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Africa's success story: Infant mortality down

Submitted by Gabriel Demombynes, co-authors: Gabriel Demombynes, Ritva Reinikka on Mon, 2012-05-07 11:23

There is a tremendous success story in Sub-Saharan Africa that has only barely been recognized. Infant and under-5 mortality has plummeted in many countries in the region in recent years.

The under-5 mortality (U5MR) measure captures the number of children per 1000 live births who die before their 5th birthday. One of the Millennium Development Goals is a two-thirds decline in U5MR between 1990 and 2015, which would require an annual decline of 4.4 percent per year.
 
In the 20 countries for which recent data is available, 12 show rates of decline above this “MDG rate.” In particular, Senegal, Rwanda, Kenya, Uganda, and Ghana have experienced extremely large drops at a rate of more than 6 percent per year. This does not necessarily indicate that any particular country will meet the MDG. But it does tell us that the African Renaissance is bringing tangible benefits to the continent’s citizens. Because of this miracle, hundreds of thousands of parents will be spared the agony of the loss of a child.

Five reasons why Kenya and Africa should take off

Submitted by Wolfgang Fengler on Wed, 2012-05-02 14:20

A week hardly goes-by without one or more international investors announcingmajor investment interests in Nairobi, or other African capital cities.

Nokia, Nestle, and IBM are some of the companies which intend to position themselves more strongly in (East) Africa. True, their investments may still be low by international standards, but they are increasingly becoming noticeable. 

On a macroeconomic level, the new Africa momentum has also been evident. Africa has weathered both the global financial crisis, and the turbulence in the Euro zone. According to World Bank’s latest economic outlook, Sub-Saharan Africa is projected to grow above 5 percent in 2012 and 2013. This would be higher than the average of developing countries (excluding China), and substantially, above growth in high-income countries. This means that at some point in this decade, Africa could grow above the levels of Asia.  A few years ago, it would not have been possible for economic observers to consider such a scenario.  Once Africa becomes the fastest growing continent in the world; this will also be the true turning point for Africa’s global perception.

Big shifts and what they mean for Africa and Kenya

Submitted by Wolfgang Fengler on Mon, 2012-04-16 11:46

Can Africa claim the 21st century? When the World Bank’s Africa department published this book in April 2000, most observers were doubtful that African countries would ever be in a position to become emerging markets. That year, The Economist called Africa “The hopeless continent” and global attention was focused mainly on Africa’s problems: HIV/Aids in Southern Africa; the relentless war in Somalia; and, droughts in the Sahel—which gave the pessimists plenty of ammunition. 

But over the last several years, something remarkable has happened: Africa’s fragile and conflict-affected countries remain a major development challenge, but besides these, a Stable Africa has emerged. Most of this Stable Africa has experienced continued high growth for a decade, and major improvements in social indicators. Africa is becoming an investment destination, and there is hardly a week which goes by without a major investor dropping by my office, to discuss the region’s economic fundamentals.

How has Africa changed over the last decades?

Will oil be a blessing or a curse for Kenya? – Lessons from Indonesia and the rest of the world

Submitted by Wolfgang Fengler on Wed, 2012-04-11 13:21

This piece was co-authored with Günther Schulze1.

Kenya may have found oil in Turkana that could change the development trajectory for the country. In 2011, Kenya spent US$ 4.1 billion on oil imports, equivalent to approximately 100,000 barrels per day. For Kenya to become a net oil exporter, the resources in Turkana would need to be substantial and similar to those of Sudan or Chad. 

If indeed Kenya has substantial oil reserves, will they benefit the country in the long-term?

Some observers are predicting similar problems as in Nigeria, Equatorial Guinea and many other resource-rich African countries where corruption has been amplified.

Others argue that this need not be the case. Countries as diverse as Botswana, Chile and Norway have shown that natural resources can be a blessing. If managed well, they can even support the fight against poverty by providing the resources needed to scale up the delivery of public services. In the last ten years, many of the world’s fastest growing economies, including in Africa, have benefitted from exporting natural resources.

So who should we believe?

Why Kenya needs a world-class port in Mombasa

Submitted by Wolfgang Fengler on Wed, 2012-04-04 12:31

Suppose all of Kenya’s borders suddenly close. Goods and people can no longer enter or exit the country through the port of Mombasa, Jomo Kenyatta International Airport or roadways. Quickly the lack of fuel brings economic activity—and daily life— to a stand-still. Tea and flowers rot in warehouses, and hotels shut their doors for lack of visitors.

Now imagine a situation where Kenya is trading with the whole world, producing world class products and enriching its citizens: consumers can enjoy cheaper products, and exporters exploit expanded opportunities. Given the choice, which scenario would you pick? 

A more open Kenya is indeed possible. According to the “Growth Commission”, there have been some 15 economies over the last 50 years which managed to grow at the rate of 7 percent a year for more than 15 years. In doing so they were able to move vast numbers of their citizens out of poverty. These countries have a few things in common, including that they embraced the world economy through trade. Openness to trade encouraged international firms to invest. Over time, local firms caught up and eventually became world leaders, such as Samsung.

Can mobile phones be used to "bank" the poor?

Submitted by Gabriel Demombynes on Tue, 2012-04-03 07:11

The phenomenal success of Kenya’s M-PESA system, which allows people to store and transfer funds via electronic accounts that they access via mobile phones, has raised hopes that mobile money may provide a way for the poor to access basic banking services. In an earlier post, I presented findings from my recent working paper with Aaron Thegeya, showing that a remarkable 73% of Kenyan adults use mobile money, and nearly a quarter use it every day. 

We also show that savings with a simple M-PESA account is common, with 2/3 of M-PESA users reporting that they save in some form with M-PESA. We see some mild evidence that M-PESA may increase savings: controlling for various characteristics, those who are registered for M-PESA are 32 percent more likely to report some savings activity.

Why do people save with M-PESA when it doesn’t pay interest?  A possible explanation comes from an experimental study on health savings (not involving M-PESA).  

Kenya’s tourism – Still an unpolished diamond

Submitted by Wolfgang Fengler on Tue, 2012-03-20 14:50

When I first came to Kenya, in August 1990, I was a backpacker on a shoestring budget. At midcourse between Cape-town and Cairo, I got accommodation at the New Kenya Lodge in River Road for US$ 2.50. After spending two nights there, I continued to Garissa and Liboi, heading to Somalia.


In 1994, I returned with my wife, and in downtown Nairobi, urban chaos and poverty struck her so much, that she was reluctant to come back 15 years later, when I was offered a job.


Today, I enjoy the full beauty of Kenya with my family, and we all agree—my wife included!—that this is one of the most beautiful countries in the world. If you created an index of "natural beauty per square-kilometer" Kenya would probably come up on top of the list. Starting from Nairobi, within a few hours of driving, you enjoy the most amazing nature: the Masai Mara, Mt Kilimanjaro, Mt Kenya, and Lake Victoria, are all within reach. Nairobi is surprisingly pleasant, with one of the best climates in the world: it is one of the few cities where you neither need air-conditioning nor heating—all year long (well, it will soon get “cold” in July but the fireplace will help).

How to kick-start Kenya’s second growth engine

Submitted by Wolfgang Fengler on Mon, 2012-03-05 11:58

Last year, Kenya’s economy was behaving like a plane flying through a storm on one engine. After a lot of turbulence, especially when the shilling reached a record low against the dollar, the Central Bank intervened forcefully, and brought the plane back to stability.


But Kenya’s exchange rate woes are just the tip of the iceberg (see figure). Kenya’s big challenge is to reduce the gap between the import bill and exports revenues, what economists call the “current account deficit” (which remains large, even when services—such as tourism—are included). Last year, the deficit reached more than ten percent of GDP, approximately Ksh 400 billion (US$ 4.5 billion). This is larger than Greece’s.

The East African ride to Middle Income

Submitted by Wolfgang Fengler on Tue, 2012-02-21 12:29

You have embarked on a long train ride in Africa. The train is in bad shape, the ride is bumpy and breakdowns frequent. You wonder when you will arrive at destination or if you ever will. But after a tortuous first half of the trip, the train is starting to gain speed. There are still a number of unnecessary stops but the destination is now in sight and passengers are becoming upbeat. Just as the train is about to enter the station you are overtaken by three trains, which had been accelerating even faster.


This train could be Kenya in East Africa’s race to Middle Income. The country remains the richest in East Africa and with almost US$800 income per capita is the closest to meeting the international Middle Income threshold of US$1000.  But its EAC partners Rwanda, Uganda and Tanzania are catching up fast.

Creating a level playing field

Submitted by Wolfgang Fengler on Wed, 2012-02-08 15:41

Throughout the slums of this world, poor children are dreaming of becoming football stars and playing in the World Cup. Some of them from Kibera—Kenya’s largest slum—had a shot last weekend, when the International School of Kenya hosted the third “Mini World Cup”.


The event involved more than sixty teams made-up of Kenyan and international children from all walks of life. Two teams from Kibera made it to the top eight teams of the tournament, keeping their dream alive to win the “Cup” in one of the next years. The great thing about football is that all teams, no matter what their social background, have an equal opportunity to win. They start on a level playing field, and they all play by the same rules. When the final whistle blows, there is no reason why one of the teams from Kibera should not lift the Mini World Cup next time, just as Ghana’s Black Stars overcame Team USA in the 2010 World Cup, despite the huge disparity in wealth between the two nations.


In economic development, the equivalent of having a level playing field is equality of access to basic services.