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Africa

Across the universe of firms in Tanzania

Isis Gaddis's picture

Let's think together: Every Sunday the World Bank in Tanzania in collaboration with The Citizen wants to stimulate your thinking by sharing data from recent official surveys in Tanzania and ask you a few questions.
In industrial countries, small and medium firms are the vectors of economic innovation and job creation. In the USA, small-businesses account for almost two-thirds of all net new job creation. They also contribute disproportionately to innovation, generating 13 times as many patents, per employee, as large companies do. Small business owners are also in general more educated and wealthier than the rest of the active population.
The reality is different in Tanzania. The vast majority of firms are very small and predominantly confined to self-employment. They are also highly concentrated in agriculture and trading activities:

- In 2010/11, there were approximately 11 million family-owned businesses operating in Tanzania, including farms. This is equivalent to a rate of entrepreneurship of 40 percent, which is about the rate reported in Uganda and Ghana, but three and 10 times higher, respectively, than in the United States and France.
- Half of the firms operating in Tanzania have only one employee, typically the owner; while an additional 40 percent report less than five employees. Firms with more than 10 workers represent only 0.6 per cent of the firms’ universe (still almost 70,000).

Saving is the key to future growth for Kenya

Wolfgang Fengler's picture

How do countries and individuals become rich? Human history provides a clue. One of our most defining moments as a species took place some 10,000 years ago, when a group of humans started to switch from hunting and gathering food to growing it. This allowed them to settle down (in an area called Mesopotamia). If they produced more than they consumed, they could save for the future. With proper storage facilities, they no longer needed to eat and drink everything they had; instead they could put some aside literally for "rainy days", and, even more importantly, invest some of the agricultural output to produce even more.

Now zoom forward several thousand years: saving has become central to individual and collective prosperity. As a rule of thumb those who save more become wealthier because foregoing consumption today allows one to invest in the future (e.g. you can save to buy a bicycle, a car, or a house). Businesses can invest in new equipment and governments in new roads, schools and health facilities. All of these investments are associated with better economic futures.

People and companies tend to save and invest if they can trust the institutions that manage their money and the economy at large. In the past, it was not always safe to keep deposits at banks in many African countries. It is different today. In fact some may feel more secure entrusting their savings to African banks than those in Europe (as depositors in Cyprus’ banks recently realized). But you need more than robust and credible banks for increasing savings and investments. Investors will only enter and stay in large numbers if they can trust that the state won’t change the rules of the game in mid-course.

Poor but happy?

Tom Bundervoet's picture

A common belief in rich countries is that people in Africa are poor but happy. This image is time and again confirmed by popular reality shows on Western television, in which the rich-and-famous visit little-known tribes in the most remote villages of rural Africa, only to concede, in front of a dozen cameras, that despite all their hardship, the people they visited really seemed happier than the average burnt-out desk-warrior in their home countries.

Are the poor in Africa really happier? In recent years economists started focusing on happiness and its measurement, a field long considered too trivial to pay much attention to. Recent research on the topic gives conflicting, and sometimes surprising, results. In 2012, an Ipsos poll measuring the degree of happiness in 24 countries found that self-reported levels of happiness were higher in poor and middle-income countries than in rich ones, seemingly confirming popular beliefs.  In contrast, the first World Happiness Report, also published in 2012, finds that the rich countries in Scandinavia are the happiest on earth, while four poor Sub-Saharan African countries are at the bottom of the list. The Gross National Happiness (GNH) index, pioneered by the Kingdom of Bhutan, comes up with a number of surprises of its own: the GNH is highest among the young and the unemployed (and also-perhaps less surprising-among the unmarried), which seems at odds with today’s television images of the streets of Madrid and Athens.

I was there when the Republic of South Sudan was born!

Obiageli Ezekwesili's picture


Obiageli Ezekwesili (c) with South Sudan President Salva Kiir (r). Photo: Laura Kullenberg, The World Bank

4:00 AM: I wake up this morning in Nairobi unusually excited and think to myself, “today is actually the Independence Day of South Sudan. Wow! This day has finally come!” I say a word of prayer for the day and get myself ready for the 5:30 a.m. trip to the airport to board our flight to Juba.

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