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Financial Sector

Learning from a Kenyan revolution

Wolfgang Fengler's picture

Who would have thought, 20 years ago, that a poor African country would become a powerhouse of global innovation in Information and Communication Technology (ICT)? Definitely not me! As student on a long road trip through Africa in 1990, I often struggled to make expensive calls home to Europe. Making an international call typically involved finding an Indian-African merchant, who was one of the few people with a phone that could connect you to other parts of the world, in theory. In practice, I often waited for at least an hour and, when I was lucky enough to get through, paid the equivalent of what today would be about 600 Shillings per minute.

Now zoom back to today and look at the abundance of mobile devices, even in the poorest parts of Africa, and incredibly low calling rates. This year Kenyans could call the US from their cell phones for as little as 3 Shillings per minute! Something extremely remarkable must have happened. In describing the transformation of the telecom industry over the last 10-15 years in Africa, especially in Kenya, the term “revolution” is not an exaggeration.

Since 2000, the Kenyan ICT sector has grown on average 20 percent each year, outperforming every other sector by a wide margin (the second best performer was hotels and restaurants which grew at 8 percent). The ICT sector has been driving growth in Kenya: without it, instead of the 3.7 percent average growth it achieved, the economy would have seen lackluster growth of 2.8 percent (barely enough to keep up with population growth).

Business is brewing in the world’s newest country

Gabriel Demombynes's picture

Emerging from decades of violent conflict, with more than half its population living below the national poverty line and three quarters of the population never having attended school, South Sudan may seem like an unlikely place for setting up a successful, modern manufacturing business.

However, we recently saw an exciting example of what the private sector can achieve even under these conditions:  the Southern Sudan Beverages, Ltd (SSBL) plant, which produces beer, soft drinks, and bottled water for the local market.

SSBL started production in 2009 after investing $37 million to build the facility; a $15 million expansion is now underway.  The plant looks like a modern manufacturing enterprise—with one exception: it is largely self-contained, with its own generators and a treatment plant for the water that is pumped up from the White Nile.

Kenya’s telecom revolution and the impact of mobile money

Wolfgang Fengler's picture

Our third “Kenya Economic Update” – Kenya at the Tipping Point? – notes Kenya’s strong economic recovery in 2010 reaching 4.9 percent of GDP. For 2011, we forecast growth of 5.3 percent.  The special Focus on the ICT Revolution and mobile money captures the economic momentum which is now spreading across Africa. Kenya now has 21 million phone subscribers, the vast majority connected by cell phones.

Delivering Aid Differently – The New Reality of Aid

Wolfgang Fengler's picture

This month Homi Kharas and I published a book titled “Delivering Aid Differently – Lessons from the Field”. We launched the book yesterday at the University of Nairobi.  Here is a summary of the main messages:

We live in a new reality of aid. Rich countries delivered US$ 3.2 trillion of aid to poor countries between 1960 and 2008, and it is a US$ 200 billion dollar industry today. Despite disputes and convulsions, the core of the aid industry has changed little over the past few decades. Now the new pressures on the aid systems may be too strong to resist fundamental change.

Running on One Engine

Wolfgang Fengler's picture

This week, the World Bank launched its second Kenya Economic Update. We have been positively surprised to see such a strong uptake of our previous report and were pleased to have a full house at the launch and informal briefings we have in the run-up of the launch. These Economic Updates aim to replicate a model of shorter, crisper and more frequent country economic reports, which have become a trademark of the World Bank’s analytical presence in other countries, in particular China and Russia.

Varieties of African successes

Shanta Devarajan's picture

Tolstoy notwithstanding, the 20 African success stories described in the booklet “Yes, Africa Can” show that success comes in many different forms.  Broadly speaking, the cases fall into three categories:

- Success from removing an existing, major distortion.  The best example is Ghana’s cocoa sector, which was destroyed by the hyperinflation and overvalued exchange rate in the early 1980s.  When the exchange rate regime was liberalized and the economy stabilized, cocoa exports boomed (and continue to grow).  Similar examples include Rwanda’s coffee sector and Kenya’s fertilizer use.  Africa’s mobile phone revolution, too, is an example of the government’s stepping out of the way—in this case by deregulating the telecommunications sector—and letting the private sector jump in. 

Madagascar - What's Going On?

Jacques Morisset's picture

After one year (still counting) of political crisis, uncertainty remains the key word in Madagascar.

Private activities have rebounded compared to the first quarter 2009 but remain below pre-crisis levels. Fiscal policy, globally cautious, went through several “stop and go” episodes, sending mixed messages to financial markets, especially visible through the recent variations in the exchange and interest rates.

This uncertainty is exacerbated by the lack of consistency in policy decisions.

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