Position Papers

Analysis in brief: Once thriving, Ghana’s garment and textile industry collapsed under the weight of cheap Asian imports and international development treaties. However, the 2020s has seen the beginnings of a comeback for Ghana’s clothes makers due to savvy marketing, utilisation of social media and a crop of talented local designers, making high fashion of distinction.

Ghana – the origin of Africa’s most iconic fabric, the Kente cloth – had the continent’s largest garment and textile (G&T) industry. Its demise has been a sad case study for economic planners, the end of employment for thousands and a national tragedy for Ghana itself. At its height in the 1970s, the G&T industry had 16 major manufacturers that, along with 138 medium- to large-registered garment manufacturers, employed over 25,000 people.

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Analysis in brief: A clean energy source that is widely available in Africa, hydrogen may be the solution to not only the continent’s but the world’s energy needs, as well as being a sustained form of employment and poverty-ending revenues.

Hydrogen is an abundant and naturally occurring gas found in water and fossil fuels, which makes the element particularly energy-rich. By separating it from water and coal or other fossil fuels, hydrogen can be used as a fuel on its own. The separation process can be done with renewable energies like solar or wind power, creating a product that is known as ‘green hydrogen.’ What is left over from the separation process is merely water, making hydrogen the least-damaging fuel environmentally. Unlike other fuels, hydrogen does not warm the atmosphere when it is used. What is required for a successful hydrogen industry is not only the base product from which it is extracted but also abundant solar and wind energy to power the separation. Africa has both requirements.

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By Jacques du Preez

Analysis in brief: Media has been abuzz over the past two weeks with reports of how a regional power was seemingly almost toppled by the world’s largest private army. Though the meteoric rise of Yevgeny Prigozhin, the founder of the Wagner Group, appears to have reached its zenith, his group’s influence in Africa is far from over. With a new dawn for private military contracting on the continent apparently underway, it serves to ask what this will mean for security – both in Africa and the world at large.

Neither fear nor fidelity

The old saying goes “Neither the fear of God nor fidelity to men.” This age-old maxim amongst students of politics and international relations shows that mercenaries are fundamentally unreliable. This piece of wisdom was rendered in perfect clarity on 23 June 2023 when Yevgeny Prigozhin, founder of the private military company Wagner Group, seemingly locked swords with Putin’s inner circle in Moscow and brought a nuclear armed nation within a hair’s breadth of civil conflict. 

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Analysis in brief: Cryptocurrencies are at the stage that the automobile was a century ago: recognised as an important innovation that is here to stay. African governments are working to protect consumers in the digital money age, while also entering this new financial field to bring a host of benefits to their citizens.

The growing acceptance of digital currencies

They exist only as electronic impulses. A digital currency is any asset that calls itself money and is managed, stored or exchanged on digital systems, using the internet as the means of buying, selling and trading. Digital currencies are called variously ‘cryptocurrency’, ‘virtual currency’ and, when they are issued by governments, ‘Central Bank Digital Currency’ (CBDC). Some digital currencies can be used to purchase real-life goods and services. Since their introduction, always accompanied by scammers and hype, investment in cryptocurrencies has not been for the faint of heart. Governments have generally cautioned citizens against putting their money in so-called phantom currencies that are not backed by anything tangible like gold or that aren’t guaranteed by the monetary power of a government. That attitude is changing. The digital currencies market has stabilised somewhat in 2023, and their trade has become so widespread that African investors now expect to have them as an option if they choose to make some of their investment portfolios digital. Against the tide of growing demand, governments are taking their first regulatory steps. Some are getting into the cryptocurrency market themselves.

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Analysis in brief: Since the launch of Africa’s first artificial satellite in the 1990s, these orbital devices have grown smaller and less expensive, affording additional nations the opportunity to enter the space race. However, all orbital technology is being put into service for the common purpose of terrestrial development.

Much progress in a brief span of time

Three decades ago, African nations were not participants in space science. Africa had observatories – indeed, ancient Egyptian astronomers were amongst the first to make sense of the night sky – and in Kenya, the world’s first water-based launch pad was erected by the Italians a few metres off Kenya’s Indian Ocean coast in 1964. Other than that launch pad and one in South Africa, there are still no facilities on the continent to send rockets into space nor any rocket factories. However, by launching their payloads as cargo aboard American, Asian, European and US rockets, nearly a third of Africa’s countries by 2023 have their national flags painted onto satellites that currently orbit thousands of kilometres overhead. Those countries that have sent up satellites have plans to send up more, while new countries launch their own for the first time.

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Analysis in brief: Tanzania’s announced plans to build Africa’s longest bridge from Dar es Salaam to Zanzibar is technically feasible. It is also both the continuation of impressive bridge projects continent-wide in recent years and a harbinger of megaprojects to come. All that is lacking is investor commitment.

Bridging the Indian Ocean is no longer a fantasy

Before serious negotiations began on 11 March 2023, the idea of building a 50-km-long bridge from Tanzania’s capital Dar es Salaam on the African mainland to the Zanzibar archipelago was a fanciful idea. However, engineers at the China Overseas Engineering Group Co. that would erect Africa’s longest bridge have demonstrated that the necessary technology exists.

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Analysis in brief: Financial technologies (Fintech), most notably doing banking tasks using a smartphone app, have become a way of life for many Africans, clearly showing the future of African financial services. While traditional banks are offering mobile apps of their own, they are also embracing Fintech start-up firms run by savvy young entrepreneurs bringing new ideas.

From pandemic life-saver to post-pandemic financial essential

The Covid-19 pandemic devastated African economies, while at the same time forever reshaping these economies by accelerating the way Africans conduct business. Confined to their homes, some Africans could still order items at online stores and restaurants for residential delivery, pay bills and transfer money. Post-pandemic, as the number of smartphones increased (in some countries, surpassing the number of people), online apps enabled a diversity of financial services. The Fintech that created these instantaneous services, which lessened the destructiveness of the Covid pandemic by enabling financial transactions online, have shown the way forward for the financial industry.

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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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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’ 19^th-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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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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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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