An article in yesterday’s New York Times observes that, with the number of mobile subscriptions exceeding five billion, more people today have access to a cell phone than to a clean toilet. Leaving aside the relative value of these two appliances, the surge in cell phones in Africa—some 94 percent of urban Africans are near a GSM signal—is transforming the continent. Farmers in Niger use cell phones to find out which market is giving the best price; people in Kenya pay their bills and send money home using M-Pesa.
From the Africa Progress Panel’s latest bulletin:
At the [Pan Africa Media Summit], Uganda's Minister for Information and National Guidance, Kabakumba Labwoni Masiko, was asked a question about Uganda's proposed media regulations and the moderator did not let the Minister take the question and ensured the session stayed on topic. The discussion immediately shifted online as attendees began to tweet about the incident.
It’s clear that Africans are increasingly using social media as an accountability tool.
Since beginning its transition 30 years ago, China’s economic development has been miraculous.
The average annual growth rate of GDP reached 9.8 percent, far exceeding the expectations of most people in the 1980s or even early 1990s, including Deng Xiaoping who initiated the reforms. Deng’s goal was to quadruple China’s economy in twenty years, implying an average annual growth rate of 7.2 percent per year.
In 1979, China was inward-looking and its trade as a percentage GDP was only 9.5 percent. Now China is the world’s largest exporter and the third largest importer, with trade contributing around 70 percent of GDP. Over 30 years, more than 600 million people got out of poverty.
China’s miracle raises the following five questions.
Consider the following description of a trucker’s journey in Cameroon: “The plan was to carry 1,600 crates of Guinness and other drinks from the factory in Douala where they were brewed to Bertoua. According to a rather optimistic schedule, it should have taken 20 hours, including an overnight rest. It took four days. When the truck arrived, it was carrying only two-thirds of its original load.”
And this is how a Tanzanian exporter explains why few firms stay in the exporting business: “They discover that it is a miserable experience. Having gone to the effort of getting an export order they then spend weeks pounding through bureaucracy, endlessly waiting in dirty government corridors trying to find a morose civil servant prepared to do his job.”
How do these costs affect Africa’s trade?
During my recent seminar in Geneva, where I was also meeting with the Africa Progress Panel, a couple of members of the audience (which consisted of ambassadors, U.N. staff, civil society and academics) said, “I liked your analysis, but not your conclusions.”
The seminar summarized many of the points I have been making on this blog:
- For the decade before 2008, Africa was experiencing sustained and widespread economic growth, thanks to aid, debt relief, private capital flows, high primary commodity prices, and improved macroeconomic policies
- Despite being the least integrated region, Africa was perhaps the worst hit by the global crisis
- Contrary to some people’s fears, African governments continued to pursue prudent economic policies during the crisis—even though the visible payoffs to these policies (growth and poverty reduction) had suddenly diminished
- Conclusion: Economic policy in Africa, which had been improving before the crisis, and either stayed on course or improved during the crisis, has never been better.
Since my conclusion followed directly from the analysis, I had three possible explanations for the reaction mentioned above:
A new paper by David Yanagizawa finds tragically large effects of access to radio on violence in Rwanda, concluding that “hate radio” may explain as much as 9 percent of the genocide.
Despite being pummeled by the global crisis--diamond production and exports contracted by 50 percent in 2009--Botswana was in the enviable position of being able to cushion its people and the economy, thanks to large savings accumulated over the years and access to inexpensive financing.
But it may have overdone the cushioning. The fiscal deficit for the 2009/10 budget year is projected at 14 percent of GDP.
Although diamond prices are expected to rebound, production and exports will remain below pre-crisis levels, and another double-digit deficit is expected in 2010/11. Not even Botswana can maintain double-digit deficits for long without jeopardizing its fiscal sustainability, especially given the specter of a rapid fall in diamond production--and eventual depletion of known reserves--in a few decades.
At the same time, cutting spending is particularly painful in a country like Botswana where government expenditures are pivotal to economic activity and to sustaining non-mining private sector.
Some tough choices ahead for one of Africa's best-managed economies.
One of the reasons why schoolchildren in low-income countries, despite being in school most of the time, seem to be learning very little is that the teacher is often not there. In Uganda, for instance, the teacher absence rate in public primary schools was estimated at 27 percent.
Throughout the developing world, productive-employment-intensive growth remains a challenge. In Africa, it is almost a crisis, with most of the labor force working in low-productivity, informal-sector jobs, and 7-10 million young people entering the labor force every year. That the unemployment rate in South Africa—the continent’s largest economy—has remained around 25 percent is particularly troubling.
For the World Bank's internal website, I was asked to list the three most important developments of the past decade. To elicit a broader discussion, I am sharing it on this blog. In a subsequent post, I will list the three most important challenges and opportunities for the coming decade. One or two of my items are also reflected in Bono's excellent piece in yesterday's New York Times, "Ten for the Next Ten." Here are my top three: