Despite Africa’s great diversity of cultures and climates, countries on the continent often speak the same language when it comes to tackling common development challenges. Senegal and Uganda recently did just that, teaming up to exchange best practices to boost agricultural productivity and employment on both sides of the continent.
I witnessed this knowledge exchange firsthand as I accompanied a Ugandan delegation led by Hon. Maria Kiwanuka, Uganda’s minister of finance, planning, and economic development, on its visit to Senegal. Their core mission was to seek out innovative ways to boost economic growth and create job opportunities for the country’s burgeoning youth, a challenge faced by Uganda and Senegal alike. As both countries continue to experience an increase in urbanization and population growth, and currently have economies that are predominantly based on agriculture, one common answer to this rising challenge is the enhancement of agricultural productivity and the development of agricultural value chains.
Is bigger always better? Economists have long debated what size firms are more likely to drive business expansion and job creation. In industrial countries like the United States, small (young) firms contribute up to two-thirds of all net job creation and account for a predominant share of innovation. (Source: McKinsey, Restarting the US small-business growth engine, November 2012). In developing countries, evidence from Ethiopia, Ghana and Madagascar shows that the vast majority of small operators remain small, and so are unlikely to create many decent jobs over time [Source: World Bank, Youth Employment, 2014]. By contrast, ‘big’ enterprises are seen as the best providers of employment opportunities and new technologies.
The difference in role and performance of small firms in developing and industrial countries reflects to a large extent their owners’ characteristics. In the US, small firm owners are generally more educated and wealthier than the average worker, while the opposite is true in most developing countries. This point was emphasized by E. Duflo and A. Banerjee in their famous book ‘Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty’ (Penguin, 2011). Most business owners in developing countries are considered to be ‘reluctant’ entrepreneurs; essentially unskilled workers that are pushed into entrepreneurship for lack of other feasible options for employment.
This is also very much a reality in Tanzania where small business owners have few skills and limited financial and physical assets. Of the three million non-farm businesses operating in the country, almost 90% of business owners are confined in self-employment. Only 3% of business owners possess post-secondary level education. As a result, their businesses are generally small, informal, unspecialized, young and unproductive. They also tend to be extremely fragile with high exit rates, and operate sporadically during the year. Put simply, most small businesses are not well equipped to expand and become competitive.
Photo Credit: @Gates Foundation. A girl plays with a bicycle tire in the slum of Korogocho, one of the largest slum neighborhoods of Nairobi, Kenya
This is an impressive decrease from 58% in 1999, but at the same time there is a general sense that progress has been too slow. Africa is rising, with GDP growth rates upwards of 6% between 2003 and 2013 (if one excludes richer and less dynamic South Africa) but the poor’s living standards are not rising as fast as GDP.
Une petite fille joue avec un pneu de bicyclette dans le bidonville de Korogocho,à Nairobi au Kenya @Fondation Gates
Bien que l’Afrique subsaharienne connaisse une croissance économique soutenue depuis près de deux décennies, l’extrême pauvreté continue d’y sévir : environ un Africain sur deux (49 % selon nos estimations les plus fiables) vivait avec moins de 1,25 dollar par jour en 2010 (aux prix de 2005). Certes, c’est neuf points de moins qu’en 1999 mais, en dépit de ce recul exceptionnel, le sentiment général est celui de progrès bien trop lents. Si l’essor de l’Afrique est réel, avec des taux de croissance du PIB de plus de 6 % entre 2003 et 2013 (en exceptant l’Afrique du Sud, plus riche et moins dynamique que les autres pays de la région), le niveau de vie des populations les plus démunies ne croît pas aussi vite que le PIB…
The expansion of household surveys in Africa can now show us the number of poor people in most countries in the region. This data is a powerful tool for understanding the challenges of poverty reduction. Due to the costs and complexity of these surveys, the data usually does not show us estimates of poverty at “local” levels. That is, they provide limited sub-national poverty estimates.
For example, maybe we can measure district or regional poverty in Malawi and Tanzania from the surveys, but what is more challenging is estimating poverty across areas within the districts or regions (known as “traditional authorities” in Malawi and “wards” in Tanzania).
To address this shortfall, several years ago a research team from the World Bank developed a technique for combining household surveys with population census data, and poverty maps were born. Poverty maps can be used to help governments and development partners not only monitor progress, but also plan how resources are allocated. These maps depend on having access to census data that is somewhat close in time to the household survey data. But what if there is no recent census (they are usually done every 10 years) or the census data cannot be obtained? (I will resist naming and shaming any specific country): we are left with no map. Can we fill in the knowledge gaps in our maps?
Travelling across Africa these days you are likely to run into increasing numbers of mining, oil, and gas industry personnel engaged in exploration, drilling, and extraction across the continent. Although commodity prices are moderating, the discoveries being made in Africa offer the real prospect of significant revenue to many cash-poor, aid-dependent governments in the decade ahead. If you care about development, the question is whether these revenues will catalyze broad economic development and whether they will benefit the poor in Africa.
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.
In a recent interview on the Canadian Broadcasting Corporation, I reacted to statements by Patrick Bond on Africa’s export of raw materials and on structural adjustment policies. I said that the problem with natural resources was not that Africa exports them, but that many African governments have not used the revenues from these resources productively. On structural adjustment, I said that policies followed by the better-performing African countries over the last 15 years were quite similar to