an ideal mode of government. Elections, according to non-democratic forces, cannot express the will of the people, which is only truly known, they claim, by the benevolent autocrat himself. This is paradoxical because there is only one system that empowers a nation’s people with self-governance, and that is democracy (from the Greek word “demo,” meaning “the many”). Oligarchies are government of the few, and monarchies and dictatorships are government of the one (“mono”). It is not democracy that fails the people, it is people who fail democracy by not recognising and overcoming political power usurpers who rob them of self-governance. All governance is aimed at fulfilling self-interests. In democracies, the interests of the entire population are met through the collective use of state financial, security, judicial, administrative and legislative bodies. For non-democratic systems, these institutions serve to fulfil the self-interest of the ruling elite.

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Piracy’s decline in Gulf of Guinea is good news for African Trade

Analysis in brief: Compared to media coverage given to piracy in West Africa’s Gulf of Guinea at its height two years ago, relatively little attention has been given to this year’s decrease in the area’s piracy. Piracy is one of several economic and security threats to the region that originates in its coastal waters.

Still a grave threat, West Africa’s pirates no longer pillage without impunity

For centuries, the Gulf of Guinea has been the transportation and trade lifeline between 20 Central and West African coastal and five landlocked nations. The waters of the coastline that measures 6,000 km is also vital to the economies of landlocked Central African nations whose imports and exports travel by road, rail and river barge to and from Atlantic Ocean ports. The gulf is defined by Senegal in the north and Angola to the south – a maritime area encompassing 11,000 square km (4,247 square miles). Because of oil shipped through the gulf from Nigeria and Central, Southern and West African sources, the Gulf of Guinea remains one of the world’s most important shipping routes. One out of four ships sailing to and from Africa passes through this gulf, which is 25% of African maritime traffic.

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The drying Nile and the surprising mitigation offered by the Grand Ethiopia Renaissance Dam

Analysis in brief: Water insecurity is a continent-wide crisis throughout Africa. The Nile River exemplifies what happens when climate change and population growth stress even a massive body of water on which millions of people depend.

Africa’s insufficient water resources

All of Africa’s most notable water crises, including the shrinkage of Lake Victoria and the disappearance of Lake Chad, are part of a larger scenario involving African nations’ water security. It may come as a surprise that Africa’s most water-secure country is Egypt, which is 90% desert and where 90% of the people are forced by their country’s environment to live within 50 km of the great Nile River – the historic source of the people’s lives and livelihoods. This is due to water-use planning that has been practiced for millennia to ensure the survival of the population.

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Electric vehicles are Africa’s future… but economics will determine how smooth the transition is from petrol

Analysis in brief: Africa will be the world’s last continent to embrace electric vehicle technology, largely because of the world’s use of Africa as a marketplace for its used petrol-powered cars. However, the next 15 years, which will see Africa’s transition to the inevitability of electric vehicles, will be time used by African countries to prepare the infrastructure and policy needed for the transportation revolution.

Cost hinders electric vehicle roll-out

Africa contributes 10% of the world’s carbon emissions – the cause of global warming that is disproportionately and negatively impacting Africa. However, that percentage is certain to rise because Africans will still be driving polluting petrol-powered vehicles long after these have been phased out of the developed world. The reason: 85% of vehicles purchased in Sub-Saharan Africa are used cars imported from the rest of the world. While electric vehicles (EVs) are less costly to use over the vehicle’s lifetime – electricity is cheaper than petrol – their upfront purchase price is prohibitively high for most Africans. A used petrol car imported from abroad costs a fraction of the US$ 55,000 price tag of an average EV. Of course, if the developed world were serious about cutting carbon emissions, it would ban the export of used petrol cars. Instead, the developed world seeks one last profit from Africa for its discarded petrol cars. A UN Environmental Programme (UNEP) study found that 40 of 49 Sub-Saharan African countries have poor-to-weak used-car market regulations, allowing cars with low emission standards to contribute to a growing crisis of urban air pollution, which is all the more reason to switch to EVs.

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Trans-Sahelian Highway – a modern replacement for the legendary camel caravans

Analysis in brief: A highway system across Northern Africa’s Sahel region is being completed much more rapidly than the proposed continent-spanning Trans-African Highway. A major transportation advancement, the link’s potential to spark investment opportunities recalls the days when Africa’s first railroads opened new lands for commerce.

Like the Trans-African Highway that has been decades in the making, the Northern African Trans-Sahelian Highway is not just one route but consists of several interlinking highways. This is because neither the Trans-African Highway nor the regional highway for the Sahel can hope to reach the many places required for connectivity – without a map of such a road resembling a spider web. While the trans-African ‘Cape to Cairo’ highway will require decades more work to be realised, the Trans-Sahelian Highway is 90% completed.

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