Position Papers

Analysis in brief: Water shortages have either created or exacerbated humanitarian crises in Africa, stalling economic development. Climate change, through worsening or causing droughts, has increased the pressure to secure reliable sources of water. As a result, new and sometimes large-scale water infrastructure projects are underway across the continent.

More than 300 million Africans, which is more than one out of five people living on the continent, do not have access to clean drinking water. Sub-Saharan Africa loses 5% of its combined regional GDP because of a lack of water, contaminated water, and poor water infrastructure, according to the International High-Level Panel on Water Investments for Africa (IHLPWIA). The body was launched in March 2022 during the 9th World Water Forum in Dakar to find a holistic and continent-wide solution to Africa’s perennial problem of water shortages. Run under the auspices of the African Union, the IHLPWIA found that African countries are losing over US$ 200 billion annually because of inadequate water infrastructure. The African Development Bank has also identified other economic consequences to the water insecurity situation. Every year, 40 billion hours of Africans’ time is used to collect water, with women and children being most burdened with the task – rural Ethiopians for example can spend as much as eight hours each day fetching water, and their Kenyan counterparts six.

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A business begun from scratch by its founder, using his or her own money or finding financial support from family and friends, had always been called a business before the name ‘startup’ came into vogue. Financing for a startup, which can be defined simply as a company in its fledgling stage, now includes venture capitalists, who the company’s founder convinces that the new enterprise is innovative and has great growth prospects, and crowdfunding, where masses of people buy into the new enterprise with online cash contributions.

Global investors have been attracted to the youthful entrepreneurship that characterises Africa’s business sector. For years, globalisation and the perpetuation of companies established during the colonial era have dominated African economies. However, nowadays, crowdfunding and venture capitalism have allowed Africans themselves to enter the African corporate space and marketplace. No one knows African markets better than the entrepreneurs who grew up within them. Consequently, African startup companies are found in all fields, from agriculture to consumer products, and particularly in new fields that fascinate young entrepreneurs like telecommunications and fintech.

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Analysis in brief: Africa’s debt load has reached a crisis point. The repayment of monies borrowed to advance the development of African peoples is now inhibiting their economic and social development. No solutions are at hand, only an awareness that some way out is necessary for African countries drowning in debt.

The African debt crisis of the 1980s has returned 40 years later in a more devastating manifestation. While lessons were learned from the earlier crisis, unpredictable events occurred, such as the Covid-19 pandemic. During the 1980s, African nations borrowed to build transportation infrastructure, dams, hospitals, schools and a host of other developmental projects. When international prices fell for commodities on which national incomes relied, the resulting decrease in revenue made it impossible to service debt, leading countries to default. Lending institutions attempted debt restructuring, relief and even cancellation, with loan write-offs described as a means of foreign aid.

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Analysis in brief: Once a convenience and now a necessity, digital banking has become essential to conducting business in Africa. More notably, it is significantly empowering Africans by offering access to financial services that were previously unattainable to them.

What a difference a decade makes for Africa’s embrace of digital banking. In 2021 (the most recent year when complete data is available for the entire continent), 55.07% of Africans owned a bank or mobile money account, more than double the 23.33% who accessed banking services in 2011. The growth was not in traditional banking but was entirely because of online banking services. Consequently, more than three-quarters (76%) of African banks prioritise digital banking services, according to the 2023 edition of ‘The African Banking Digital Transformation Report.’ Because smart phones now use 75% of Africa’s internet traffic, half of all Africans have access to banking services online.

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Analysis in brief: Drawn by lower costs and high-quality healthcare offered by Africa’s private clinics, medical tourists from abroad are bringing hard currency appreciated by governments, as well as driving private sector investment into state of the art medical care. Against the danger of creating a two-tier medical care system, advocates of medical tourism say the public healthcare system will benefit from the availability of new healthcare expertise.

Medical tourism is defined by the World Health Organization as travel to a foreign country for non-essential procedures, such as cosmetic surgery, while medical travel is defined as what is done for essential healthcare for procedures unavailable in the patient’s home country. However, both these categories are generally combined into one, following the US Centre for Disease Control and Prevention’s definition of medical tourism as simply travelling to another country for medical care. Because incoming foreigners are issued temporary tourist visas, they are listed as tourists by the host countries. Tunisia’s government notes that patients arriving for medical care take excursions outside their healthcare facilities and are usually accompanied by travel companions who enjoy activities associated with holidays. African healthcare providers and hospitals seeking medical tourists advertise patients’ trips as actual tourism opportunities, and they partner with tourism companies to provide cultural and recreational experiences.

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Analysis in brief: The importance of the informal economic sector in job creation has long been known. This reality has not led to concrete measures to assist this off-grid portion of national economies. This may change as economists predict that the expansion of regional trade can not only boost the informal sector but prompt improvements.

African governments acknowledge the importance of their informal economies but do so grudgingly. Informal economies exist because formal economies do not offer enough jobs required by a population. Governments laud the informal sector for giving livelihoods to most of their working-class demographic but seem embarrassed that this reality is so. When heads of government show off symbols of their country’s economic progress to the press and visiting dignitaries, they host tours of new shopping malls, industrial parks and commercial transportation infrastructures. They do not go to the markets where most of their citizens buy their food, clothing and personal items.

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Analysis in brief: Africa can only develop through economic growth, which is impossible without the movement of goods within countries and across borders. Africa’s logistics industries are undergoing innovative changes to expedite the shipping that fuels businesses.

Difficulties faced by Africa’s logistics sector

Africa’s logistics sector is moving beyond the paradigm it has followed for a century, spurred by e-commerce and consumer demands for ecologically benign business practices. Since modern shipping began on the continent, goods have been moved in and out of seaports by road or rail, though air freight has never played a large role in the shipment of African goods because of its expense. The 21st century has brought online purchases, and while some African companies provide their own fleet of delivery vehicles, like Nigeria’s Jumia, most rely on the established shipping firms and logistics companies that have run Africa’s shipping for years. The logistics industry is confident that it can meet additional needs that require the movement of goods in greater volumes and more swiftly than ever before.

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Analysis in brief: As a leading indicator of the health of national economies, the retail sector has been doing well throughout Africa. Stores and now online businesses increase in numbers in proportion to the growing urbanisation of the continent.

Each African country’s retail sector reports its own accumulative annual revenues and possesses its own particular share of its nation’s GDP. However, every African nation is reporting rising sales, signalling that retail is a well-performing economic sector on a continental scale. By definition, the retail sector is made of all businesses that sell goods through stores and virtually through the internet. In other words, every company that sells goods to the public, through outlets ranging from vending machines to luxury car showrooms, is retail (as opposed to wholesale, which is businesses selling to other businesses).

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Analysis in brief: Dedicating 2024 as the Year of African Education, the African Union has drawn attention to the continent’s primary developmental need: to increase access to quality education for its children. Demonstrable progress has been made towards this end in the 21st century, but there is much work yet to be done.

Africa needs an educated population for economic growth and sustainability, political stability and to create a brain trust to compete globally. Education is also the only way for the continent to find solutions to crises like climate change. Towards this end, earlier this year, the African Union declared 2024 ‘The Year of African Education.’ To ensure that this goes beyond a slogan, the World Bank, UN agencies and public-private partnerships are focusing on education reform. These endeavours will also support concrete and obtainable means to expand the education system and improve the quality of existing schooling. On 16 June – the Day of the African Child, with its motto of ‘Education for All Children in Africa: The Time is Now’ – the NGO Human Rights Watch noted that legal, policy and practical barriers must be removed to make education available to millions of African children, especially girls, who are denied schooling at present.

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Analysis in brief: As Africa’s hospitality industry welcomes foreign visitors in record numbers, contemporary trends are directing future tourism growth. Egypt and South Africa remain top tourist destinations, staying at the forefront of holiday innovations.

Most major African economies host annual tourism conventions. These can be government sponsored like Africa’s Travel Indaba held each May in ocean-side holiday-destination Durban, South Africa, or they are presented by the private hospitality industry itself, such as the African Hospitality Investment Forum that concluded in Windhoek, Namibia, on 27 June 2024. The common factor that has threaded through all the tourism conventions in 2024 has been optimism from rising tourism numbers, including overseas visitors, attendance of attractions and overall tourism revenue. At these conferences, trends are noted, and the means to exploit these trends are presented. With few exceptions, the dark days of the Covid-19 pandemic are history, and companies that did not survive the tourism industry’s long closure are reportedly regrouping to form new enterprises.

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Analysis in brief: Insurgencies are the primary cause of food shortages throughout Africa in 2024, with the Sahel region particularly affected. Harsh weather wrought by climate change worsen the food production outlook. Sustainable solutions are available, but all rely on the establishment of peace and security.

Identifying the challenges

Conflict has negatively affected food production throughout Africa’s history. In 2024, the perpetual plague of conflict in various African locations has put millions of people in danger of starvation, outstripping available international aid. The 21st century has brought a new perennial plague: global warming, causing severe weather like flooding and drought that disrupts food production. Both conflict and climate change are human-caused maladies that can be ended through human actions. For the foreseeable future, however, humanitarian groups can only track areas of the highest danger and prepare mitigation measures.

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