Growth and Employment: Visions at Work

Progress Report of the Africa Commission July 2010 Chairman Members of the of the Africa Commission Africa Commission

Mr. Lars Løkke Rasmussen H.E. Jakaya Mrisho Kikwete (Tanzania) Dr. Luísa Dias Diogo (Denmark) President of the United Republic of Tanzania (Mozambique) Prime Minister of Denmark, Member of Parliament since 1988, also serving as Member of Parliament for FRELIMO. Chairman of the Africa Commission Deputy Minister for Energy and Minerals 1988-1990; Ms. Diogo served as the first female Minister of Water, Energy and Minerals 1990-1994; Leader of the Liberal Party (Venstre). Prime Minister of the Republic of Minister for Finance 1994-1995 and Minister of Foreign Mr. Løkke Rasmussen has also served as Mozambique 2004-2010. Prior to her Affairs and International Cooperation 1995-2005. Minister of Finance and Minister for the nomination as Prime Minister Ms. Diogo In 2008 he was the Chairman of the African Union. Interior and Health. had served as Minister of Planning and Finance (1994-2005).

Dr. Mohamed Ibn Chambas (Ghana) Mr. Lauritz B. Holm-Nielsen (Denmark) Dr. Mo Ibrahim (Sudan) Secretary-General of the ACP Group Rector at Aarhus University Founder of Celtel and member of the of States, Brussels Prior to this Mr. Holm-Nielsen served as Lead board of the Mo Ibrahim Foundation Up to 2010 President of the Economic Com- Higher Education Specialist for the World Bank. In Dr. Ibrahim is also Founding Chairman of munity of West African States ECOWAS. his earlier career Mr. Holm-Nielsen was Rector of Satya Capital Ltd. Also served as Member of Parliament and the Danish Research Academy and Chairman of the Deputy Foreign Minister and Deputy Nordic Academy for Advanced Study. Minister of Education in charge of Tertiary Education in Ghana.

Dr. Asha-Rose Migiro Dr. Greg Mills (South Africa) Dr. Ngozi Okonjo-Iweala (Nigeria) (Tanzania) Director of the Brenthurst Foundation Managing Director of the World Bank Deputy Secretary-General of the Prior to this Dr. Mills was National Director of the Has served as Nigerian Minister of Finance United Nations South African Institute of International Affairs (SAIIA). and Minister for Foreign Affairs. Prior to Has also served as Minister of Foreign A council member of RUSI, during 2008 he was this Ms. Okonjo-Iweala was Vice-President Affairs and International Cooperation and seconded as strategic adviser to President Kagame of and Corporate Secretary of the World Bank as Minister for Community Development, Rwanda. He has also taught at a number of Group. Gender and Children in Tanzania. institutions including the Universities of the Western Cape and Cape Town. Dr. Christian Friis Bach (Denmark) Mr. Klaus Aagaard Bustrup Mr. Robert Calderisi (Canada) International Director of DanChurchAid (Denmark) Economic consultant and writer until 1st July 2010 Chairman of the Board of Danida Has served at the World Bank as Country Dr. Friis Bach is Affiliated Professor at the Member of the Danish Board for Director for Central Africa, World Bank University of Copenhagen and has also International Development Cooperation Spokesman for Africa, Manager in the worked as an independent adviser, author since 1990 and Chairman since 2008. Mr. Institutional Change and Strategy and lecturer and served as Associate Bustrup previously held the position as Department and as Chief of the World Bank Professor of International and Development CEO of the Danish Council for Agriculture. Regional Mission in Western Africa. Economics at the Royal Veterinary and Agricultural University.

Dr. Donald Kaberuka (Rwanda) Ambassador Ellen Margrethe Løj Ms. Betty Maina (Kenya) President of the African (Denmark) Executive Director of the Kenya Development Bank Special Representative of the Association of Manufacturers Dr. Donald Kaberuka is the 7th President of Secretary General of the UN in Liberia Prior to this Ms. Maina held the position as the African Development Bank. He served Has also been Ambassador and Permanent Chief Executive of the Institute of Economic as Rwanda’s Finance and Economic Representative of Denmark to the United Affairs. Ms. Maina has also worked as a Planning Minister from 1997 to 2005. Nations and Representative of Denmark on consultant for the World Bank and the the Security Council. United Nations.

Mr. Søren Pind (Denmark) H.E. Jean Ping (Gabon) Ambassador Koen Vervaeke Danish Minister for Development Chairperson of the Commission of (Belgium) Cooperation the African Union European Union Special Represen- Member of the Danish Parliament since Has served as Minister for Foreign Affairs, tative and Head of the European 2005. Has served as Mayor with Cooperation and la Francophonie of the Commission Delegation to the AU responsibility for building and technology Gabonese Republic and as Minister of During his diplomatic career Mr. Vervaeke administration in the City of Copenhagen, Planning, Environment and Tourism. has held a wide range of positions within 1998-2006. the Belgian Ministry of Foreign Affairs. About the Africa Commission

The Africa Commission was launched by the Prime During 2008 and 2009, the Africa Commission held Minister of Denmark in 2008 to help Africa benefit three summits and organised five thematic confe­ more from globalisation. The Commission consisted rences and a number of workshops in Africa, gather- of Heads of State and Government, politicians, ex- ing stakeholders from across the continent, repre- perts, representatives from international and regional senting civil society, youth, governments, regional organisations as well as the business community, and international organisations, universities and re- civil society and the academic world. The majority of search institutions as well as the private business the Commissioners were from Africa, reflecting the sector. Commission’s overriding commitment to ensure Afri- can ownership of its recommendations and initia- In Copenhagen on May 6 2009 the Africa Commission tives. presented its final report entitledRealising the Poten- tial of Africa’s Youth and containing a number of rec- The Commission addressed ways to create employ- ommendations and initiatives. The Commission has ment for young people through private sector-led held no further formal meetings but continues to growth and improved competitiveness of African function as a network with its individual members economies. There was special emphasis on creating promoting the views of the Africa Commission and decent jobs, fostering entrepreneurship, and provi­ contributing to the international development de- ding greater opportunities for young African women bate. The Commission Secretariat works to imple- and men through education, skills development and ment the recommendations and initiatives of the access to finance. Drawing on existing analyses and Commission. best practices, the Commission’s aim was to make specific policy recommendations and devise concrete initiatives. Growth and Employment: Visions at Work

Progress Report of the Africa Commission July 2010 4 Addressing Africa’s Priority Challenges

6 Growth and Employment: Visions at Work · Progress Report of the Africa Commission

Contents Foreword by Prime Minister Lars Løkke Rasmussen 4 Foreword by President Jakaya Kikwete 5 Introduction 6 1 The Africa Commission. Progress Report 2010 10 How it all began 12 Refocusing the international development agenda 14 The Five Initiatives – Work in Progress 17 2 Views and visions. Key-note articles 28 The Cheetah Generation: Challenges and Opportunities for Africa’s Young Women and Men, by Søren Pind, Minister for Development Cooperation of Denmark 30 Turning a Crisis into Opportunity: Towards a Private Sector Development Agenda for Africa, by Donald Kaberuka, President of the African Development Bank 33 Repositioning Africa as the Fifth BRIC: A Destination for Investment, not just Aid, by Ngozi Okonjo-Iweala, Managing Director, World Bank 37 Integration in Africa. The Quest for Continental Growth and Employment, by Jean Ping, Chairperson of the African Union Commission 40 African Competitiveness 2010: The State of Affairs, by Jennifer Blanke, Senior Economist, World Economic Forum 44 Africa and the MDGs: Assessing Progress Made so Far, by Abdoulie Janneh, United Nations Undersecretary General and Executive Secretary of the Economic Commission for Africa 48 3 Best Practices and Lessons Learnt 52 Networking for Youth Employment, by the Youth Employment Network 54 A new Green Deal for Africa: Renewable Energy and Green Development, by the African Development Bank 56 Training for Rural Economic Empowerment, by the International Labour Organisation 58 Support for Financial Services in Tanzania – Some Lessons Learnt, by the Ministry of Foreign Affairs of Denmark 60 Agricultural Research and Private Business Development – Making Ends Meet, by the Forum For Agricultural Research in Africa 62 Abbreviations 64 Contacts and Photo credits 7 Forewords

Foreword by Prime Minister Lars Løkke Rasmussen

I am happy to present the Africa Commis- present a progress report in 2010 on the im- sion’s Progress Report. plementation of the Commission’s recom- mendations as an input to both the global Last year the Africa Commission made a bold debate on the status of the 2015 MDGs and contribution to refocusing the international the High Level MDG Meeting. development agenda, in particular where Af- rica is concerned. In May 2009 the Commis- We have listened to our African fellow mem- sion launched its final report: Realising the bers of the Commission and to the multitude Potential of Africa’s Youth. The report pre- of politicians, private sector representatives, sented the analytical work undertaken or members of the civil society and not least the commissioned by the Africa Commission and young people from all over the African conti- its distinguished members as well as the re­ nent. Hence, Africa receives increased atten- commendations and initiatives of the Com- tion in the Danish Government’s new Devel- mission. Our vision was to suggest ways and opment Strategy 2010. As one part of our means for African nations to tap the great re- revised strategic focus, we have decided to serves of energy vested with their huge young double Denmark’s annual support to private generations for the benefit of the develop- sector development in Africa by 2014. ment of the Continent. The instrument was Lars Løkke Rasmussen, youth employment through private sector led The Commission noted after its last meeting Prime Minister of Denmark, economic growth. in Copenhagen in May 2009 that ‘the work we Chairman of the Africa Commission have initiated does not end with today’s The Africa Commission launched a number of meeting. The success of our Commission will recommendations and five concrete interna- ultimately be judged by our ability to imple- tional initiatives to be implemented in African ment our recommendations and provide op- countries in cooperation with African govern- portunities for Africa’s youth, women and ments and institutions, international organi- businesses to prosper’. Consequently, the Af- sations and bilateral donors. Denmark under- rica Commission has not been dissolved but took to provide funding for the initial continues as a virtual body, striving for the im­plementation of the initiatives. We did this fulfilment of its innovative visions. I wish to with the clear expectation that other partners express my appreciation to the members for would join in the continent-wide roll-out of their continued interest and efforts for the the initiatives. I take this opportunity to re- promotion and realisation of the Africa Com- new the invitation to bilateral and multilateral mission recommendations. I take this opportunity to renew partners and donors to join in Africa’s effort to the invitation to bilateral and realise the potential of its youth. multilateral partners and donors to join in Africa’s effort to realise We presented clear recommendations to in- the potential of its youth fluence the international development agen- da for Africa and notably the MDG High Level Lars Løkke Rasmussen, Meeting in New York in September 2010. In 8 Prime Minister of Denmark that respect, the Commission undertook to Copenhagen, July 2010 Growth and Employment: Visions at Work · Progress Report of the Africa Commission

Foreword by President Jakaya Mrisho Kikwete

In May last year the Africa Commission launched Africa has the fastest-growing and most youth- by the Prime Minister of Denmark presented its ful population in the world. Over 20 percent of report. I was happy to serve on the Commission Africa’s population is between the ages of 15 and to partake in its recommendations. Tremen- and 24. And, for over 30 years, 45 percent of the dous work was done by the commissioners and population in most African Countries has been the many, not least African, stakeholders below the age of 15. As a result, the number of throughout the process. As a result we came up young people entering the labour market has with very pertinent observations, recommenda- constantly risen while job opportunities have tions and initiatives which I fully support. I not been expanding as fast. This has made strongly believe that the proposals made by the youth unemployment a daunting challenge in Commission, if implemented, will go a long way Africa. The work of the Africa Commission gives towards addressing the youth unemployment hope in this regard. The five initiatives of the problem on the African Continent. Commission form a strong basis of addressing the problem of youth unemployment on the Afri- In my speech during the general debate of the can continent and the prospects of sustainable UN General Assembly last year, I raised the growth, peace and stability. One year since we problem of youth unemployment in Africa and launched the Report, much has been done by its negative consequences for the African conti- both African stakeholders and international nent for discussion and action. I commended partners in implementing the Commission’s rec- Jakaya Mrisho Kikwete, the Danish Government for showing the way by ommendations. Knowing that strong partner- President of the United Republic of Tanzania, forming the Africa Commission to address the ship will help us make a difference, I commend Member of the Africa Commission youth unemployment challenge in Africa.I made all the stakeholders. a request for the General Assembly to receive a presentation of the findings and recommenda- Year 2010 will see the UN high level meeting on tions of the Africa Commission. I am glad to note the status of the achievements towards the Mil- that this presentation was brought about at a lennium Development Goals. We know that special event at the UN Headquarters in New many African countries will have difficulties in York in November last year under the presence reaching all of the ambitious goals, not least of the UN Secretary General, Mr. Ban Ki-Moon, against the backdrop of the international eco- several members of the Africa Commission and nomic crisis. I submit that the realization of the representatives from UN member States. Africa Commission recommendations in a sus- I contend that we in Africa and tained effort by Africa itself, by African institu- our friends in the international In my intervention to the special event I reiter- tions, by multilateral organisations and bilateral community should take youth ated the importance of Africa’s development development partners will be an important in- employment as one of the biggest partners dedicating efforts towards enhancing strument in Africa’s success in reaching the challenges but also one of the youth employment in Africa. I repeat that impor- MDGs by 2015. biggest opportunities of our time tant aspect. I contend that we in Africa and our on the African Continent friends in the international community should take youth employment as one of the biggest Jakaya Mrisho Kikwete, challenges but also one of the biggest opportu- President of the United Republic nities of our time on the African Continent. Dar es Salaam, July 2010 of Tanzania 9 Introduction

10 Growth and Employment: Visions at Work · Progress Report of the Africa Commission

11 Introduction

Introduction

At its third meeting in Copenhagen on 6 May 2009, the Africa Commission presented its fi- nal report ‘Realising the Potential of Africa’s Youth’ and, in conjunction with this, issued its

Realising the Potential of Africa’s Youth ‘Copenhagen Statement’. At the meeting, the 18 Commissioners agreed to promote refo- Realising the Potential of Africa’s Youth cusing the agenda for international develop- The Africa Commission’s Five ment cooperation with Africa towards the Report of the Africa Commission About the Africa Commission International Initiatives May 2009 creation of decent jobs for the growing Afri- Report Commission of the Africa May 2009

1 Benchmarking African Competitiveness be offered through existing local providers, like business associa- The Africa Commission was launched by the Prime gen, Denmark on 16 April 2008; the second in Addis The Africa Commission, in partnership with the World Economic tions, youth-led organisations, private consultancies and training Minister of Denmark in 2008 to help Africa benefit Ababa, Ethiopia on 20 November 2008; and the third providers, or public agencies. can youth population. Forum and the African Union, will ensure coverage of a significant and increasing number of African countries in the World Economic more from globalisation. The Commission consisted and concluding summit occurred in Copenhagen on Forum’s Global Competitiveness Index, and encourage policy 4 Access to Sustainable Energy of Heads of State and governments, politicians, ex- 6 May 2009. impact through measures to engage business and government Together with the African Development Bank the Africa Com- perts, representatives from international and regional leaders in a results-based dialogue on the required reforms. mission will address the African energy deficit. The initiative organisations as well as the business community, civil Between these summits, various stakeholders con- will stimulate and expand the emerging market for sustainable society and the academic world. The majority of the tributed with numerous recommendations and pro- 2 Access to investment finance for small and energy, primarily in rural areas, by strengthening the role of small Commissioners were from Africa, which reflected the vided significant input to the work of the Commis- medium-sized enterprises (SMEs) and medium-sized enterprises in delivery and productive use of energy from local and renewable energy sources. It will build Commission’s overriding commitment to ensure Afri- sion. During 2008, the Commission organised five The Africa Commission will develop an African Guarantee Fund CO2-neutral product Published by: With the Copenhagen Statement the Commis- upon positive experiences with decentralised energy systems in can ownership of its recommendations and initiatives. thematic conferences in African capitals, gathering in partnership with the African Development Bank to foster the The environmental impact of CO from producing this Secretariat of the Africa Commission Africa and contribute to the Africa-EU Energy Partnership. 2 stakeholders from across the continent, representing growth of financial resources available for the investment needs printed matter has been neutralised by buying CO Ministry of Foreign Affairs of Denmark of small and medium-sized enterprises and for capacity develop- 2 The Commission addressed ways to create employ- civil society, governments, regional and international quotas from Climate Friendly via the WWF. Asiatisk Plads 2 ment of financial institutions. Furthermore, the Commission will 5 Promoting Post-Primary Education and Research ment for young people through private sector-led organisations, universities and research institutions The Africa Commission will launch an initiative along two tracks. DK-1448 Copenhagen K sion also decided on the next steps: launch a complementary facility for enterprises to improve their growth and improved competitiveness of African econ- as well as the private sector. In the spring of 2009, The first track will promote innovative ways to expand technical business management and technical skills in order to gain access This report was printed by an ISO 14001 eco-certified and www.africacommission.um.dk and vocational skills development, focusing on out-of-school omies. Special emphasis was given to create decent three workshops involving high-level stakeholders to investment finance. EMAS-registered printing firm. youth by upgrading existing apprenticeships and developing jobs, foster entrepreneurship, and provide greater op- worked to refine the proposals agreed upon by the Design & Production: demand-driven technical and vocational training in under-served portunities for young African women and men through Commission in Addis Ababa. Furthermore, the Com- 3 Unleashing African Entrepreneurship rural communities. The second track links university educa- Datagraf education, skills development and access to finance. mission convened a youth forum and an African Youth The Africa Commission will together with the International Labour tion, research and private sector development in sustainable Organisation develop packages of assistance to young existing Drawing on existing analyses and best practices, the Panel, which enabled visionary young people from all agriculture and agro-business to increase the business skills of ISBN: and would-be entrepreneurs, complementing entrepreneurship graduates and promote innovation with a special focus on value Commission’s aim was to make specific policy recom- over the continent to present their candid views and ISBN 978-87-7087-153-2 training with advisory services, mentorship, and access to finance chains. This track will be implemented in partnership with the mendations and devise concrete initiatives. innovative proposals to improve the lives of African for both rural and urban entrepreneurs. In order to strengthen the African Union Commission through its agreement with the Forum youth. Substantial input was also provided by net- sustainability of this initiative, all enterprise support services will for Agricultural Research in Africa. May 2009 Over the course of its work, the Africa Commission works of trade unions and business associations in held three summits: The first took place in Copenha- Africa, representing workers and the private sector. »

73222_AC_Omslag.indd 1 01/05/09 12:10:00

• Working towards anchoring the monitoring The work we have initiated does not and evaluation of our initiatives within the end with today’s meeting. The suc- joint secretariat of the African Union Com- cess of our Commission will ultimately be mission, the African Development Bank judged by our ability to implement our recom- and the UN Economic Commission for Afri- mendations and provide opportunities for Afri- ca, based in Addis Ababa. ca’s youth, women and businesses to prosper.

• Promoting our agenda within the frame- We have therefore agreed that we will actively work of the EU Africa Strategy, and by of- engage with national and international part- fering our five initiatives as concrete and ners in the public and private domain as well implementable activities within the indi- as youth organisations in Africa to promote vidual Partnerships of the Strategy. The Africa Commission our refocused agenda for international devel- opment cooperation with Africa and our five report, entitled Realising concrete initiatives. This process will include: By adopting the Copenhagen Statement we the Potential of commit ourselves to promoting this refo- Africa’s Youth, and the • Working towards recognition by the 2010 cused agenda for international development Copenhagen Statement UN MDG review conference that strong cooperation with Africa and our five initia- can be found on growth, productive employment, decent tives. work and scaled up and predictable aid are the Commission’s required in order to achieve the Millennium website at www. Development Goals. 12 africacommission.um.dk. Growth and Employment: Visions at Work · Progress Report of the Africa Commission

The Africa Commission here presents its pro­ cern to Africa and the Africa Commission, gress report. while Part 3 is dedicated to shorter articles sharing some relevant experience and les- This Progress Report presents in Part 1 pro­ sons learnt. gress in the implementation of the Africa Commission’s recommendations and five ini- The members of the Africa Commission are tiatives by mid-2010. The Africa Commission presented on the inside of the front cover has made a significant contribution to the on- sleeve of this Report, while all the 2009 re­ going international debate on the need for commendations of the Commission are reca- private sector development and the creation pitulated on the inside of the back cover of decent employment in Africa. Work on the sleeve. implementation of the Commission’s initia- tives is well under way with the organisations selected by the Africa Commission.

In Part 2, the report lends space to a number of key-note articles by commissioners and other prominent persons on matters of con- 13 The1 Africa Commission

Progress Report 2010

14 Growth and Employment: Visions at Work · Progress Report of the Africa Commission

15 1 The Africa Commission · Progress Report 2010

How It All Began

The Africa Commission was established in The Commission’s mandate was ambitious and April 2008 when the Danish Prime Minister the agenda visionary. The Africa Commis- gathered 18 high profile Commissioners, pre- sion’s aim was to inspire and influence the dominantly from Africa, in Copenhagen for international development agenda vis-à-vis Af- the first of three Africa Commission summits. rica with a view to Africa benefitting more from The Commissioners did not work in a vacuum. globalisation. However, while seeking influ- By 2025, one in In between the summit meetings of the Com- ence and maintaining an ambitious agenda, mission there was a flurry of activities: five at no time did the Commission seek to rein- every four young thematic conferences were held in Africa fo- vent the development wheel. The Commis- cusing on Africa’s youth and women, their em- sion’s work remained firmly nested in existing people worldwide ployment opportunities and their potentials knowledge and sought to expand on ideas as drivers of economic growth and employ- that have worked. will be from ment creation in Africa. Apart from the the- matic conferences a number of workshops, “Realising the Potential of Africa’s Youth”, the Sub-Saharan meetings and forums were held and more report of the Africa Commission, was presented than 1,000 stakeholders representing the pri- to the public on 6 May 2009 at the third and fi- African vate sector, trade unions, civil society, govern- nal meeting of the Commission in Copenhagen. Source: World Bank: World Development ments, and research institutions were con- The report marked the conclusion of more than 16 Report 2007 sulted. a year’s dedicated efforts by the Commission Growth and Employment: Visions at Work · Progress Report of the Africa Commission

with a view to inspiring new efforts towards countries are diverse and the Africa Commis- growth and employment – and, above all, carv- sion recognized that there cannot be one uni- ing out a brighter future for Africa’s youth. form solution for all. It proposed specific ac- tionable initiatives to address the need for The Commission’s message is positive – Afri- greater growth that creates jobs as a neces- ca’s resources are not merely buried under- sary condition for sustainable development, ground. The Africa Commission places em- reducing poverty and achieving the MDGs. phasis on the tremendous resources embed- ded in Africa’s private sector, in its women The Africa Commission report launched a and in its young people. The Africa Commis- number of policy recommendations and five sion focuses on bringing these resources concrete international initiatives to be imple- more fully into play for sustainable and inclu- mented as soon as possible: African Competi- sive development in Africa and for the tiveness, Investment Finance in Africa, Young achievement of the MDGs on the continent. African Entrepreneurs, Sustainable Energy and Post-Primary Education and Research. The Commission did not claim to address all the challenges of Africa. Rather, it highlighted The recommendations of the Africa Commis- priority areas which require urgent action if sion are listed on the inside sleeve of the Africa is to achieve its full potential. African back cover of this report. 17 1 The Africa Commission · Progress Report 2010

Refocusing the international development agenda

The most central recommendation of the Africa Notably, the President of Tanzania, H. E. Jakaya Commission regards the need to influence the Kikwete, took the initiative in the 64th UN international development agenda for Africa General Assembly to i.a. thank Denmark for towards increased focus on private sector led taking the initiative to establish and realise the economic growth and the creation of decent Africa Commission in an inclusive process and jobs for the growing youth population as pre- urged the UN General Assembly to take note of requisites for finding sustainable solutions to its report and recommendations. Africa’s challenges, which in the long term can reduce Africa’s dependence on donor aid. Based on this call, Denmark sponsored an event in New York in November 2009 present- At its concluding meeting in May 2009, the Af- ing the Africa Commission’s recommenda- rica Commission agreed to continue promoting tions to the UN delegates. In the event par- this refocused development agenda beyond its ticipated, among others, UN Secretary final meeting. Indeed, the success of the Com- General Ban Ki-moon, President Kikwete, the mission should ultimately be judged by the Danish Minister for Development Coopera- ability to implement its recommendations and tion and the President of the African Develop- provide opportunities for Africa’s youth, wom- ment Bank, Dr. Kaberuka. The UN Secretary en and businesses to prosper. Members of the General in his intervention emphasised job Commission therefore agreed that they would creation in Africa as one of his main priorities engage actively with African and international towards achieving the MDGs and reiterated partners to promote the refocused agenda for that the UN would continue to be an active international development cooperation with partner in this effort. Africa, including its five concrete initiatives. The cross-cutting theme in the ensuing de- Consequently the last year has seen a number bate was the close connection between pri- of events in Africa and at the global scene with vate sector led broad based and inclusive a direct bearing on the agenda promoted by the growth, job creation and the achievement of Africa Commission, where Commission mem- the MDGs. Several interventions noted that bers, individually or together, have been using the Africa Commission recommendations existing platforms or creating new opportuni- constitute an important and timely input to I call on Africa’s leaders to show ties to attract the attention of the international the debate on the achievement of the MDGs the bold leadership required community to this agenda. Overall, the Africa in the wake of the 2010 UN MDG review meet- to intensify the fight against Commission has contributed significantly to ing with their emphasis on private sector led poverty. And I urge the donor the ongoing international debate, in particular growth, job creation, focus on young entre- community to help implement by raising awareness on the potential of the in- preneurs and improvements of African com- the report’s recommendations, creasing number of young Africans and the petitiveness. Other interventions focussed on including through financial and need to promote private sector development as the importance of the Africa Commission’s technical aid the best way not only to create employment, operative approach by ensuring that the poli- but also as a means to raise national funding cy recommendations be followed by five con- Ban Ki-moon, Secretary General of the for achieveing the MDGs. crete and implementable initiatives. 18 United Nations Growth and Employment: Visions at Work · Progress Report of the Africa Commission

The next milestone on the international agen- as well as governance structures need to be da is the UN High Level Plenary Meeting on improved and regional integration strength- the MDGs in New York in September 2010, ened. Finally, and most importantly, Africa’s where the world will gather to review pro­ perhaps largest untapped potential and gress towards the achievement of the MDGs. source of comparative advantage – Africa’s Two thirds of the way towards the global youth – needs to be included as drivers of pri- deadline in 2015, the UN Secretary General vate sector-led growth – amongst other by has called for an action oriented agenda in better realizing their potential for entrepre- the global effort to accelerate progress on the neurship. The Africa Commission’s agenda is MDGs. The High Level Plenary Meeting will action oriented and its recommendations and provide a platform not only for reviewing initiatives are already contributing to shaping progress – but also for presenting and elabo- Africa’s road to the achievement of the MDGs. rating on lessons learned, best practises and opportunities for scaling up actions for the The Africa Commission addresses the chal- fulfilment of the MDGs. lenges and has taken action upon them through its recommendations and initiatives. The review shows that Africa still remains the The members of the Commission continue to continent lagging furthest behind in progress drive and contribute to the ongoing interna- towards achieving the MDGs. At the same tional debate on the need to refocus the de- time Africa remains a continent full of un- velopment agenda for Africa towards inclu- tapped potential. It is the intention of the Af- sive growth and job creation. rica Commission that the High Level Plenary Meeting recognise that achieving the MDGs and sustaining progress in health, food secu- rity and education will require strong growth and employment opportunities for the African youth. This report is to be seen as an input to the deliberations.

The Africa Commission has emphasized the importance of bringing the private sector more in the forefront as an engine for eco- nomic growth and employment opportunities in Africa. The Commission has highlighted several of Africa’s key potentials, which can facilitate inclusive growth and employment creation leading to progress towards the at- tainment of the MDGs. Africa’s Small and Me- dium sized Enterprises (SMEs) hold tremen- dous potential. To realise that potential, access to finance, energy and infrastructure 19 1 The Africa Commission · Progress Report 2010

The Africa Commission’s five international initiatives

1 Benchmarking African Competitiveness 3 Unleashing African Entrepreneurship 5 Promoting Post-Primary Education and Research The Africa Commission, in partnership with The Africa Commission will together with the the World Economic Forum and the African International Labour Organisation develop The Africa Commission will launch an initia- Union, will ensure coverage of a significant packages of assistance to young existing and tive along two tracks. The first track will pro- and increasing number of African countries in would-be entrepreneurs, complementing en- mote innovative ways to expand technical the World Economic Forum’s Global Competi- trepreneurship training with advisory servic- and vocational skills development, focusing tiveness Index, and encourage policy impact es, mentorship, and access to finance for on out-of-school youth by upgrading existing through measures to engage business and both rural and urban entrepreneurs. In order apprenticeships and developing demand- government leaders in a results-based dia- to strengthen the sustainability of this initia- driven technical and vocational training in logue on the required reforms. tive, all enterprise support services will be under-served rural communities. The second offered through existing local providers, like track links university education, research business associations, youth-led organisa- and private sector development in sustain- 2 Access to investment finance for small tions, private consultancies and training pro- able agriculture and agro-business to in- and medium-sized enterprises (SMEs) viders, or public agencies. crease the business skills of graduates and promote innovation with a special focus on The Africa Commission will develop an Afri- value chains. This track will be implemented can Guarantee Fund in partnership with the 4 Access to Sustainable Energy in partnership with the African Union Com- African Development Bank to foster the mission through its agreement with the Fo- growth of financial resources available for Together with the African Development Bank rum for Agricultural Research in Africa. the investment needs of Small and Medium- the Africa Commission will address the Afri- sized Enterprises and for capacity develop- can energy deficit. The initiative will stimu- ment of financial institutions. Furthermore, late and expand the emerging market for the Commission will launch a complementary sustainable energy, primarily in rural areas, facility for enterprises to improve their busi- by strengthening the role of Small and Medi- ness management and technical skills in or- um-sized Enterprises in delivery and produc- der to gain access to investment finance. tive use of energy from local and renewable energy sources. It will build upon positive ex- periences with decentralised energy systems in Africa and contribute to the Africa-EU En- ergy Partnership.

20 Growth and Employment: Visions at Work · Progress Report of the Africa Commission

The five initiatives – work in progress

In May 2009 the Africa Commission launched mal funding agreements, logistics, staff re- five international initiatives aimed at strength- cruitment etc. ening youth employment in Africa through pri- vate sector development by means of in- Furthermore, several other international key creased competitiveness, better access to institutions have been engaged in various energy and financial resources for Small and ways in the follow-up activities to the Africa Medium sized Enterprises, promotion of en- Commission recommendations. These institu- trepreneurship for young people and im- tions comprise the African Union Commission proved conditions for post-primary education (AUC), the United Nations Economic Commis- and research. The Commission pointed to sev- sion for Africa (UNECA), the United Nations eral African and international organisations as Development Programme (UNDP) and the the natural partners for the implementation of World Bank (WB). the initiatives: the African Development Bank (AfDB), the World Economic Forum (WEF), the The following description of the implementa- International Labour Organisation (ILO), and tion of the five Africa Commission initiatives the Forum for Agricultural Research in Africa reflects the status by mid 2010. (FARA) under the African Union.

The five initiatives of the Africa Commission 1. Benchmarking African are being developed and implemented by Competitiveness these partner organisations in collaboration with the Commission Secretariat, following African countries must become more com- the establishment of cooperative frame- petitive if they are to benefit from globalisa- works. In the initial stages the initiatives will tion. The key challenges are to identify the only be realised in a limited number of coun- main constraints to competitiveness, devise tries. It is the hope of the Africa Commission the necessary reforms and then implement that its ideas and visions will be embraced by them in accordance with the particular char- other bilateral and multilateral donors in or- acteristics of each country. The World Eco- der to broaden the funding base for the initia- nomic Forum’s Global Competitiveness Index tives, either by direct participation in well de- that benchmarks countries’ competitiveness fined activities or by support to other initia- is a relevant tool for this purpose. The aim of tives along the lines recommended by the this initiative is therefore twofold: improving Africa Commission. the coverage of African countries in the index and fostering policy dialogue and reforms at Since the presentation of the Africa Commis- country level. sion’s report last year, efforts have been dedi- cated to translating the Commission’s initia- With the support of this initiative the total tives into concrete programmes and projects number of African countries covered by the with the various stakeholders and responsi- Global Competitiveness Report series will be ble partner organisations, passing through increased to 38. The most recent Executive the processes of appraisal, approval and for- Opinion Survey conducted by WEF gathered 21 1 The Africa Commission · Progress Report 2010

data from 31 African countries. The initiative 2. Access to Investment Finance will help to maintain a subset of 11 of these and Capacity Development countries in the index, and will aim to add an additional 7 countries. African Small and Medium-sized Enterprises (SMEs) have huge unexploited potentials for The outreach and dissemination of the results growth. If properly supported, the African of the WEF Global Competitiveness Report in SMEs can come to play a key role in employ- African countries will be enhanced through ment creation, which will hugely benefit the country-level and regional workshops in order growing African youth population and the to achieve maximum policy impact of the com- women. This initiative by the Africa Commis- petitiveness index. It is envisaged that four to sion aims to address one of the key con- five national workshops will be held in select- straints to accessing finance faced by African ed African countries each year, bringing to- SMEs by creating an African Guarantee Fund gether leaders from business, government, that will provide guarantees to African finan- media and civil society, with a goal of fostering cial institutions lending to SMEs. Financial in- a process of policy reform for improved com- stitutions in Africa typically associate lending petitiveness. to SMEs with high risks and huge administra- tive costs. The provision of guarantees to Afri- The initiative, which is implemented by WEF’s can financial institutions will lead to increased Global Competitiveness Network, took off in access to bank credit for African SMEs. the second half of 2009. The first of the series of national workshops was successfully held The AfDB has agreed to take the initiative for- in Dar es Salaam in May 2010 in cooperation ward and has advanced significantly in the with the Tanzanian think-tank Research for preparation of the facility. The Danish and The cost of importing Poverty Alleviation (REPOA). The workshop Spanish governments have joined the process. or exporting a proved a highly successful event with around 60 participants, and with the active participa- Several preparatory studies have confirmed container of goods tion of the Tanzanian government at ministe- that the demand for the services of the African rial level as well as high level business repre- Guarantee Fund is huge and partners are in or out of African sentatives. The workshop resulted in a num- therefore determined to have the Fund estab- ber of concrete strategic policy recommenda- lished before the end of 2010 with the expec- countries can be as tions with a focus on improving productivity, tation of issuing the first guarantees by early much as 4 times the innovation, infrastructure, quality of educa- 2011. Reflecting the recognition that the de- tion, access to long-term finance as well as mand for SME guarantees is much bigger than cost in China and harmonisation of government policies and the supply, the target is to mobilize a guaran- regulations necessary for improving Tanza- tee capital of approximately USD 500 million 2-3 times the cost in nia’s competitiveness. over a period of five years. In addition to the India. provision of guarantees, the African Guaran- In 2010, three further national workshops are tee Fund will provide support for capacity de- Source: Ramachandran et al., Africa’s Private planned for Kenya, Nigeria and Cote d’Ivoire, velopment of client financial institutions to 22 Sector, 2008 respectively. help improve their handling of the SME client Growth and Employment: Visions at Work · Progress Report of the Africa Commission

From Wall Street to Mali

It is a long way from Wall Street to Mali. ties. But the financial crisis in 2009 put an And one can scarcely imagine two more end to the positive development and un- different people than the smartly dressed derlined the need for consolidation with- stockbroker in New York and the female in the sector. Branches closed, and the entrepreneur in Mali who desires some- development of new loans targeted at, thing as down-to-earth as manufacturing for example, female entrepreneurs and and selling fruit juice. When the female farmers was put on hold. The micro-fi- entrepreneur in Mali needs a small loan nance institutions’ sources of funding, to purchase, for example, equipment for such as banks, were hesitant and cau- manufacturing or preserving juice, it is tious. “The financial crisis has altered the called micro-finance. Micro-finance insti- perception of risks associated with mi- tutions are specialists in granting such cro-finance. Risks that previously were small loans. But in a globalised world, the regarded as being less important are now lives of the stockbroker and of the Malian viewed with greater seriousness”, ex- entrepreneur are inter-connected. After plains Alou Sidibé, Director General of the crisis in 2009, the woman in Mali the Federation of Mutual Savings and does not have the same borrowing op- Credit Organisations of Mali (Kafo Jigi- portunities as she had before. Historical- new). Denmark has supported the micro- ly, the micro-finance institutions have finance sector in Mali since 2008. For emerged virtually unharmed from the Danish assistance, the developments in global financial crises. Today, however, 2009 meant a temporary reprioritisation the global financial markets are more of funds. It is Denmark’s goal to help the closely interconnected than they have micro-finance sector face the new chal- been earlier. This has increased vulnera- lenges, partly by placing more emphasis bility, and in 2009 micro-finance institu- on the formulation of business plans and tions around the globe felt the impact of governance instruments for institutions the financial crisis. The same happened and less emphasis on product develop- in Mali. In contrast to what one might oth- ment and expansion until the sector has erwise expect, Mali has a well developed recovered its stability. range of financial services, including 132 institutions that provide micro-finance. Over a longer period, the micro-finance sector has acquired more branches as well as increased saving and credit facili-

23 1 The Africa Commission · Progress Report 2010

segment. The development potential of the antee Fund in Africa, establishing it as a le- African Guarantee Fund is significant in terms gally independent unit operating out of Mau- of the possible number of end-beneficiaries. ritius and through a branch in Nairobi. The unit will be staffed with highly qualified offi- Almost 50 The process of establishing the African Guar- cers with the ability to reach out to African fi- antee Fund is being led by an Oversight Com- nancial institutions interested in utilising the percent of African mittee composed of representatives of the services of the Fund. The appointment of a companies founding partners, supported by a Focal Point Board of Directors and the recruitment of a based in the AfDB. Together, these entities are CEO and key staff will be initiated by mid- identify access to responsible for dealing with all strategic and 2010, as will the identification and renting of practical issues that arise in the preparatory office facilities. finance as a major phase. Overall strategic guidance is provided by an Advisory Panel of African and other spe- The African Guarantee Fund is projected to be constraint to doing cialists in the areas of financial services and a financially sustainable venture and it will business. SME development. Building on this advice, a operate and price its products according to number of feasibility studies as well as recom- market principles. Initially, the Fund will start Source: World Bank Enterprise mended best practice, the founding partners its operations in Cameroun, Ghana, Kenya, 24 Surveys, 2009 have agreed to firmly anchor the African Guar- Mali, Mozambique, Senegal, Tanzania, Ugan- Growth and Employment: Visions at Work · Progress Report of the Africa Commission

da and Zambia but it is envisaged to rapidly ing youth to pursue entrepreneurship oppor- increase its coverage to the whole of Africa. In tunities is one of the few feasible options for accordance with the Paris Declaration and the young people to create employment for them- Accra Agenda for Action, the African Guaran- selves and others both in the formal and the tee Fund will work actively to attract donor informal sector. funds that currently flow into separate bilat- eral guarantee schemes thus contributing to The Young Entrepreneurs initiative is imple- harmonization among donors in the field of mented by the Youth Entrepreneurship Facili- provision of guarantees in Africa. ty (YEF), which is a partnership between the International Labour Organisation (ILO) and the Youth Employment Network (YEN). The 3. Unleashing African Facility commenced in January 2010 and will Entrepreneurship initially focus on Kenya, Tanzania and Ugan- da. By 2010 Sub-Saharan Africa will be the ‘youngest’ region in the world. Taking into ac- The initiative has successfully completed its count the limited absorptive capacity of exist- six-month inception phase and the Facility is ing formal labour markets in Africa, encourag- now actively engaged in supporting concrete 25 1 The Africa Commission · Progress Report 2010

Value chains ”from farm to fork”

In the Naivasha district in Kenya the milk being When the value chain functions properly, the In Kenya, Denmark has supported the know­ sold at the market was of a poor quality and di- value of the product rises in each part. The val- ledge of the agricultural advisers concerning luted with water. The customers were demand- ue-addedd that is created is freed when the milk production, the producers’ methods of ing better milk. The milk sellers were willing to product reaches the final market. The sale on production and the milk buyers’ skill at judg- supply this, but they lacked the knowledge and the market creates a cash flow that goes to the ing the quality of the raw milk. This means that skills necessary to judge the quality of the milk subcontractors and producers of the raw materi- several links in the value chain have been from the farmers who sold it to them. als. It is this cash flow that is to ensure increased strengthened. Now it is not only possible to income for the rural population of the develop- buy richer milk in the Naivasha district; Danish The route of the milk from farmer to milk buyer ing countries. The higher the quality in each part support has also contributed to furthering to dairy to customer comprises a value chain. of the chain, the higher is the remuneration. economic growth and development.

and practical youth entrepreneurship devel- was done through intensive consultations in opment activities in the three countries with each country. Innovative “Open Space” work- governments, youth organisations, educa- shops were widely attended by young people tional institutions, business development and youth organisations who actively en- service providers and micro-finance institu- gaged with governments and actors in the tions through its six components: i) fostering private and civil sectors. The first call for pro- an entrepreneurship culture among the young posals to the Youth-to-Youth Fund was issued people; ii) introducing entrepreneurship edu- in July 2010 through a widely disseminated cation in schools; iii) making sure that poten- media campaign, which has kick-started the In Zambia about tial and existing young entrepreneurs have promotion of a culture of entrepreneurship 50% of all young access to the support they need to develop among youth. their business; iv) enabling access to finance people between 15 for young entrepreneurs; v) a Youth-to-Youth The consultative process has produced a fund through which youth organisations are shared vision and strategy for youth entrepre- and 19 years of age strengthened; and vi) promoting evidence- neurship promotion and development in each based advocacy to better understand “what of the three countries based on local experi- wish to start their works” in youth entrepreneurship develop- ence and knowledge and aligned with nation- own business. ment. al development plans. Furthermore, the in- ception phase completed the establishment 26 Source: ILO, 2005 The finalisation of the country components and staffing of country offices, established Growth and Employment: Visions at Work · Progress Report of the Africa Commission

national advisory committees, and mapped 4. Access to Sustainable Energy out and further analysed lessons learnt of past interventions in the area of youth entre- The energy initiative will stimulate and ex- preneurship along with financial sector stud- pand the emerging energy market in Africa for ies of young entrepreneurs’ constraints in ac- SMEs as producers, distributors, suppliers cessing finance. Partnerships with govern- and consumers of climate-friendly energy. ments, national and international agencies The initiative will build upon positive experi- have also been formalised. ence with decentralised and renewable ener- gy systems in Africa, where technologies are The Youth Employment Network successfully becoming increasingly reliable, affordable mobilised additional resources for the Youth- and profitable. With this initiative the Africa to-Youth Fund (USD 140,000) through a part- Commission wants to draw global attention to nership with the Kenya Community Develop- the huge untapped potential for renewable ment Foundation as well as funds for the and climate friendly energy in Africa. Invest- evidence based advocacy component on ment in renewable energy production and en- “what works in youth employment” through ergy efficiency can potentially contribute con- the Swiss based Jacobs Foundation (USD siderably to sustainable growth and job 400,000). creation in African countries.

27 1 The Africa Commission · Progress Report 2010

The objective of the initiative is increased pro- range of USD 30-70 millions and would duction of and access to sustainable and reli- typically be renewable energy based co- able energy services, primarily in rural and generation projects. It could also include peri-urban areas, through a market based ap- grid-connected electricity generation utilis- proach. This will help accelerate economic ing wind, hydro, geo-thermal, bio-fuel and growth, job creation and entrepreneurship in waste incineration. The SME sector may not SMEs. be the direct beneficiary, but the increased security of energy supply would increase The focus of the initiative is on promoting re- their competitiveness through stabilised newable energy resources through reducing prices for bulk power supply and a reduced one of the key obstacles to this emerging need for expensive back up supply. market, lack of access to finance. To develop new renewable energy investments in Africa • The second fund will target SMEs and pro- On average, firms in and address the lack of finance, the AfDB, in vide both funding and technical assistance Africa lose power for collaboration with other partners, will estab- for SME renewable energy projects. The lish two funds: fund will provide private equity in the range 13 percent of their of USD 5-30 million, and thereby address • The Sustainable Energy Fund for Africa the lack of access to finance for SMEs with- working hours. (SEFA) will provide technical assistance for in the emerging renewable energy sector in the preparation of larger bankable renew- Africa. Source: World Economic Forum: The Africa able energy projects for AfDB co-financing. 28 Competitiveness Report 2009 The projects to be financed will be in the Since the Africa Commission launched the Growth and Employment: Visions at Work · Progress Report of the Africa Commission

sustainable energy initiative in 2009, part- TVSD linked to economic opportunities; and ners have worked together to find the best informal apprentice systems, predominantly way to provide the emerging sustainable en- in urban areas. The programme is being im- ergy market with access to finance. Missions plemented by the International Labour Or- have been fielded to a number of African ganisation (ILO). It was launched in January countries (Kenya, Mali and Ghana) to collect 2010 in Benin, Burkina Faso and Zimbabwe. first hand experience and draw upon lessons learnt in these countries. The institutional The inception phase of the programme, to be set-up for SEFA is expected to be jointly de- completed by the end of September 2010, in- cided in November 2010 with the aim of start- cludes more in-depth analysis of the specific ing activities early 2011. skills development issues in the informal economy of the three countries; further con- sultations with national partners; set-up of 5. Promoting Post-Primary structures; and detailed planning of the inter- Education and Research ventions in each of the countries.

This initiative of the Africa Commission covers So far, the programme has finalised its meth- two separate tracks: one concerning technical odological basis and published the English- and vocational skills development, and an- language Manual on Training for Rural Eco- other concerning agricultural research and nomic Empowerment (TREE) as well as private sector development. completed the French-language translation. A web-based information platform has been es- Track One: tablished to facilitate sharing of TREE experi- Technical and Vocational Skills Development ences, tools and lessons learnt.

Technical and vocational skills are crucial for In Zimbabwe a study on informal apprentice- enhancing competitiveness and decent work. ships and an analysis of the skills develop- Despite the fact that training in the informal ment system were completed. The former in- sector is the primary avenue through which cludes a survey of existing occupations in young people in Africa can acquire technical which apprenticeships are concentrated, in- and occupational know-how, it has, to a cer- cluding male/female breakdowns, and the tain extent, been neglected in development latter is a comprehensive analysis of Zimba- interventions. bwe’s national training system with an inven- tory of existing training institutions that may The “Skills for Youth Employment and Rural support programme interventions. Development in Southern and Western Afri- ca” Programme will address this gap and de- velop technical and vocational skills develop- ment (TVSD) interventions in the informal sector in two areas: rural community based 29 1 The Africa Commission · Progress Report 2010

Track Two: proposals on the focus and organisation of Linking University education, Research and such collaboration within the overall aim to Business in Sustainable Agriculture enhance agricultural innovation and develop- ment. In Sub-Saharan This initiative will help develop sustainable capacity for entrepreneurship and innovation The implementation started in January 2010 Africa the gross and for high-quality tertiary education in sup- with an inception phase to last for six months enrolment rate for port of national and regional agricultural poli- in order to further define and develop the pro- cies and development in Africa. This will be gramme concept and activities, leading to the tertiary education done through the establishment of partner- start of the actual programme phase where ships between universities, agricultural re- field activities will be contracted to successful is around 5%, search institutions and the private sector in bidders from universities, businesses and ag- compared with selected African countries. ricultural research establishments. 23% in East Asia A response to this initiative has been devel- The first round of field projects will be identi- oped by the Forum for Agricultural Research fied following a pre-qualification round, sup- and 30% in Latin in Africa (FARA) and its partner organisations ported by business linkages training to the with the programme: Universities, Business pre-qualified universities. 3-5 projects are ex- America. and Research in Agricultural INnovation (Uni- pected to be given approval for start-up at the BRAIN), whereby consortia between universi- latest by early 2011. Source: African Development Bank: ties, research institutions and the private 30 Investing in Africa’s Future (2007) agribusiness sector will be invited to develop Parallel to the process of identifying field Growth and Employment: Visions at Work · Progress Report of the Africa Commission

Danish support to the 5 initiatives of the Africa Commission 2009-2013*

Initiative USD million (approx.) 1. Benchmarking African Competitiveness 4.0 2. Access to Investment Finance and Capacity Development 83.0 3. Unleashing African Entrepreneurship 20.0 4. Access to Sustainable Energy 50.0 5. Promoting Post-Primary Education and Research 36.0

* Indicative figures

projects in selected countries, FARA and its sion for Africa (UNECA) have established a partner organisations are in the process of joint secretariat in Addis Ababa with the aim establishing an institutional framework to of facilitating institutional cooperation on support and secure that lessons learnt and shared initiatives and agendas between the ideas developed will be shared by all poten- three organisations as well as cooperative tial users in Africa in fulfilment of the mandate programmes with international partners. The given to FARA by the African Union. Africa Commission specifically pointed to a set-up of the Monitoring and Evaluation Unit within this joint secretariat. Monitoring and Evaluation Unit The Monitoring and Evaluation Unit has thus Besides the five concrete initiatives, the Afri- been established with the support of the ca Commission also recommended the estab- three organisations. The unit will undertake lishment of an African Monitoring and Evalua- overall monitoring, evaluation and quality as- tion Unit to follow up on the Commission’s surance of the five initiatives and document recommendations in order to ensure contin- the experiences and results. The unit will also ued African ownership of the activities and further develop and disseminate the recom- that the initiatives maintain the pan-African mendations of the Africa Commission at the scope, which has remained so essential to the pan-African level and continue discussing and Commission’s work. The African Union Com- representing this agenda vis-à-vis Africa’s in- mission (AUC), the African Development Bank ternational development partners. (AfDB) and United Nations Economic Commis- 31 Views2 and visions

Key-note articles

32 Growth and Employment: Visions at Work · Progress Report of the Africa Commission

33 2 Views and visons · Key-note articles

The Cheetah Generation: Challenges and Opportunities for Africa’s Young Women and Men

More and more young Africans are rising and ricans, by the African private sector and civil shining. They are often called the ‘cheetah gen- society and by African youth themselves, real- eration’ – young, well educated, fast moving ising that this resource should not be lost and entrepreneurial women and men, con- through migration or lack of utilisation. scious of themselves as modern Africans. They have the resources and the capabilities to take The goal for our development efforts must be their destinies into their own hands. They are to set poor persons free to strengthen their the role models. This is the new Africa. individual capabilities and possibilities for emerging from poverty – and staying out of But – as the Africa Commission pointed out - poverty. This is the basis for the new Danish huge numbers of young Africans do not have Development Policy ‘Freedom from Poverty – these possibilities yet. The 7-10 million young Freedom to Change’ that was approved by the Søren Pind, Danish Minister for men and women entering the African labour Danish Parliament in June this year. And that is Development Cooperation market annually should all enjoy the freedom why we have made growth and employment to get a job that can reasonably fulfil their ex- one of five key priorities for Danish develop- pectations in a globalised world. If their expec- ment cooperation in the policy. The agenda of tations are not met, they may fall prey to crime the Africa Commission has thus been taken and prostitution, or engage in antisocial activi- fully into the Danish development strategy. ties and armed conflicts. We all have a respon- sibility to set these young people free to also This strategic focus on growth and employ- take their destinies into their own hands. ment takes its point of departure in recogni- tion of the crucial role of the private sector in Freedom is a key word for development. Free- offering opportunities for young Africans. For dom and development are mutual prerequi- societies as well as for individuals, sustain- sites and mutually reinforcing. Therefore the able development and durable poverty reduc- agenda of the Africa Commission of freeing tion cannot be reached without free and well young people from the poverty trap through functioning markets. And a thriving private private sector led growth and employment is sector is the best enabling environment for more relevant than ever. These young African these young Africans to find employment or women and men must be provided with the start their own business. freedom and the opportunities to realise their potential and to fully exploit their resources for A thriving private sector also benefits the their own good and for the good of their soci- whole society by creating the economic Freedom is a key word for ety. Young people’s energy, initiative, and ca- growth which is a prerequisite for sustainably development. Freedom and pacity to learn and think innovatively are their achieving the Millennium Development Goals development are mutual primary resources. This represents a huge po- in the African countries. No country has suc- prerequisites and mutually tential for positive change in Africa, as reflect- ceeded in fighting poverty without lasting reinforcing. ed in the Africa Commission report ‘Realising economic growth. Private business growth the Potential of Africa’s Youth’. And most im- will increase the tax revenue to be used for Søren Pind, Danish Minister for portantly, this is an African agenda, driven by i.a. health and education. But growth must 34 Development Cooperation African Heads of State and other prominent Af- also be broad-based and inclusive in order Growth and Employment: Visions at Work · Progress Report of the Africa Commission

not to benefit a small elite only. Economic dency on export of raw materials and largely growth that is lasting in the long term has the unprocessed goods. best chance to succeed in open, free societies that support innovation, creativity and private In this endeavour we must not forget that entrepreneurship. agric­ulture is the backbone of most African economies. Higher productivity, better use of Fortunately, the economic outlook for Africa is the resources in the African agricultural sec- encouraging, when compared to May 2009, tor and ensuring that agricultural produce is when the Africa Commission’s report was processed to a higher degree than at present launched. In 2009 Africa’s economic growth for the local as well as the international mar- slumped to 2.5%, but is expected to reach kets hold the promise of creating direct and 4.5% in 2010 and 5.2% in 2011. African econo- indirect income for millions of families in the mies have proven more resilient than expect- countryside and in the cities. Sustained ef- ed to the financial and economic crisis. This is forts in the development of local and national a good basis for supporting our partners in value chains for both primary produce and their efforts to improve competitiveness and other raw materials can create a marked in- diversify their economies towards more la- crease in added value within the African econ- bour intensive activities, away from depen- omies. 35 2 Views and visons · Key-note articles

We know what works. During my visits to Afri- i.a. lack of access to markets, land and cre­ can countries I have met young ‘cheetahs’ dits. In Zimbabwe, I have met with vegetable with proper education and training and ac- producers who were unable to sell their pro- cess to credit, who have managed to start a duce due to harassment from the authorities. viable business, creating income not only for There is no way these producers can move themselves but also for their employees and forward and make the best of their resources. their suppliers. I was truly impressed when I Such conditions kill the private initiative and met the young owner of the Shambani Gradu- are unacceptable. Freedom and economic ac- ates Enterprise Diary, in Tanzania. With a tivities are closely interlinked. modest support for training and a marketing strategy, he had managed to create full time The Africa Commission has shown the way. jobs for 20 persons while providing a stable Five concrete initiatives are underway, led by market for up to 200 milk suppliers. And our African and international partners. I hope plans are to double the production. This is but to see these five initiatives scaled up consid- one among many such good stories. erably by joining hands with other develop- ment partners to achieve a real impact on the However, I have also met hard-working and African Continent providing opportunities to 36 industrious persons who were held back by more young people. Growth and Employment: Visions at Work · Progress Report of the Africa Commission

Turning a Crisis into Opportunity: Towards a Private Sector Development Agenda for Africa

Africa has embraced the vision of private sec- frastructure and services, Africa has been tor led growth and development. This com- able to stave off some of the immediate ef- mitment, fostered through substantial prog- fects of the financial crisis. Economic contam- ress in infrastructure and regulatory reform is ination arose, as an aftershock, in a context of bearing fruits. The private sector is the main decreased global demand for commodities, driver of capital formation in 45 of the 53 Afri- reduction of remittances and FDI. In turn, this can member countries of the African Develop- lowered fiscal revenue prompted govern- ment Bank. Private resource flows now also ments on the continent – as in the rest of the exceed official development aid on the conti- world – to take costly measures to attenuate nent. While intra-African FDI remains modest the impact of the crisis. These measures were compared with external FDI inflows, both are financed from reserves, by turning to the local making progress. The commodity boom re- markets, sourcing budget support and bal- mains an important driver of resource seeking ance of payment assistance or even delaying Donald Kaberuka, President of the investment. And in the footsteps of increased payments to creditors. African Development Bank regional integration, successful market-seek- ing investment is also making inroads. While global recovery still remains fragile, in the aftermath of the crisis central banks, both Over the last twenty four months, African at home and abroad, are tightening pruden- economies have sailed through troubled wa- tial regulations. As a consequence, banks ters. They have confronted three global crises may struggle to meet higher capital adequacy in quick succession – food price hikes, energy requirements and more stringent credit regu- cost increases, and the aftermath of the glob- lations. The crisis has cast a different light on al financial turbulences. Middle Income Coun- Africa’s risk premium, relative to established tries (MICs) and countries rich in natural re- and emerging economies. However, overall sources, i.e. countries typically more globally risk aversion remains heightened particularly connected, took the brunt of the impact, in- towards the low income countries (LICs). In terrupting the pre-crisis growth momentum. other words, while Africa escaped compara- The fragile states with pre-existing vulnerabil- tively unscathed from the financial crisis, a ities were also hard hit. Nonetheless, 42 Afri- protracted credit squeeze may be looming, can countries experienced growth of more particularly for domestic and foreign market- than 4.5% in 2009. Such robustness in the seeking investors. face of the crisis is not coincidental. Twenty years ago the economic, social and political The gradual recovery of the mineral and hy- cost of such events would have been disas- drocarbon sectors on the global market is trous. generating an abundance of resource-seek- Only private sector-led ing investment opportunities. This will ease growth can sustain the rate Resilience in the face of the crisis stems from liquidity constraints in natural resource rich of economic growth required policy choices which acknowledge that pri- countries by bringing in public and private to pull Africa out of poverty vate sector-led economic growth is effective, revenue alongside foreign exchange. The inclusive and sustainable. By leveraging pri- agri­culture sector remains ripe for efficiency Donald Kaberuka, President of vate sector participation in the delivery of in- gains through industrialization as well as sup- the African Development Bank 37 2 Views and visons · Key-note articles

ply chain and logistic enhancements, to in- gate systemic risks and take the “guess- crease yields, product quality, reliability and work” out of credit management; increasing to bring goods to markets, both at home and market predictability through disclosure of abroad, particularly when accompanied by public sector budgets, expenditure and poli- climate change adapted technologies. Mar- cies; and conducting sector-specific business ket-seeking investment may be hit the hard- enabling and investment facilitation interven- est by the long-wave effects of the crisis, but tions. opportunities are emerging, in particular when regional integration makes progress. Beyond investing in large infrastructure, such Moreover, during the past decade, many Afri- as seaports, roads, power and airports, which can companies, notably in Northern African enable African countries to connect to the countries and South Africa, have experienced world and to their neighbours, governments unprecedented growth and are now entering should also continue to proactively identify the global markets as credible competitors. infrastructure services that can be developed and operated on a commercial basis, includ- Technology can circumvent institutional or in- ing by private operators. Moreover, ongoing frastructural constraints to doing business. efforts to establish regional markets remain a The phenomenal growth of mobile banking priority. While it enables private investors to services is facilitating access to secured com- take advantage of the benefits of scale, re- mercial transactions in places where imple- gional integration should also enable more menting and maintaining a physical network optimal patterns of investment in social ser- of retail banking services would be impossi- vices, such as health and primary education, ble, even between SMEs and their clients. Re- and facilitate human resources development structuring and regulatory reforms in the in- in sectors that are key for the economy, e.g. frastructure sector, notably by unbundling through market-oriented regional centres of water, power, and transport operators also excellence. present opportunities, by enabling greater control of costs and revenues and by creating Now more than ever, development partners competition. Finally, the private sector is al- have a critical role to play in facilitating and ready beginning to tap into the diaspora mar- backing the flow of funds to governments and ket, to facilitate investment, production and private investors alike. Development finance consumption on the continent. institutions are particularly well placed to le- verage their public resources and favourable To ward off the risk of pro-cyclicality, govern- access to capital markets for lending and in- ments are restructuring public expenditure vestment and to channel technical assistance and accelerating reforms. In the still uncertain subsidies for capacity building. Of particular environment, a focus on efficiency-seeking importance is facilitating finance and capacity interventions and enabling environment im- building to the erstwhile “unbankable” but provements must remain the order of the day. would be future entrepreneurs through sup- This includes sustained investment in en- port to micro-finance institutions and banks 38 abling financial sector infrastructure to miti- that serve SMEs. Growth and Employment: Visions at Work · Progress Report of the Africa Commission

Development finance institutions are also potential is utilized. Likewise, an abundance well positioned to facilitate South-South of opportunities can be found in wind, solar learning between policy makers and regula- and other renewable energy sources. tors, in terms of enabling environment devel- opment, and more specifically in respect of At the African Development Bank, the crisis public private partnerships in the infrastruc- has allowed us to learn some important les- ture sector and beyond. Africa suffers from an sons. These are guiding us to hone our financ- acute shortage of electric power. South of the ing activities further, with greater selectivity Sahara, total power consumption is less than and better results orientation, and to adapt that of Mexico. This makes power financing a the way we do business. Even before the cri- critical priority for the continent. In this con- sis, private sector development was a strate- text, development partners should also sup- gic priority of the Bank because only private port the building of greater resilience to cope, sector-led growth can sustain the rate of eco- through adaptation and prioritizing “green” nomic growth required to pull Africa out of solutions, with the creeping impact of climate poverty. This priority remains acutely rele- change, to which African economies are par- vant. ticularly vulnerable. For example, estimates indicate that only 7% of Africa’s hydro power Consequently, we have significantly scaled up 39 2 Views and visons · Key-note articles

financing where long-term financing is a pre- credit guarantee institution, will contribute to condition and countercyclical, in infrastruc- filling a substantial market gap, enabling ture particularly. In 2009, the Bank financed commercial banks to finance SME growth. In no less than USD 6 billion for the provision of parallel, we will continue to mobilize resourc- infrastructure. We have recently established es and technical assistance to strengthen the an energy, power and climate change organi- business climate. Indeed, Africa is open for zational structure tasked with supporting business, and the business of the African De- both public and private sector operators to velopment Bank is to make it happen. overcome the continental power gap. We are also introducing new instruments to mitigate risk aversion in private sector transactions such as in public private partnerships. Going forward, we will aim to discernibly support market-seeking investment. We will also con- tinue to promote the SME sector, and are con- fident that the African Commission initiative which we are jointly embarking on with the 40 Danish Government to create a pan-African Growth and Employment: Visions at Work · Progress Report of the Africa Commission

Repositioning Africa as the Fifth BRIC: A Destination for Investment, not just Aid

It may come as a surprise that, in nominal US growth and market potential, SSA can serve dollars, Sub-Saharan Africa grew faster than as a new source of global demand. The conti- India during the period 2000-2010! Its GDP nent is poised to join the ranks of the BRICs! went from US$ 321.3 billion in 2000 to a pro- jected US$1017.6 billion in 2010, while that of A Growth-with-Jobs Agenda India went from US$ 461.9 billion to US$ To turn the BRIC vision into a reality, Africa 1367.2 billion over the same period, an annu- needs help on three fronts, which accord well al growth rate of 12.2 percent versus 11.5 per- with the Africa Commission’s competitiveness cent. And Sub-Saharan Africa (SSA) is pro- theme: (i) a “big push” on infrastructure to jected by the IMF to grow faster than Brazil achieve scale economies; (ii) deepening ef- between 2010 and 2015. forts to manage volatility; and (iii) a major expansion in skills. In keeping with these encouraging projec- Ngozi Okonjo-Iweala, tions, the May 2009 Report of the Africa Com- The “Big Push” Managing Director, mission “Realising the Potential of Africa’s Electricity generation capacity is only 37 The World Bank Youth” argues for a refocusing of aid to help megawatts per million of population in SSA Africa become more competitive in order to versus 326 megawatts for low-income coun- realize its own potential. As the report notes, tries elsewhere; and at 31 kilometers of road Africa is going through a demographic transi- per one thousand square kilometers, paved tion with growing numbers of young people road density is less than one-fourth that in who will need jobs. It proposes private-sector low-income countries elsewhere. As a result, led growth as the most effective way to create SSA is isolated from global markets, and its more and better jobs, and sets out a list of pri- border restrictions fragment the region into a orities which includes a focus on small and myriad of small local economies. medium-sized enterprises (SMEs); agri-busi- ness; gender equality and skills; better infra- Here is a game-changing idea: Given the con- structure; and better governance and macro- siderable infrastructure financing needs in economic management. Sub-Saharan Africa, DAC donors could issue Africa Development Bonds in New York with a The ideas of the Africa Commission report are yield that matches the US 30-year Treasury clearly echoed in a recent speech I made at bond rate, currently averaging around 4.5% Harvard University, in which my main point per year. The payments on such a bond (prin- was that it is in the interest of the rich coun- cipal plus interest) would amount to a little tries to promote Africa as a destination for in- more than 6 cents for each dollar raised. This vestment and not just aid. Africa is reaching a means that if donors agreed on paying out Africa is reaching a stage where it can begin contributing to the US$ 6 billion a year in cash towards debt ser- stage where it can begin global economy in a serious way – at a time vice on such bonds – just about a fourth of the contributing to the global when fiscal retrenchment to avoid an unsus- net bilateral ODA to Sub-Saharan Africa in economy in a serious way tainable public debt build-up in the advanced 2009 and less than the shortfall in the Gle- countries is more-or-less inevitable. Given neagles promise to Africa – African countries Ngozi Okonjo-Iweala, Managing SSA’s large size, young population, rapid could receive US$ 100 billion in cash immedi- Director, The World Bank 41 2 Views and visons · Key-note articles

ately. An important spinoff is that issuing nance. They have been taking determined such a bond could also change perceptions steps in this direction since 2001, with consid- about doing business in Sub-Saharan Africa, erable improvement in macroeconomic and with private firms lining up to provide infra- fiscal management, aided by the debt reduc- structure. This could augment funds by sup- tion initiatives; and some improvement in porting platforms for Public Private Partner- governance. ships in infrastructure. But help is needed in managing externally- Managing Volatility and driven sources of volatility, of which the cur- Improving Governance rent global crisis is the most serious example Africa’s long-run growth has been harmed by in decades. Two things can be done to cush- macroeconomic volatility. One study finds ion Africa better. First, donor resources can that 9 of the 15 most volatile countries were be used more aggressively as countercyclical from SSA. And historically most of the volatil- instruments – as indeed was done with World ity has stemmed from domestic economic Bank Group resources during the crisis. Sec- mismanagement, political instability and vio- ond, the costs associated with aid volatility lent conflict. can be eliminated through coordinated donor actions. African country governments recognize they must assume responsibility for domestic vol- Skills and Knowledge atility emanating from bad policy, social con- Africa’s growing numbers of young people 42 flict, institutional weakness and poor - gover badly need an infusion of skills and knowl- Growth and Employment: Visions at Work · Progress Report of the Africa Commission

edge in the pursuit of not just more but better ships among industry, government and civil jobs, as noted by the Africa Commission re- society in vocational and tertiary education port. While tremendous strides have been should be formed. The thriving telecommuni- made in raising enrollment and achieving cation sector in many African countries can gender parity especially at the primary-school facilitate information transfer and knowledge level, the quality of education leaves much to learning. Skills plus investment plus access to be desired. Recent research shows that it is technology can unleash growth in productive cognitive skills, not years of schooling that sectors from agriculture to manufacturing and makes the difference to long-run growth. services, which would propel Africa to BRIC- Electricity generation capacity is These skills are measured by reading, mathe- hood. matics and science tests for students. For ex- 37 megawatts ample, Early Grade Reading Assessments car- Conclusion ried out in certain African countries indicate It makes eminent sense for donors to view Af- per million of high levels of deficiency in identifying and rica as a new source of global demand. Africa reading words at the second and third grade must do its part in persuading donors that it is population i SSA levels. ready to play its role in a multipolar growth world with a refocusing of aid towards growth. versus The good news is that the rate of return for It is high time Africa saw and presented itself skills is high in Africa. What is needed there- as the fifth BRIC, an attractive destination for 326 megawatts fore is a big push on quality education and investment, not just aid. This is realistic and for low income skills, as the East Asian “tigers” did to under- within reach. As Nelson Mandela said, “It al- pin their growth miracles. For this, partner- ways seems impossible until it’s done.” countries elsewhere 43 2 Views and visons · Key-note articles

Integration in Africa. The Quest for Continental Growth and Employment

The majority of African economies are facing potential for expanding the economies in Af- considerable challenges with employing rica exists in developing inter-regional trade growing populations and there is an urgent from its low starting point. need to address these challenges. The African private sector has a huge unexploited poten- Fragmentation into many small economies tial in this regard, but companies rely on Afri- can explain much of the poor African develop- can leaders to adopt, implement and enforce ment performance and the costs imposed on decisions that create an environment condu- African citizens. 39 African countries have cive of entrepreneurship and growth. And in- fewer than 15 million people, and 21 countries creased regional economic integration in Af- have fewer than 5 million. These small popu- rica offers tremendous opportunities for lations and low incomes offer small domestic quick gains. markets, which limit the overall potential to Jean Ping attract foreign investments and the possibili- Chairperson of the African The quest for stimulating growth and employ- ties for local companies to expand produc- Union Commission ment in Africa should not only focus on im- tion. This impedes growth and job creation. In proving Africa’s position in the world trade. order to diversify development through strat- There are major welfare gains associated with egies that focus on domestic and foreign mar- strengthening trade between the African kets it is absolutely critical that African coun- countries. Sub-Saharan Africa has a popula- tries pursue regional economic integration tion of 819 million, but economic activity only with neighbours with the aim of expanding reaches modest levels and the continent as a market sizes. whole is facing a declining share in world pro- duction and trade. The lack of integration into One of the factors that impede intra-regional the world economy is a major challenge for trade in Africa is the high transport costs, African economies and limits the strategies sometimes around 60 % higher than in the US available for pursuing growth and fighting and in Europe, that companies have to add to poverty among a growing population. This re- the prices of services and goods. One ele- quires ambitious efforts to integrate African ment of the high transport costs is poor infra- economies. The Africa Commission clearly ac- structure. Deficiencies in infrastructure create knowledges that this is not an easy task – but barriers to productive opportunities and in- action is urgently needed. It is time for African crease costs for all firms, from micro enter- decision makers and companies to place prises to large multinational corporations. It is time for African decision themselves at the forefront of securing sus- Poor infrastructure results in high cost of makers and companies to place tainable growth and employment in Africa. transporting goods between regions and themselves at the forefront of countries, which inflicts a heavy cost on Afri- securing sustainable growth and Intra-regional trade within the African conti- can citizens in terms of higher commodity employment in Africa nent is unsatisfactorily low. Trade between prices. African countries is constrained by small and Jean Ping poor economies with low levels of diversifica- But high costs are also caused by non-tariff Chairperson of the African tion, insufficient infrastructure and legal and barriers such as cumbersome customs and 44 Union Commission administrative barriers. Nevertheless, a huge administrative procedures at border posts, li- Growth and Employment: Visions at Work · Progress Report of the Africa Commission

censing requirements and trade regulations than 6%. Other studies confirm that the im- that hamper the competitiveness of many Af- mediate gains are indeed tangible: for every 1 rican economies. As an example, exporters in dollar reduction in trade costs, exports could Burundi and Kenya must spend an average of increase by more than US dollars 1000! Where 47 and 27 days, respectively, completing all the trade environment is favourable, compa- export formalities from the time the sales nies can take advantage of new opportunities contract is signed until the container is on the to grow and create jobs to the benefit of Afri- vessel. The costs associated with such delays can citizens. are considerable with trade-related expenses for exporting a container exceeding US dol- The African Union is pleased to see that many lars 2,000 for both Kenya and Burundi. It is African countries already have realized the obvious that these delays significantly in- potential gains arising from harmonizing crease the costs for local companies and dis- trade-related rules and procedures and inte- courage foreign companies from seeing these grating economies. The political backing to countries as attractive investment destina- integration schemes is growing as promising tions. According to the World Bank, reducing statistics on the positive impact on trade see the time to export in Sub-Saharan Africa by the light of the day. One example is East Africa 10% could potentially increase trade by more where the effects of the East Africa Commu- 45 2 Views and visons · Key-note articles

Internal80 regional trade in percentage of total trade

70

60

50

40

30

20

10

0 Africa NAFTA East Asia EU

nity (EAC) customs union are becoming more governance. A significant number of African and more visible. Since 2005 and the coming Union member States have joined this volun- into effect of the EAC customs union, intra tary Mechanism. The Africa Commission in its EAC imports have increased 54%, exports 48 report from May 2009 suggested that modali- % and total trade (imports and exports) 50 %. ties should be developed for a possible com- Only 5% of African In the case of Uganda, a strong growth, al- petitiveness review mechanism integrated most 161 % from 2004 to 2008, in trade with into the African Peer Review Mechanism, a trade is with other its EAC partners has been registered. These suggestion which I fully support. African countries figures clearly provide a strong case for con- tinuing the pursuit of regional integration. – compared to the This is an agenda fully supported by the Afri- internal trade of the can Union. In 2003 African Union Member States launched the African Peer Review EU of 62%, NAFTA Mechanism – a bold attempt to promote shar- of 46% and East Asia ing of experiences, learning and best practis- es among member States in vital areas such 46 of 55%. as political and economic performance and Growth and Employment: Visions at Work · Progress Report of the Africa Commission 2 Views and visons · Key-note articles

African Competitiveness 2010: The State of Affairs

Africa has experienced impressive growth tinue to support such efforts by benchmarking over the past decade, and has weathered the Africa’s progress and by providing platforms recent global economic turmoil relatively for dialogue between leaders of business, gov- well. Indeed, coming out of the crisis, the IMF ernment and civil society on how best to in- predicts 4.7 percent growth for sub-Saharan crease Africa’s competitiveness. Africa in 2010 and well above 5 percent for the next few years. Yet an assessment of the com- The African region is characterized by a great petitiveness of African economies raises variety of performances with regard to com- questions as to how sustainable this growth petitiveness. Some countries, such as Bot­ will be over the longer term, and highlights swana­, Mauritius, South Africa and Tunisia areas in need of urgent attention to allow Af- have been quite successful in putting into rica to achieve its full economic potential. place many of the factors necessary for eco- Jennifer Blanke. Senior Economist nomic development, and a number of other Director of the Global Competi- Competitive economies are those that have in African countries fare well in individual areas. tiveness Network place factors driving the productivity en- Yet, most African countries lag behind the rest World Economic Forum hancements on which their present and fu- of the world in competitiveness, requiring ef- ture prosperity is built. The level of productiv- forts across many areas to place the region on ity, in turn, sets the sustainable level of a firmly sustainable growth and development prosperity that can be achieved. Twelve spe- path going forward. cific issue areas have been identified by the World Economic Forum as being critical for Figure 1 shows the disparities in the twelve driving national competitiveness: institu- areas of competitiveness across the conti- tions, infrastructure, macroeconomic stabili- nent, on a scale of 1 to 7 (with higher values ty, health and primary education, higher edu- demonstrating better performance). The cation and training, goods market efficiency, length of the bars indicates the difference be- labour market efficiency, financial market so- tween the strongest and weakest performers phistication, technological readiness, market in Africa and the dark blue line shows the Afri- size, business sophistication and innovation. can average. In addition, the dot shows the average performance of OECD countries, pro- Looking forward there is much to be gained viding a stringent international benchmark for by improving Africa’s competitiveness. The comparison. region is not only home to significant natural ...Africa is home to a number of resources but also offers an impressive return The figure shows that biggest differences countries that provide excellent on investment. Not surprisingly, recent years among African countries are in the quality of best practise examples for the have witnessed increasing levels of FDI flow- infrastructure, health and primary education, other African countries struggling ing into the continent. Closing the competi- financial market sophistication, market size to improve their competitiveness... tiveness gaps will be critical for ensuring that and especially macroeconomic stability. this investment translates into economic de- These are areas where there are very strong Jennifer Blanke, Senior Economist velopment and rising living standards. The performers as well as countries struggling. On Director of the Global Competitiveness Africa Commission’s initiative on competitive- the other hand, the smallest gaps are in 48 Network World Economic Forum ness and the World Economic Forum will con- goods and labour market efficiency, techno- Growth and Employment: Visions at Work · Progress Report of the Africa Commission

Fig 1 Figure 1: Variation in competitiveness of African countries, and OECD comparison

Highest/Lowest OECD average Africa average Figure 1 shows the disparities in the

7 twelve areas of competitiveness across the continent, on a scale of 1 to 7 (with 6.4 higher values demonstrating better 6.0 performance). The length of the bars

5.4 indicates the difference between the strongest and weakest performers in 5.0 4.7 4.8 4.9 Africa and the dark blue line shows the 4.8 4.7 4.6 African average. In addition, the dot shows the average performance of

4 3.8 OECD countries, providing a stringent 3.6 international benchmark for comparison.

3.1 3.1 2.9 2.7 2.7 2.6 2.5 2.2 2.3 1.9

1.0 1.3 1 Innovation Institutions Market size Infrastructure Labor market efficiency Business sophistication Technological readiness Technological Goods market efficiency Macroeconomic stability Macroeconomic Health and primary education Higher education and training Financial market sophistication World Economic Forum: Global Competitivenes Report 2009-2010.

logical readiness, business sophistication The figure provides a sense of the weakest and innovation. These are areas in which Afri- competitiveness areas for African countries. can countries are more similar. The areas of The biggest gaps in relation to the OECD, technological readiness and innovation are even compared with the best performing notable for being areas where the majority of countries, relate to the quality of infrastruc- African countries tend do to quite poorly. ture, higher education and training, business 49 2 Views and visons · Key-note articles

sophistication, innovation and most marked- Table 1 provides more details about Africa’s ly, technological readiness. Given the stage of strengths in particular areas. While the table development of most African countries, it is shows that only two countries are ranked more important to put in place the more basic among the top 50 in overall competitiveness, factors for productivity enhancements. This several countries receive strong assessments suggests that the areas in need of urgent at- in important areas. tention are upgrading infrastructure, improv- ing educational systems and ensuring that With regard to the quality of institutions and technology is better utilized for productivity governance, there are a number of countries enhancements in the region. with comparative strengths from throughout the continent, including Botswana, Gambia, Table 1 shows Africa’s strength in The figure also holds some encouraging Malawi, Mauritius, Namibia, South Africa and different areas of competitiveness. news. It shows that the best performing coun- Tunisia. They benefit from institutions on a Numbers indicate the position of African tries from Africa actually outperform the par with countries such as France, Spain and countries scoring among the top 50 in OECD average in four areas: institutions, mac- the United States, attributable to their com- the twelve competitiveness pillars. roeconomic stability, labour market efficien- paratively efficient policymaking and govern- cy, and financial market sophistication. ment services. Having built up strong institu-

Table 1: African countries among the top 50 of each pillar of the Globas Competitiveness Index (CGI)

Overall Macro- Health and Higher Goods Labor Financial Country GCI Institutions Infrastructure economic Primary Education market market Market Technological Market Business Innovation rank stability Education and Training efficiency efficiency Sophistication readiness size sophistication

Tunisia 40 23 37 55 30 32 39 38 South Africa 45 45 45 35 5 24 36 41 Mauritius 57 41 37 26 Botswana 66 29 41 47 Egypt 70 26 Morocco 73 32 Namibia 74 37 32 31 Gambia, The 81 27 26 Algeria 83 2 Libya 88 4 Kenya 98 40 37 48 Nigeria 99 20 42 Lesotho 107 29 Uganda 108 30 Cameroon 111 34 Zambia 112 41 Malawi 119 50

50 Global Leader Singapore Germany Brunei Finland Finland Singapore Singapore Hong Kong SA Sweden USA Japan USA World Economic Forum: Global Competitivenes Report 2009-2010. Growth and Employment: Visions at Work · Progress Report of the Africa Commission

tional environments by international stan- dards, these countries provide examples to follow for other countries in Africa.

Infrastructure is quite well developed in a few African countries, namely Tunisia, South Afri- ca and Namibia. They have built up good transportation infrastructure by regional standards, particularly their roads and ports, ranking higher than a number of OECD coun- tries such as Ireland and Italy. Yet, as is well- known, the underdevelopment of infrastruc- ture remains a key concern for most countries on the continent.

The top performers in the area of macroeco- nomic stability pillar include oil-exporting countries, as well as countries that have man- aged their public finances and monetary poli- cy quite well in recent years, although most countries in Africa continue to struggle in this area as shown by figure 1.

Goods markets are particularly efficient in Tu- African countries included. This reinforces the nisia, South Africa and Mauritius, while Gam- importance of upgrading the provision of bia, Kenya and Uganda boast well-functioning healthcare and education in the region. This labour markets. And at a time when financial is also the case for technological adoption, markets have been raising some concern where not one country from the entire conti- around the world, it is encouraging to note nent of Africa is among the top 50. that six African countries have developed so- phisticated and well functioning financial The overall picture is that although few Afri- markets, including Namibia, Kenya and Zam- can countries demonstrate high overall levels bia. Indeed, South Africa is ranked a very high of competitiveness, pockets of excellence do fifth worldwide in this pillar, on a par with indeed exist in a number of them. This indi- Australia and Malaysia. cates that Africa is home to a number of coun- tries that provide excellent best practice ex- On the other hand, areas where Africa does amples for the other African countries strugg- not boast a number of strong performers in- ling to improve their competitiveness, and ul- clude health and primary education and high- timately the prosperity of their citizens. er education and training, where only Tunisia is among the top 50, and with no sub-Saharan 51 2 Views and visons · Key-note articles

Africa and the MDGs: Assessing Progress Made so Far

Through the adoption of the Millennium De- vocational skills required for building com- velopment Goals, a diverse range of players petitive economies. Yet, concerns remain from across the globe made history by agree- about the limited progress made in achieving ing on a common platform of priorities for ad- the health-related MDGs and in reducing pov- dressing the many faces of extreme poverty, erty and hunger. The status of progress on from hunger, joblessness, disease and lack of some key goals that have a bearing on the housing, to health, gender inequality, and en- recommendations of the Africa Commission vironmental decline. are examined in the rest of this short review.

By making the Goals work as tools for coordi- Eradication of Extreme Poverty and Hunger. nating development policy, within broader Average incomes in Africa have risen since the development priorities, countries can tackle baseline set from the MDGs but the absolute Abdoulie Janneh, United Nations the extreme poverty that is hobbling their number of Africans living below the poverty Undersecretary-General and people, make their economies more produc- line is likely to increase by the target date. Executive Secretary of the tive and reduce the risk of conflict. This is a The results in Africa are mixed with regards to Economic Commission for Africa vital contribution of the Africa Commission growth rate of GDP per person employed which set itself the objective of creating job which is a key area of interest to the out- opportunities for young Africans through the comes of the Africa Commission. In the 48 instrumentality of the private sector. countries for which data is available, the aver- age trend in labor productivity growth be- Private sector led growth has both the poten- tween 1992 and 2007 was positive. tial to create jobs and to increase the ability of governments to provide social services. In- Achieving Universal Primary Education. Cur- deed, assurance of steady income through de- rent trends show that most African countries cent jobs especially for Africa’s teeming youth are likely to achieve universal primary enroll- population as well as access to vital social ser- ment by 2015 although progress in achieving vices have a direct link to poverty reduction the target for primary completion remains very and the attainment of the MDG targets. slow. Progress in literacy rates of 15-24 years old across the continent is commendable. Overall Situation in Africa Ten years after the adoption of the Millenni- Promoting Gender Equality and Empower- Private sector led growth has um Declaration, progress towards the MDGs ment. Most African countries are on track to both the potential to create jobs in Africa has been mixed. The good news is achieve gender parity in primary education, and to increase the ability of that there has been progress in meeting some but not in secondary and tertiary education. governments to provide social of the targets, especially in the areas of net Assessing progress in the share of women in services. primary school enrolment, childhood immuni- wage employment in the non-agricultural sec- zation, combating the spread of HIV/AIDS tor presents a challenge due to lack of gen- Abdoulie Janneh, United Nations and tuberculosis and gender representation. der-disaggregated data. The evidence from Undersecretary-General and These are essential to ensuring that Africa’s Ethiopia, Central African Republic, South Afri- Executive Secretary of the Economic youth are employable and have the founda- ca and Botswana shows a 44 per cent share 52 Commission for Africa tion to acquiring the important technical and which seems to be on the right track. Growth and Employment: Visions at Work · Progress Report of the Africa Commission

Reducing Child Mortality. The under-five tion of the work force but also because their mortality rate shows that the continent is un- positive influence is important for ensuring likely to reach the set target at the rate of pro- that children are educated and inculcate posi- gression. Nevertheless, it is noteworthy that tive values. the under-five mortality rate has declined by 21 percent from 168 deaths per 1000 live Combating HIV/AIDS and Malaria. Progress births in 1990 to 132 deaths per 1000 live continues to be observed concerning the indi- births by 2007. On a positive note, good pro­ cator on HIV prevalence among youth. There gress has been made on the proportion of is also evidence that access to anti-retroviral one year-old children immunized against treatment for HIV patients has expanded sig- measles. nificantly in most countries, but still fails to meet the demand. Improving Maternal Health. The evidence shows that Africa has the world’s highest ma- Malaria remains the largest cause of morbi- ternal mortality rate. However, there is inade- dity and mortality in Africa. In 2006, of the quate data to assess progress since the adop- approximately 800,000 deaths worldwide tion of the MDGs which is of concern not only caused by this disease, 91 % were in Africa. because women form a substantial propor- More concerted action is called for. 53 2 Views and visons · Key-note articles

Under-five-mortality rates in Africa 1990, 2007, 2015 estimate and 2015 target

Promoting employment – 200 intensive growth positively impacts on many of the MDGs 150

Source: UNDP – What will it take 100 to achieve the Millennium 50 Development Goals, 2010

0 1990 2007 2015

Actual Estimate Target

Ensuring Environmental Sustainability. One ness and the establishment of international of the key recommendations of the Africa panels like the Africa Commission. However, Commission was ensuring access to energy in the Doha Round of trade talks remains a sustainable and climate friendly manner. stalled, while debt sustainability remains a This is closely related to the MDG targets on major challenge for Africa. ensuring environmental sustainability and there is evidence of progress in slowing the Way forward pace of deforestation. There is also a general In reviewing progress made thus far, it must trend of reduced per capita emissions of car- be borne in mind that the generalized state- bon dioxide in almost all African countries. ment that Africa will not reach the MDGs by 2015 does not reflect differences across coun- Developing a Global Partnership for Devel- tries and goals. To get a clearer picture, ef- opment. There is mixed progress with regard forts must be made to disaggregate data at to developing a global partnership for devel- regional and country level as well as at the opment. On the positive side has been the sub-national level. support given by the international community to Africa’s NEPAD programme, greater com- Another element that must be taken into ac- 54 mitment to increasing aid flows and effective- count in reviewing the way forward is the ex- Growth and Employment: Visions at Work · Progress Report of the Africa Commission

ample of the Africa Commission. By helping to ment of the human condition we must also re-focus the discourse beyond achieving the begin to look beyond 2015 and pay attention targets of the MDGs to their expected contri- to ways and means of sustaining the momen- bution to growth and employment, the Africa tum that has been generated. Commission has made a vital contribution that deserves to be sustained, supported and The MDGs are listed in detail on the inside emulated in other sectors. sleeve of the back cover of this report.

Indeed, in assessing the progress that has been made, Africa will need to look at the overall development picture including the im- pact of the current global economic and finan- cial crisis.

These crucial issues must be taken into ac- count as we review progress at the High Level Plenary Meeting on MDGs in September 2010. Moreover, since our purpose is the improve- 55 3

Best Practices and Lessons Learnt

56 Growth and Employment: Visions at Work · Progress Report of the Africa Commission

57 3 Best practises and Lessons Learnt

Networking for Youth Employment

Youth Employment Network (YEN) labour market a long and complex process, from limited access to quality education to Like most youth in Liberia, Leroy Beldeh, 30 economies with slow growth of jobs and gen- years of age, started working as a volunteer der segregation. Big challenges call for both due to the marked absence of livelihood op- action and innovation; a strategic combina- portunities in the immediate post-war period. tion YEN strives for! As a partnership of three Along the way, he pursued his major in politi- international organizations – the UN, the ILO, cal science at the University of Liberia, was and the World Bank – YEN is a global platform certified as a teacher and later on received whose goal is to understand and address the training on IT skills. Jobs were scarce in Mon- aforementioned challenges through the pro- rovia – they still are – but Leroy had in mind an motion of youth employment on the develop- idea that could employ him while giving skills ment agenda and knowledge exchange on ef- to peer young Liberians to enter the labour fective youth employment policies and market. programs.

As the coordinator of a youth-led organiza- YEN is working to realize a vision: a real tion, Leroy applied for and won a US$10,000 chance for all youth to find decent and pro- grant from a competitive challenge fund de- ductive employment. To achieve this, YEN fo- signed and co-implemented by the Youth Em- cuses on policy advice, innovative pilot initia- ployment Network (YEN) in West Africa. Be- tives, knowledge sharing, and brokering tween 2009 and 2010 the grant facilitated the partnerships. Its holistic approach to youth provision of graphic, fine arts, and entrepre- employment promotion has led to open doors neurship skills training to over 20 disadvan- from numerous parties: governments, who taged youth with promising prospects for want to learn and share experiences on how self- and wage employment. Trainees ex- to tackle the youth unemployment challenge; pressed delight with the project while re- donors, who seek innovative and results-ori- counting some of the significant impacts be- ented initiatives to support youth in develop- ing made in their lives. They have now ing countries; youth employment practitio- ac­quired life-long and sustainable skills – ners and NGOs, who look for advice and scaling letters, painting, improved drawing opportunities to assess the relevance and im- skills, creative thinking and the spirit of net- pact of their actions; and youth and youth working and are now finding their niche as art groups/organizations, who seek a chance to designers locally and internationally. The articulate their needs and become active challenge fund gave Leroy and his young part- partners in implementing employment gener- ners in the organization a voice and the ating programs. chance to turn their energy and ideas into em- ployment opportunities that will lead to the This compelling package of services and a creation of more and better jobs. wide outreach capacity in a solid results- based fashion drew the Africa Commission’s As Leroy, many young Africans face difficult attention to YEN. As a result, YEN has joined 58 challenges that make their transition into the forces with the International Labour Organi- Growth and Employment: Visions at Work · Progress Report of the Africa Commission

Leroy Beldeh (center) and other members of the youth organization, who benefited from the Yen-led youth challenge fund.

zation (ILO) to create the Youth Entrepreneur- The second area, impact evaluation, hinges ship Facility (YEF); a five-year initiative that on a significant evaluation gap that limits our YEN Mission Statement will inspire and challenge African youth, in Ke- knowledge on the impact of entrepreneurship nya, Tanzania, and Uganda, into being cre- initiatives on youth employment. YEN will ative and innovative entrepreneurs. work on broadening the evidence on what YEN works to engage, educate and mo- works in the area of youth entrepreneurship, tivate actors to provide improved em- YEN will bring to the facility its expertise in providing technical and financial support to ployment opportunities for youth. It is a two key areas: youth participation and impact policymakers and practitioners to help them platform and service provider focusing evaluation. The first area will be carried out conduct rigorous evaluations of their pro- on policy advice, innovative pilot proj- through a youth challenge fund that mimics grams. ects, knowledge sharing, and brokering the model implemented in West Africa (de- partnerships. YEN makes use of its core scribed above). Through this fund, YEN will agency partners’ know how and re- identify innovative approaches designed by sources and ensures youth participa- youth and for youth, test them, and scale tion in delivering its services. them up in case they succeed in improving the labor market outcomes of participating youth. 59 3 Best practises and Lessons Learnt

A new Green Deal for Africa: Renewable Energy and Green Development

tance program to promote the application of renewable energy technologies offered capac- ity building for AfDB staff in green energy and climate change. These two initiatives estab- lished the precedent to pursue more climate- friendly energy projects originating from the operational departments of the Bank.

Currently, the AfDB is developing a new strate- gy to promote green growth – A new Green Deal for Africa. The strategy is overarching the Bank’s approach to clean energy, to climate change, and with the private sector to get in- volved in green development efforts. The Bank is engaging with RMC’s to promote the right policy context for businesses; it is working with African science and technology centres and other development institutions to rein- force the thrust of the green growth concept.

A new deal for a clean future in Africa includes African Development Bank (AfDB) job creation, technology development and environmental sustainability. Innovative tech­ The overarching objective of the African De- nology manufactured in Africa is one impor- velopment Bank Group (AfDB) is to enhance tant aspect of this picture. Ideas are abun- sustainable economic development and so- dant: Cell phones with built-in solar PV cial progress in its Regional Member Coun- chargers made in Africa; the use of hybrid, tries (RMC), thus contributing to poverty re- low-fuel vehicles and transport systems run- duction. A fundamental element of enhanced ning on clean energy; waste treatment sys- economic development is the increased pro- tems; and renewable energy substituting vision and use of modern energy and its as- costly diesel backup generators are just a few sociated services. examples. When combined with sound envi- ronmental practices, these comprise the core Henceforth, the promotion of green energy principles of the green growth concept for ef- has been increasingly incorporated into the ficient manufacturing. Bank’s Private Sector Development strategy since the provision of Danish technical assis- The aforementioned new engagements are tance to the Bank’s Private Sector Depart- flanked by AfDB’s public and private sector ment in 2004. This enabled private sector in- operations in Renewable Energy Finance. For vestments in renewable energy. Furthermore, instance, the Seed Capital Assistance Fund 60 the Dutch supported FINESSE technical assis- (SCAF) was approved by GEF in 2006 and es- Growth and Employment: Visions at Work · Progress Report of the Africa Commission

South of the Sahara, total power consumption is less than that of Mexico

Donald Kaberuka, President of the African Development Bank

tablished in 2007 in collaboration with the to invest further in the development of clean United Nations Environment Program (UNEP). energy such as: (a) converting waste to ener- This Fund provides cost-sharing support for gy by using bagasse (a waste product); (b) tea projects where a seed investment is feasible. companies developing small hydro potential Administered by the Private Sector Opera- near tea estates for their own use and for sell- tions department of the Bank, the SCAF col- ing excess power. laboration agreement with Private Equity partners provides cost-sharing opportunities Finally, The Bank is collaborating with the to increase small-scale investments to offset World Bank to implement the Clean Techno­ expected low returns on investment during logy Fund (CTF) and the Scaling up Renewable the early-stages of clean energy projects. Energy Program (SREP) under the Climate In- vestment Funds. Projects that are implement- More recently, the Bank has initiated two pro- ed for the CTF are wind farms of 300 MW in grammes in an effort to support green tea and Morocco and Egypt, as well as a 100 MW Con- sugar industries in East Africa in collaboration centrated Solar Power plant and a wind farm with UNEP, utilizing funding from GEF: The of the same capacity in South Africa. Techno­ COGEN Africa and Small Hydro for Tea Facto- logies that will be supported under the SREP ries. Both programmes offer technical assis- in Ethiopia, Kenya and Mali range from small tance to sugar and tea operations with co- to medium hydro powerplants over solar- generation of capacity in selected countries plants to co-generation based on biomass. 61 3 Best practises and Lessons Learnt

Training for Rural Economic Empowerment

International Labour Organisation (ILO) linked, to guide the articulation of local devel- opment initiatives and identification and im- The Training for Rural Economic Empower- plementation of income generation opportu- ment (TREE) is a programme developed by nities. Starting with institutional arrange- the Skills and Employability Department of ments and planning among partner organiza- the ILO based on long-standing technical co- tions at the national and local levels, these operation interventions in community-based processes aim to systematically identify em- training. It promotes income generation and ployment and income generating opportuni- local development, emphasizing the role of ties at the community/local level; to design skills and knowledge for creating new eco- and deliver appropriate training programmes; nomic and employment opportunities for the and to provide the necessary post-training poor, the underemployed, the unemployed, support, for instance, access to markets and informal economy workers and the otherwise credit facilities. disadvantaged towards sustainable econom- ic activities. A number of TREE projects have been imple- mented over the past decade. The largest of The TREE methodology consists of a set of these was the USDOL-funded project for Paki- 62 processes, which are distinct but coherently stan and the Philippines in 2002-2007. Total Growth and Employment: Visions at Work · Progress Report of the Africa Commission

beneficiaries in these two countries amount- gramme as a key intervention after the earth- ed to 5,200. TREE projects were also imple- quake in 2007 and has become a component mented in Timor l’Este, Sri Lanka, Madagas- of the national skills development strategy: car, Burkina Faso and Niger. TREE was also Skilling Pakistan. included as a component of broader projects such as those on labour market information in In the Philippines TREE continues to be imple- Viet Nam, local economic development in Ne- mented in Mindanao following closure of the pal, improvement of training systems in Ban- project in 2007 and integrated in the skills de- gladesh and youth employment in the Pacific velopment programme of the local govern- Islands. ment. Average monthly income of training participants increased by more than 90% as The following are some additional examples shown by the tracer studies conducted six of how TREE can be adapted to specific na- months to one year after training. tional contexts to support employment and income-generating activities: In Burkina Faso and Niger the importance of providing literacy and numeracy training in In Madagascar the ILO established collabora- addition to vocational skills was highlighted, tion between the multinational company especially for women who have considerably Lecofruit and small farmers. By training farm- less formal schooling when compared to men. ers on compost techniques, Lecofruit was Thus, basic skills training needs to accompa- able to purchase specialized produce for the ny vocational programmes where literacy international market, improving annual farm- rates are low. er income of between USD 50 and 100. This demonstrates the importance of linking agri- In Bangladesh, the Philippines and Pakistan cultural producers with opportunities for national TREE Manuals were adapted to local higher value-added production techniques. contexts to facilitate future training initiatives for national experts and implementation of In Bangladesh 1,201 women satisfactorily activities. Such documentation is needed to completed skills training with 85% reported support the training of future national ex- in self-employment and 7% in wage employ- perts. ment following training. For the majority of these women this was their first experience earning cash income.

In Pakistan 185 Saving and Credit Groups were organized out of which 98 were formed by women and 87 by men. In many TREE proj- ects, establishing linkages with credit institu- tions has proven crucial to support access to self-employment opportunities. TREE was in- cluded in the Prime Minister’s Recovery Pro- 63 3 Best practises and Lessons Learnt

Support for Financial Services in Tanzania – Some Lessons Learnt

Ministry of Foreign Affairs of Denmark, reduction. The evaluation finds that the sup- (Danida) port programme has not been without its problems and shortfalls, but concludes that Farming and agriculture constitute the main the major problems were dealt with effective- livelihood of most people in Tanzania, but as ly once identified, and that lessons were in many other countries in Africa, the sector learnt and applied as appropriate. faces a number of challenges. Many house- holds experience low and fluctuating in- As an example of the positive results, the con- comes, but a recent study showed that only clusions with regard to the CRDB Bank can be 5% of the rural population had access to for- mentioned. When Denmark started support- mal financial services. Small and Medium ing the Bank in 1994, CRDB was in dire straits: -sized Enterprises (SMEs) often have difficul- insolvent and almost bankrupt. Today it has ties in accessing advisory services, credit and evolved into an important and credible player other forms of financial services as well. This in the financial services sector in Tanzania. It is seen as a barrier to the development of the operates profitably, and offers a wide range of agricultural sector and the rural areas in Tan- commercial products and services, with a cli- zania. entele that includes individual customers, SMEs, corporate and institutional customers, Denmark has supported access to financial and partner microfinance institutions. CRDB services in Tanzania since the 1990s. The aim has attained country-wide coverage with a to- has been to ensure better access to financial tal of 60 branches and in 2008 it became one services such as saving and credit schemes of the largest corporate tax payers in Tanza- for the population – not least the women. The nia. The evaluation also points to emerging focus has generally been divided between ag- challenges for CRDB, e.g. in relation to main- ricultural enterprises and microfinance, in- taining sustainability in its microfinance op- cluding micro, small and medium sized enter- erations and to increasing the momentum prises. The support has formed part of with which it grows its SME business portfo- business and agricultural sector support pro- lio. grammes and has been granted through three channels: Private Agricultural Sector Support Another example relates to the results of (PASS), CRDB Bank Limited, and Financial PASS: Since the 1980s, small- and medium- Sector Deepening Trust (FSDT). sized farmers in Tanzania have encountered major obstacles in accessing finance to en- In 2009, an evaluation assessed the Danish able their businesses to grow. In order to ad- support in the period 2003-2008, amounting dress this issue, PASS was created in 2000 by to USD 13 million. The overall conclusion is the Government of Tanzania under the Dan- that the support for financial services in Tan- ish-funded Agriculture Sector Programme zania has been remarkably successful in pro- Support. PASS’s main products are business moting broader and deeper access to finance development services for agri-businesses and has made a significant contribution to and the provision of credit guarantees for 64 economic growth, employment and poverty bank loans. By 2008, PASS had met or sur- Growth and Employment: Visions at Work · Progress Report of the Africa Commission

Performance results: CRDB SME lending operations

2006 2007 2008 2009

Number of loans processed 440 1,420 2,463 3,136 Taking a long term-view on Value of loans approved (TZS) 7.6 bn 30.2 bn 60.4 bn 68.8 bn financial sector development greatly enhanced the success Number of customers trained 555 950 1,453 1,533 of the Danida financial sector Portfolio at risk (PAR) --- 0.83% 0.88% 1.60% programme in achieving a satisfactory balance between No. of branches with SME ops. 20 25 28 28 economic growth, poverty Value of the guarantee fund (TZS) 2.5 bn 2.5 bn 2.5 bn 2.5 bn reduction and sustainability.

Value of loans guaranteed (TZS) 1.77 bn 5.78 bn 6.76 bn The full evaluation report can be downloaded from www.evaluation.dk Source: CRDB Presentation of implementation status by Mussa Mwinyidaho, CRDB Bank Senior Relationship Manager for SMEs (May 2009).

passed all the objectives set for it in promot- ing increased growth of private commercial farming and agri-business in the areas where it has operated. The Trust is very well regard- ed and positioned as a knowledgeable and efficient facilitator in rural finance. One of its key success factors is that it offers a variety of complementary services to agribusinesses. The PASS model has already been replicated in Kenya, Uganda and Mozambique. Also here, the evaluation points to important chal- lenges, including adding full financial sustain- ability to the operational sustainability al- ready achieved; and the risks entailed in its planned geographical expansion. 65 3 Best practises and Lessons Learnt

Agricultural Research and Private Business Development – Making Ends Meet

Forum for Agricultural Research in Africa new sustainable opportunities for improving (FARA) livelihoods. The need for research extends across the value chains well beyond improv- Agribusinesses in their many forms, from ing technologies to include providing science- smallholder farms to multinational corpora- based evidence for making markets more ef- tions, are the main drivers of innovation and ficient and for framing enabling policies that as such they should be setting the research will encourage the uptake of improved tech- agenda and working with scientists in the nologies. generation of new knowledge. Yet the link­ ages between agricultural research and agri- Even when research has been done ‘on-farm’ business are typically not very strong. the farmers have been more-or-less confined to providing the land and labour rather than The processes of innovation extend across being intellectually involved in the design and the whole agricultural value chain from input evaluation of the research. This has resulted in development and supply, through production, many so called ‘good technologies’ never leav- post harvest handling, processing and mar- ing the shelves of the research stations be- keting to the consumer. If any link of the chain cause there were unforeseen problems down is weak the innovation system as a whole will the value chain that blocked their adoption. be weak. The consultations conducted by the Africa Agricultural research is one of those vital Commission found that “the potential of Afri- links. It is relied upon to solve technical, eco- can universities to promote positive change 66 nomic and policy problems and to generate in society needs to be enhanced”. The poten- Growth and Employment: Visions at Work · Progress Report of the Africa Commission

tial is used most effectively when the univer- will be protected and in which commercial sities have strong links with research institu- ethics will be fostered to allay the fears that What is FARA? tions and business. However, achieving such are presently preventing business people links will require adjustments in the way that from turning to African universities for help in FARA is the Forum for Agricultural Re- African universities function. They need to be the ways that their peers on other continents search in Africa, an umbrella organization engaged with private enterprises at all levels, do. These conditions will be created by estab- bringing together and forming coalitions including smallholders and firms in local and lishing university-led agribusiness incubators of major stakeholders in agricultural re- distant markets. An outcome of this finding is which will have the complementary functions search and development in Africa. FARA the establishment of the Danida-funded Uni- of improving the teaching of agribusiness in complements the innovative activities of versities, Business and Research in Agricul- the universities by engaging teaching and re- national, international and sub-regional tural INovation (UniBRAIN) initiative. search staff and their undergraduate and research institutions to deliver more re- postgraduate students in advancing commer- sponsive and effective services to its UniBRAIN is an innovative attempt at bringing cial innovations. stakeholders. It plays advocacy and coor- businesses, universities and research institu- dination roles for agricultural research for tions together. This includes creating trans- By combining the different comparative ad- development, while the national agricul- parent professional and monetary incentives vantages of all participating institutions and tural research systems (NARSs), ad- for university and research institution staff to enterprises UniBRAIN will demonstrate how vanced research institutions (ARIs) and contribute to agricultural innovation by work- to overcome limited resources to make ends international agricultural research cen- ing with business firms and by bringing- for meet in sustainably strengthening Africa’s ca- ters (IARCs) develop improved technolo- ward innovations that the firms can commer- pacity for developing and disseminating com- gies along the research-to-development cialise and up-scale. It includes creating mercially viable agricultural innovations. continuum in their respective countries institutional infrastructures in which intellec- and coverage areas. tual property and commercial confidentiality 67 3 Best practises and Lessons Learnt

AfDB African Development Bank ODA Official Development Assistance

AGF African Guarantee Fund OECD Organisation for Economic Cooperation and Development Abbreviations AU African Union PASS Private Agricultural Sector Support AUC African Union Commission RMCs Regional Member Countries (AfDB) BRIC Brasil-Russia-India-China SCAF Seed Capital Assistance Fund CRDB CRDB Bank Ltd. (formerly Cooperative and Rural SEFA Sustainable Energy Fund for Africa Development Bank) SMEs Small and Medium-sized CTF Clean Technology Fund Enterprises

DAC OECD’s Development Assistance SREP Scaling up Renewable Energy Committee Programme

The Secretariat of The Africa Commission EAC East African Community SSA Sub-Saharan Africa

[email protected] FARA Forum for Agricultural Research TREE Training for Rural Economic Head of Secretariat: Ms. Winnie Petersen in Africa Empowerment Phone +45 33920359 E-mail: [email protected] FDI Foreign Direct Investment TVSD Technical and Vocational Skills Secretariat team: Development Mr. Michael Hjortsø FSDT Financial Sector Deepening Trust Phone +45 33921416 UNDP United Nations Development E-mail: [email protected] GDP Gross Domestic Product Programme Mr. Anders Bastholm Hansen Phone +45 33920692 GEF Global Environment Facility UNECA United Nations Economic E-mail: [email protected] Commission for Africa www.africacommission.um.dk ILO International Labour Organisation Photo Credits UNEP United Nations Environment Jørgen Schytte (p.1, 6-7, 12, 13, 17, 18, 20, 21, 23, IMF International Monetary Fund Programme 24, 25, 28-29, 32, 36, 38, 39, 42, 43, 47, 49, 51, 52-53, 54, 59, 62, 63 ) LICs Low Income Countries UniBRAIN University, Business and Research Thomas Marott (p.34) Ernst Tobisch (p.13, 21, 49) in Agricultural INnovation Mikkel Østergaard (p.19, 27, 49, 60) MDGs Millennium Development Goals Guy Calaf (p.14, 15) WEF World Economic Forum Klaus Holsting (p.2, 8, 10-11, 21, 26, 41) MICs Middle Income Countries Anders Bastholm Hansen (p.9, 24, 35, 36, 55) Heine Pedersen (p.31) YEF Youth Entrepreneurship Facility 68 Vestas (p.56) NEPAD New Partnership for Africa’s Thorsten Overgaard (p.58) Development YEN Youth Employment Network The Millennium Development Goals

1 Eradicate extreme poverty and hunger 7 Ensure environmental sustainability • Target 1a: Reduce by half the proportion of people living on less • Target 7a: Integrate the principles of sustainable development than a dollar a day into country policies and programmes; reverse loss of environ- • Target 1b: Achieve full and productive employment and decent mental resources work for all, including women and young people • Target 7b: Reduce biodiversity loss, achieving, by 2010, a signifi- • Target 1c: Reduce by half the proportion of people who suffer cant reduction in the rate of loss from hunger • Target 7c: Reduce by half the proportion of people without sus- tainable access to safe drinking water and basic sanitation 2 Achieve universal primary education • Target 7d: Achieve significant improvement in lives of at least 100 • Target 2a: Ensure that all boys and girls complete a full course of million slum dwellers, by 2020 primary schooling 8 A global partnership for development 3 Promote gender equality and empower women • Target 8a: Develop further an open, rule-based, predictable, non- • Target 3a: Eliminate gender disparity in primary and secondary discriminatory trading and financial system education preferably by 2005, and at all levels by 2015 • Target 8b: Address the special needs of the least developed 4 Reduce child mortality countries • Target 8c: Address the special needs of landlocked developing • Target 4a: Reduce by two thirds the mortality rate among children countries and small island developing States through the Pro- under five gramme of Action for the Sustainable Development of Small Is- 5 Improve maternal health land Developing States and the outcome of the twenty-second • Target 5a: Reduce by three quarters the maternal mortality ratio special session of the General Assembly • Target 5b: Achieve, by 2015, universal access to reproductive • Target 8d: Deal comprehensively with the debt problems of de- health veloping countries through national and international measures in order to make debt sustainable in the long term 6 Combat HIV/AIDS, malaria and other diseases • Target 8e: In cooperation with pharmaceutical companies, pro- • Target 6a: Halt and begin to reverse the spread of HIV/AIDS vide access to affordable essential drugs in developing countries • Target 6b: Achieve, by 2010, universal access to treatment for • Target 8f: In cooperation with the private sector, make available HIV/AIDS for all those who need it the benefits of new technologies, especially information and • Target 6c: Halt and begin to reverse the incidence of malaria and communications other major diseases Recommendations of the Africa Commission

• R1: Increased emphasis on the processes involving the private • R8: Unleash the potential of role of the private sector, includ­- sector, business associations, women as drivers of economic ing agriculture, in delivering labour market associations and growth and development. Gender growth and employment. civil society. The aim should be to equality and improvement of Achieving the MDGs and improve the business environ- women’s economic opportunities sustaining progress in health, food ment by expanding and main-­ should be promoted by main- security and education requires taining major infrastructure, streaming and benchmarking strong growth and employment financial markets and skills gender equality in all policies, opportunities for African youth. development and other measures strategies and actions for private This must be recognised at the that enhance competitiveness. sector development and through 2010 UN MDG review conference. International development special efforts by government, the assistance must build upon and private sector, labour market • R2: Shift focus from donor-led support such strategies. organisations, civil society and growth to private sector-led development partners. growth. Increased competitive- • R6: Establish strong partnerships ness of the private sector com­- between the public and the • R9: Realise the potential of African bined with international trade private sector to eliminate barriers youth by giving them influence over liberalisation is the best way to to growth and to strengthen the policies and stra­tegies. Young reduce poverty, create jobs for competitiveness of the private people should be given a much- young Africans and ensure sector. African governments needed voice and the opportunity to sustainable development. should support private sector participate in decision-making, initiatives to develop value chains including through improved • R3: Increase support from and promote labour-intensive career opportunities. development partners to build manufacturing, especially in the private sector, including areas such as agriculture and • R10: Strengthen efforts to through value chain approaches agro-processing. Support from include climate change and other strategies that can help the public sector should aim to considerations in all develop- transform and grow African help develop competitive mar­ ment strategies. The interna- economies and create jobs for kets, which attract private tional community should support African youth. investments and create jobs. African governments in adapting to the risks and impacts of • R4: Ensure progress on gover- • R7: Ensure more is done to open climate change and benefiting nance, which is a prerequisite for markets, including for south- from mitigation measures, economic growth and develop- south trade. Developed countries including through reaching an ment. Efforts should aim to must give African goods full and ambitious agreement during the develop effective public sectors free access to their markets, UN Conference of Parties (COP15) able to combat corruption, protect including easing rules-of-origin in Copenhagen in December property rights and ensure the rule requirements and phasing-out 2009. of law, promote gender equality trade-distorting subsidies. and strengthen the role of civil Relative to other developing 1. Competitiveness: society and the private sector in countries, there is a case for • R11: Focus on those particular holding governments accountable. allowing African countries constraints that prevent African privileged access to markets in businesses from growing through • R5: Develop and implement developed countries, at least for exports in order to improve national development strategies a limi­ted period of time. Africa’s competitiveness in the through broad consultative glo­bal economy. • R12: Promote the use of than punishment in the form of • R19: The private sector, in competitiveness indices as extra costs, for businesses that particular SMEs, must play an advocacy tools and ensure formalise their operations. important role in the provision of ownership among African energy services at the local level. governments, the private sector 3. Entrepreneurship: Their potential should be utilised and civil society in the results • R16: Increase the focus on young by stimulating and expanding the dissemination and follow-up entrepreneurs, both women and market for decentralised, process. men, as drivers of change. Such a renewable energy services. renewed focus should be • R13: Develop a global competi- reflected in policy dialogue, 5. Education: tiveness index that will eventually poverty reduction strategies or • R20: Focus on and invest in benchmark all African countries other development plans, and post-primary education, better against international standards medium-term and annual considering the requirements of and spur debate and action on budgets. the private sector, so Africa can concrete measures that African become globally competitive. countries should implement to • R17: African governments together promote private sector-led with stakeholders, including the • R21: Enhance investment in growth. private sector, schools, universi- secondary education, specifically ties, civil society, and youth organi- within technical and vocational 2. Access to finance: sations, must promote entrepre- training and skills development for • R14: The financial sector in African neurship as a viable, pro-poor young women and men. The Africa countries must scale up access to development strategy, given that Commission recommends the finance, in particular investment most new jobs are being created expansion of the Education for All finance, for SMEs and develop the through small enterprises and self- - Fast Track Initiative to include necessary capacity. For their part, employment. In particular, the post-primary education, including African governments, supported development of comprehensive technical and vocational skills by international development programmes directly aimed at development as part of a partners, must provide a encouraging young entrepreneurs comprehensive approach to predictable regulatory framework, to set up and grow viable education for all. facilitate capacity development of businesses, including facilitating financial institutions and access to start-up capital, should • R22: African countries and enterprises, and provide effective be considered. regional organisations, supported market-based instruments that by development partners, should increase access to investment 4. Energy: invest in the creation of better finance. • R18: Increase production, linkages between university distribution and productive use of education, research and the • R15: African governments must electricity and other forms of private sector in agricultural facilitate a better business energy in a cost-effective and development and value chains. environment for small enterprises. climate-friendly manner. This Such an investment should be This requires basic infrastructure need has to be addressed at the based on national and regional (which may be financed through regional, national and local levels. strategies and funded through aid and public-private partner- In communities with limited access African organisations, with ships), the registration and to energy, the need can be met by particular emphasis on promoting protection of property rights, a an efficient utilisation of local and innovation and gender equality. less burdensome regulatory renewable energy sources. framework, and incentives, rather

CO2-neutral product Published by:

The environmental impact of CO2 from producing this Secretariat of the Africa Commission printed matter has been neutralised by buying CO2 Ministry of Foreign Affairs of Denmark quotas from Climate Friendly via the WWF. Asiatisk Plads 2 DK-1448 Copenhagen K This report was printed by an ISO 14001 eco-certified and www.africacommission.um.dk EMAS-registered printing firm. Design & Production: Datagraf

ISBN: ISBN 978-87-7087-454-0 (print version) ISBN 978-87-7087-455-7 (internet version)

1st Edition August 2010