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August - November 2017 www.un.org/africarenewal Partnerships giving Africa a new look Private sector invests in mega projects Uproar over Internet shutdowns
CONTENTS August - November 2017 | Vol. 31 No. 2
3 SPECIAL FEATURE
COVER STORY
Partnerships giving Africa a new look
4 Public-Private Partnerships provide lifeline for cash-strapped countries
6 Global companies give Africa a second look
8 Alternative financing strategies to boost small businesses in Africa Children in school in Monrovia, Liberia.
10 Interview: Li Yong, Director-General of UNIDO UN Photo/Christopher Herwig
12 An integrated Africa: A boon to the private sector
14 Philanthropists partner to fund Africa’s health sector
16 Public-Private Partnerships at work in Africa
18 Interview: Lise Kingo, Executive Director of the UN Global Compact
Managing Editor
ALSO IN THIS ISSUE Zipporah Musau
20 Africa’s app-based taxis battle Uber over local market share Sub-editor
Kingsley Ighobor
22 Interview: Gilbert Houngbo, President of IFAD
24 African airlines wait for open skies Staff Writer
26 More African women in politics Franck Kuwonu
27 The new face of the Sahel Research & Media Liaison
28 Interview: François Loucény Fall, Head of UNOCA Pavithra Rao
30 Private schools gain a foothold in Africa Eleni Mourdoukoutas
Ihuoma Atanga
32 Uproar over Internet shutdowns Fatima Sene
Design & Production
DEPARTMENTS Paddy D. Ilos, II
35 Books
Administration
35 Appointments Dona Joseph
Cover photo: Gautrain rapid rail system, South Africa. Gauteng Province Roads and Transport
Distribution
Atar Markman
Africa Renewal (ISSN 2517-9829) is published in supporting organizations. Articles from this
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2 AfricaRenewal August - Noverber 2017
Faced with dwindling funds, African governments are turning to the private sector to cover
the financing gap for much-needed infrastructure and other development projects through
public-private partnerships (PPPs). Analysts, however, want countries to examine these
partnerships closely before signing on to them to avoid falling into a trap of bad debt.
PARTNERSHIPS FOR DEVELOPMENT
Henri Konan Bédié Bridge in Abidjan, Côte d’Ivoire. Bouygues Construction
Partnerships giving Africa a new look
Private sector working with governments to fund mega development projects
T
he private sector in Africa is were to close the gap with the median for Tanzania, Uganda, and others have bene-
playing a crucial role in the conti- the rest of the developing world, according fitted from PPPs. Examples of PPPs at
nent’s economic development— to a World Bank report of April 2017. work in Africa include the Henri Konan
more than it did a decade ago. Closing the infrastructure gap relative Bédié Bridge in Côte d’Ivoire, the Lake
Following deep shortfalls in national to the best performers in the world could Turkana Wind Power Project in Kenya,
budgets, African governments are turning increase growth of GDP per capita by Senegal’s Dakar-Diamniadio Road, power
to public-private partnerships (PPPs) 2.6% per year. The largest potential and water projects in Ghana, Nigeria and
to bridge the financing gap. Foreign growth benefits would come from closing Rwanda and the Tanger-Med port project
investments supported by collaborative the gap in electricity-generating capacity. in Morocco, among others.
co-financing with development finance In the last 10 years, the continent has However, even as PPPs continue
institutions offer the prospect of neces- welcomed partnerships in such infra- to change the face of Africa through
sary capital to finance industries, build structure projects, with the construc- mega projects, experts are urging African
infrastructure, provide social amenities tion of roads, bridges and dams being governments to be careful and learn from
and create jobs. the most common. There are also part- failed PPPs when signing on to new part-
Narrowing sub-Saharan Africa’s nerships in power generation, renew- nerships.
infrastructure gap could have a big effect able energy, health and telecommuni- Mukhisa Kituyi, the secretary-general
on growth. For instance, growth of GDP cations. of the United Nations Conference on
per capita for the region would increase Côte d’Ivoire, Ethiopia, Ghana, Kenya,
by an estimated 1.7% per year if the region Morocco, Nigeria, Rwanda, South Africa, see page 23
AfricaRenewal August - November 2017 3
Partnerships provide a lifeline
for cash-strapped countries
Governments reforming to woo private capital
By Kingsley Ighobor
S
outh Africa and Nigeria may The project will be implemented,
be Africa’s biggest economies, coordinated and managed by the Tangier
according to the International Mediterranean Special Agency (a private
Monetary Fund, but thanks to public company with public prerogatives), oper-
private partnerships (PPPs), Morocco, ating under an agreement with the govern-
Rwanda, Côte d’Ivoire and a few other ment and interacting with the different
smaller countries can boast world-class ministries involved.
infrastructure. Typically, PPPs consist of contrac-
In an article published in the August tual arrangements referred to as BOTs,
2016 issue of the African Journal of which stands for Build, Operate and
Management Research, authors Bernadine Transfer. For example, a private company
J. Dykes and Carla D. Jones described PPPs may provide financing for a road project
as “cooperative arrangements between and the government grants permis-
governments and multinational corpora- sion to such a company to operate the
tions that are created to finance, construct road for a specified period. This allows
and manage infrastructural projects.” the company to recoup its investment,
The writers observed that in past after which it transfers operations of the
decades “Africa’s involvement in PPPs road to a government agency. The Dakar-
has been limited relative to other conti- Diamniadio Road in Senegal, which was PARTNERSHIPS FOR DEVELOPMENT
nents,” but that lately, due to pressures on completed in 2013, is a good example. The
national budgets and the inability of the total cost of the project is estimated at
public sector to provide efficient services, $335 million. deficits, former minister for finance and
“African governments are looking harder economic planning Seth Terkper says
for infrastructure development cash Huge infrastructure gaps the country needs to invest $1.5 billion
to support population growth and the Africa needs $93 billion annually for annually in infrastructural develop-
demand for commodities.” infrastructure, which is approximately ment; however, other analysts believe
With a gross domestic product of 15% of the continent’s GDP, notes the financing requirements could be up to
around $37 billion in the 1990s, according African Development Bank (AfDB). $3.5 billion.
to the World Bank, Morocco could not Therefore, PPPs are lifelines for cash- Even South Africa, often touted
afford huge infrastructure investments strapped governments. as a model for PPPs in Africa, is facing
while fulfilling its recurrent budg- “Governments are increasingly energy problems “best characterised by
etary obligations, including paying civil turning to PPPs to bridge the financing the power shortfalls and load shedding,”
servants’ salaries and running its govern- gap and deliver more efficient and states Ventures Africa. Experts cannot
ment. cost-effective infrastructure,” writes agree on what South Africa requires for
Then a lucrative opportunity emerged Ventures Africa, a website dedicated to infrastructure, but figures range from
five years ago that took advantage of African business. $4.5 billion to $8 billion annually.
Morocco’s unique position on the Straits Kenya, for example, requires infra- The private and public sectors like
of Gibraltar, with proximity to Europe. structural investments of between $4 to consider a PPP project a win-win: the
The Tanger-Med will be the largest port billion and $5 billion annually to cover government can claim to have led efforts
in North Africa, and part of a wider plan to its financing gap. Projects such as the to provide infrastructure or services
boost the economy of the region. Lake Turkana Wind Power Project have for citizens, and private investors can
The idea is to create a logistics hub been successfully executed through PPP promote their involvement in socioeco-
to attract manufacturers to the region, arrangements. nomic development, even if they also set
thereby turning the greater Tangiers Neighbouring Tanzania needs up to their eyes on profits.
area into a logistics and export centre $8 billion per year to meet its infra- Yet a government’s perception of
for moving goods to the USA, the eastern structural financing shortfall. In services or infrastructure as a social
Mediterranean and beyond, to Asia. Ghana, a country with increasing budget undertaking, especially in poor countries,
4 AfricaRenewal August - Noverber 2017
contrasts with the private sector’s profit- Private firms are not warmly The Tanger-Med port located about 40 km east of
driven market solutions, and often leads embracing PPPs in Africa just yet. In its Tangier, Morocco. Bouygues Construction
to problems. 2015 report Infrastructure Financing
“As with many markets,” reports Trends in Africa, the Infrastructure the continent, says that African countries
Oxford Business Group, a UK-based Consortium for Africa (ICA), an organisa- can achieve better health-care systems
business intelligence firm, “there have tion that promotes access to sustainable through PPPs. Dr. Thakker proposed a
been stumbles with the implementation infrastructure services on the continent, three-phase strategy for implementing
of some PPP projects [in Morocco]. notes that uncertainty and a lack of polit- PPPs in Africa.
“Partnerships with private firms in ical will are barriers to successful PPPs. The first phase, P1, consists of a govern-
the utilities sector, for example, have faced The ICA stresses that many public ment entering into dialogue with a private
opposition over tariff and pricing changes, institutions lack capacity, which stokes investor to clarify roles and vision. P2
as well as questions over access, with fears of financial risk for private investors. consists of “creating and adapting regula-
privately managed water utilities in major It criticized weak regulatory frameworks tory frameworks and contractual obliga-
cities attracting protests over pricing and and corruption in some countries. tions and the institutionalisation of PPP
other issues,” notes the business intel- The AfDB lists factors working against Acts.” P3 “will be the project implementa-
ligence firm. successful PPPs: “inadequate legal and tion phase, which will include building and
In late 2015, private investors engaged regulatory framework for PPPs; lack of tech- operating projects and products, followed
by the Nigerian government to distribute nical skills to manage PPP programmes by evaluation and sharing of information
electricity faced public outcry over plans and projects; unfavorable investor percep- and case studies.”
to increase electricity tariffs. Unable to tion of country risk, Africa’s limited role in Some countries are already changing
establish their preferred tariffs, Nigeria’s global trade and investment, small market laws or enacting new ones to improve the
electricity distribution companies last size, limited infrastructure and limited business environment. Kenya’s PPP laws
April claimed they had lost about $2.3 financial markets.” are meant to assure the private sector of
billion since November 2013, when they Dr. Amit Thakker, who heads the policy stability and market certainty. The
took over responsibility for power distri- Africa Healthcare Federation, which advo-
bution. cates for better health-care systems on see page 23
AfricaRenewal August - November 2017 5
PARTNERSHIPS
PARTNERSHIPSFOR
FORDEVELOPMENT
THE GOALS
W Global companies give
hen travelling abroad for
work and looking for accom-
modation, Joe Eyango, a
Africa a second look
Cameroonian living in the US, considers
two factors: convenient transportation
from the airport and around the city and
reliable Internet access. He is a univer-
sity professor and wants to be able to South Africa hosts most of the top companies
jet in, hit the ground running, make his in Africa, but other countries are coming up
presentation and zoom off to another
destination in a day or two. By Zipporah Musau
Mr. Eyango has been to various coun-
tries in Africa for business and work but South Africa attracts many profes- car manufacturers BMW, the Standard
has reasons for preferring South Africa. sionals and big multinationals. It’s Bank Group, Barclays Bank, Vodafone
“South Africa has a lot to offer currently home to more than 75% of all (one of the world’s largest communication
compared with other African coun- top global companies in Africa. companies), Volkswagen, and General
tries. The road system is good, there is “Where these big companies choose Electric. There is also FirstRand, Sasol,
adequate electricity and reliable Internet to invest depends on whether the envi- Sanlam, and MTN Group.
connection, which is necessary for work ronment is right for business. Investors In an earlier interview with South
and business,” Mr. Eyango told Africa are interested in relatively stable coun- African officials on why they’d chosen
Renewal in an interview. tries, good infrastructure, reliable the country as an investment destination,
Recently, having been invited to pres- communication, electricity and labour,” Sam Ahmed, then the managing director
ent a conference paper on a tight schedule, says Dr. John Mbaku, a researcher at of Britannia Industries, an India-based
Mr. Eyango flew into Johannesburg from Africa Growth Initiative at the Brookings manufacturer of biscuits, snacks and
Amsterdam, spent less than 30 minutes in Institution and also a professor of confectionery, said his organization had
customs at the O. R. Tambo International economics at Weber State University, US. been looking for a country that would
Airport, took a taxi and was at his hotel in Some of the global companies with a give it access to the entire African market
less than an hour since arrival. presence in South Africa include luxury while keeping its costs low.
6 AfricaRenewal August - Noverber 2017
However, despite its successes, South the continent has welcomed PPPs for
Africa continues to grapple with a high projects in infrastructure, electricity,
crime rate (especially in urban areas), health and telecommunications.
graft accusations and the political uncer- Lenders like the African Development
tainty that businesses loathe. Bank are urging African countries to
Dr. Mukhisa Kituyi, the secretary- improve business environments by
general of the UN Conference on Trade “creating the necessary legal and regula-
FDI into Africa by and Development (UNCTAD), the UN tory framework for PPPs, and to facilitate
projects numbers 2015 body that deals with trade, investment networking and sharing of experience
and development issues, acknowledges among regulatory agencies and other
Country Projects that South Africa has the oldest and most similar organizations.”
South Africa 118 developed market economy in the whole
Kenya 85 of Africa for historical reasons: the market Tread carefully
Morocco 71 grew out of a strong mining and industrial However, even as PPPs begin to change
Egypt 59 base and the financial industry. the face of Africa, there is need for coun-
Nigeria 51 However, according to Mr. Kituyi, tries to tread carefully and to learn from
Ghana 40 things are now changing and other African failed PPPs when signing up for such
Mozambique 29 countries are also attracting big investors. partnerships.
Ethiopia 27 “It’s true South Africa has had “Ask yourselves, does the state have
Côte d’Ivoire 26 a head start, but in net terms, there is the capacity to forge ahead with these
Tanzania 20 faster growth in alternative centres for partnerships? This is necessary to avoid
Uganda 20 both manufacturing and service delivery bad debt,” says Mr. Kituyi, adding that
Other 159 than in South Africa. Today, the finan- governments should not let private
Total 705 cial services industry is growing faster in companies drive the agenda.
Source: fDi Markets Morocco than in South Africa,” Mr. Kituyi This word of caution is echoed by
told Africa Renewal in an interview. the Brookings Institution’s Mr. Mbaku,
He notes that some multinational who is advising African governments to
enterprises operating out of South ensure that PPPs work to their advan-
Africa have relocated substantially. “We tage: “If you have a weak or corrupt lead-
BMW South Africa announces the production recently saw the opening of the Volvo ership, you may not have the power or the
of its one-millionth BMW 3 Series sedan at its truck-manufacturing plant in Mombasa. skills required to negotiate a favourable
manufacturing plant in Rosslyn, Pretoria in And similarly, we have seen many other partnership. You will end up with a PPP
South Africa. BMW Group services, particularly IT-based services that is not really a partnership.”
and telecommunications, growing in new Mr. Mbaku gives the example of oil
“In South Africa you have first-world nodes like Nigeria, Kenya and Rwanda.” companies that have been operating in
infrastructure and third-world cost,” Mr. Africa for more than 20 years yet still
Ahmed said. The company’s production Fringe benefits depend on expatriate labour instead of
costs in South Africa were much lower So why should African governments employing locals. Such companies are
than in Southeast Asia, the company want to encourage global companies to reluctant to transfer skills, knowledge
headquarters. set up shop in their countries? and technology to the locals.
Big businesses are also attracted to Driven by insufficient funds, African Another problem with PPPs is the
countries where the legal system works, governments are increasingly turning imbalance of power. “If you are a govern-
so they can be assured of justice should to private-sector companies for a much- ment engaged in a PPP on a development
legal issues arise. South Africa’s judiciary needed boost. Foreign investments project, there is inequality in power.
has been hailed for its sound judgements provide capital to finance industries, The multinational has capital, skilled
and independence from political machi- boost infrastructure and productivity, manpower and [an] external market. The
nations relative to other African coun- provide social amenities and create jobs, government has no power over these,”
tries. all of which can help a country reach says Mr. Mbaku.
Another attraction for big businesses its economic potential. And as coun- Despite the challenges, however,
is human resources. The efficiency and tries rush to implement the Sustainable PPPs will continue playing a major role
smooth operation of these large compa- Development Goals, funding is key. in the development of poor countries.
nies depend on the calibre of its labour In Africa, governments and industry For African countries to attract multina-
force. Despite many years of apartheid, are gradually forming public-private tionals and other big investors to partner
according to Mr. Mbaku, South Africa partnerships (PPPs) in which compa- with, their governments need to put their
provides its citizens with relatively good nies provide capital while govern- house in order—improve infrastructure,
quality education the multinationals are ments ensure an environment condu- communication, security and the legal
looking for in their labour force. cive to business. In the last 10 years, system, and fight corruption.
AfricaRenewal August - November 2017 7
Alternative financing strategies to
boost small businesses in Africa
Essential small and medium-size enterprises need funding
By Franck Kuwonu
A
few years ago, more than half a the World Bank and others often realise manager at the Togo-based LOGOU
century after the concept was that the funding available cannot meet the Concept Togo (LCT).
first proposed, the government financial needs of the SMEs. LCT manufactures a type of electric
of Côte d’Ivoire completed construction “In Ghana, SMEs can safely be food mixer (the Foufou Mix) that is used
of the Henri Konan Bédié Bridge, a span regarded as the backbone of the economy, in place of the traditional mortar and
over the Ébrié Lagoon linking the north employing thousands of people,” Ghana’s pestle and saves women the energy used
and south of Abidjan, the country’s main minister of finance, Ken Ofori-Atta, said in pounding yam for fufu, a West African
city. The project became a reality after at a gathering of Ghanaian entrepreneurs staple dish.
the government received development in June. “The Foufou Mix allows for quick and
bank and private capital financing. SMEs represent 92% of all local busi- hygienic yam preparation in approximately
Similarly, the Dakar-Diamniado nesses in Ghana, providing up to 85% of eight minutes,” the African Innovation
Highway in Senegal, although a public manufacturing jobs in the country and
structure, was built and is being operated contributing about 70% to the country’s
by private companies. GDP.
PARTNERSHIPS FOR DEVELOPMENT
Increasing difficulties in obtaining In Nigeria, 37 million SMEs employ
traditional financing, including bank about 60 million people and account for
loans for public infrastructure such as about 48% of the country’s GDP.
roads, railways and dams are forcing South Africa (the most advanced
African countries to explore alternative economy south of the Sahara) is home to
financing approaches. more than 2.2 million SMEs, about 1.5
Having the private sector build and million of them in the informal sector.
operate infrastructure, recoup its invest- About 43% of South Africa’s SMEs operate
ments and later transfer the infrastruc- in trade and accommodations, according
ture to governments is one way of compen- to South Africa’s Small Enterprise
sating for the shortfall in official develop- Development Agency (SEDA), which,
ment assistance and banks’ reluctance to among other functions, implements the
provide loans. government’s small business strategy.
A 2016 SEDA report says that SMEs
Economic backbone face challenges in accessing finance and
Aid to the least developed countries, most markets.
of which are in Africa, fell by 3.9% in 2016, Yet eight out of 10 jobs and nine out of
according to the Organisation for Economic 10 of all businesses in sub-Saharan Africa
Co-operation and Development, which are related to small business, according to
promotes policies that improve economic UN figures.
and social well-being of rich countries.
At the moment, governments are Potential
coming up with innovative financing strat- SMEs, especially those in the informal
egies, while big corporations are relying sector, have a hard time accessing bank
on investments or bank loans to grow and loans. A majority of African SMEs rely on
expand their businesses. However, Africa’s personal savings or start-up capital from
small and medium-size (SMEs) enter- friends and family.
prises, still struggle for financing. “Even when a bank is willing to
Governments that seek financing lend them some money, the collateral
from private partnerships or interna- and guarantee they require and some-
tional financing institutions such as the times the down payment is just too much
African Development Bank (AfDB), the for a small company like us,” says Alex
International Finance Corporation (IFC), Treku, the communications and projects
8 AfricaRenewal August - Noverber 2017
Foundation (AIF) said when it named LCT to markets are other challenges African be reluctant to lend to.
the runner-up for the Innovation Prize for MSMEs face, but access to financing is the Last June, the AGF announced that
Africa in 2014. most critical. through a partnership with the African,
AIF added that “pounding of yam On the occasion of the first-ever Caribbean and Pacific Group of States, the
has traditionally been done by women; MSME Day marked globally on 27 June, European Union and the UN Development
this innovation provides a solution not the AfDB called for an increase in new Programme, some 5,000 SMEs in “devel-
currently being contemplated by inter- and affordable financing schemes. Both opment minerals” in five countries will
national manufacturers. It also opens up the AfDB and the IFC would like SMEs to have more affordable financing because of
possibilities for a whole new industry for have increased access to financing. Last AGF’s $12 million credit guarantee.
manufacturing of such appliances on the year the AfDB reported helping 156,000 Two years ago, the IFC and Ecobank, a
continent.” SME business owners through financial pan-African commercial and investment
One-third of Nigerians reportedly eat intermediaries such as commercial banks, banking group, launched a $110 million
fufu, making the country of 170 million development investment and guarantee risk-sharing facility that allows Ecobank
people an attractive market for the gadget. funds. That’s a good start, but hardly to lend money to SMEs operating in fragile
Yet LCT is able to manufacture only about enough, experts say. and conflict-afflicted states in West and
a hundred mixers a month, according to By providing coverage for risks asso- Central Africa. In addition to current
Mr. Treku. The reason? “We don’t have ciated with lending to SMEs, an inter- efforts by traditional banks to lend to
access to bank credit or funds to grow our mediary such as the African Guarantee SMEs, experts have urged SMEs in Africa
business,” he says. LTC currently employs Fund (AGF) can provide credit guarantee to explore innovative financing, such as
19 people. facilities to financial institutions that give cooperative financing and diaspora funds.
Operational capacities and access loans to enterprises they would normally The World Bank is said to be exploring
other ideas like crowdfunding—an innova-
tive way of financing a project by raising
funds from a very large number of people—
peer-to-peer lending, social impact bonds
and development impact bonds.
But the AfDB wants credit providers
to increase lending by at least $135 billion
to meet demand by African SMEs. As the
overall financing gap in developing coun-
tries is currently between $2.1 and $2.6
trillion, new strategies are required to
finance the 17 Sustainable Development
Goals.
According to the World Economic
Forum, “blended finance” could plug this
hole. Should these funds become avail-
able, the majority of SMEs still operating
in the informal sector will have to “take
giant steps towards formalisation in order
to increase their potential for accessing
formal credits,” according to a 17 March
study, Financing the Growth of SMEs in
Africa: What Are the Constraints to SME
Financing within ECOWAS? published in
the Review of Development Finance.
The authors of the study maintain that
policy reforms are as necessary as avail-
able financing. They also suggest requiring
companies to provide credit information
to boost creditors’ confidence and to make
sure that government-sponsored credit
schemes are managed efficiently and
transparently.
Chef and owner of a restaurant and catering
company in Liberia. UN/ C. Herwig
AfricaRenewal August - November 2017 9
INTERVIEW
Africa on the road to
century. But let me talk about factors
hindering industrialization. Long ago the
international development institutions
industrial progress
wrongly prescribed deindustrialization
for some countries. An ambassador of
an African country actually told me that
the very painful process of deindustri-
— Li Yong alization forced them to stop exporting
cheese, cocoa beans and other products.
Another reason is that countries change
A s the director general of the United Nations Industrial Development Organization
(UNIDO), Li Yong leads a specialised agency that promotes industrial development,
inclusive globalization and environmental sustainability. Recently in New York, Mr. Yong took
policies too often. Insecurity occasioned
by frequent changes of policies scares
away investors and disrupts the industri-
part in a special meeting on “innovation in infrastructure development and sustainable indus- alization process.
trialization” in developing countries and countries with special needs. He spoke with Africa
Renewal’s Kingsley Ighobor on a range of issues pertaining to Africa’s industrialization. Here Were the structural adjustment
are the excerpts: programmes (SAPs) of the 1980s a
wrong prescription?
I do not want to talk about that because
Africa Renewal: You are attending underdevelopment of the industrial I was involved in the whole process of
a meeting on industrialization in sector, some countries are not growing structural adjustment lending when I
developing countries, which includes fast enough. was working at the World Bank. I would
many African countries. How does just say that some of the prescriptions
Africa fit in the picture? What are the factors hindering provided to African countries were not
Li Yong: The ECOSOC [UN’s Economic Africa’s industrialization? very good.
and Social Council] meeting is impor- The sudden drop in commodity prices
tant because of SDG 9, which calls for caused problems because it lowered Critics say meetings such as the one
inclusive sustainable industrialization, the competitiveness of commodities- you are attending are all talk but no
innovation and infrastructure. Africa dependent countries. action. What’s your take on this?
has to compete within the global value I think that sometimes if there’s too much
chain, the manufacturing value addition But commodity prices dropped only talk, too much debate on the theories, on
and with the growth and speed of other recently. the reports and studies, action is lost. Just
regions. Two-thirds of the least devel- No, not just recently. Let’s say this do it! If it’s creating jobs, let’s go for it.
oped countries are in Africa. Due to has been the case throughout the last
UNIDO’s Programme for Country
Partnership (PCP) aims to mobilise
PARTNERSHIPS FOR DEVELOPMENT private and public sector resources
for industrialisation and to provide
technical assistance to countries.
How is that going?
It’s an innovative way to support a coun-
try’s industrial development. We collabo-
rate with governments and development
institutions to create industrial devel-
opment strategies, and we support such
strategies. Usually there is a financing
issue: the government needs to allocate
resources to basic infrastructure. But
development institutions also need to
provide supplementary financing for
infrastructure such as roads, highways,
railroads, electricity, water supply, etc.
We advise governments to formulate
Li Yong, Director-General of the United Nations
Industrial Development Organization (UNIDO).
Africa Renewal/Eleni Mourdoukoutas
10 AfricaRenewal August - Noverber 2017
policies that protect investments that countries that used to export cocoa beans capacity, if there are foreign investors
will trigger private-sector financing and are currently producing some chocolate that come in to build factories and create
FDI [foreign direct investment]. products locally. In Ghana, a private jobs, why not?
company is producing cocoa butter, cocoa
You were heavily involved in the oil and cocoa cake for domestic consump- Sustainable industrialization produces
development of agricultural and tion. And UNIDO supported them with long-term results, I believe. Countries
small and medium-size enterprises in a laboratory, equipment and technicians grappling with poverty need resources
China. What lessons can Africa learn to enable them to receive certifications immediately. Such countries cannot
from China? to export to Europe and Asia. Consider slow down their unsustainable exploi-
There must be a vision and a strategy. Ethiopia, with 95 million people and tation of natural resources.
Develop policies that support small millions of cattle and sheep and cows. I believe we should have industrial devel-
and medium-size enterprises (SMEs) But they only export around 7% of their opment in an inclusive, sustainable way.
in the agriculture sector, to begin with. live cattle to other countries because If we manufacture goods with a heavy
In China, the number one document they don’t have processing capacity. They pollution of water, soil or air, there’s a
released at the beginning of the year was don’t have the standard certifications for cost to people’s health. Think about what
a plan to support agriculture develop- export, although the quality of meat is it will cost to address those pollutions in
ment. Second, take concrete measures. excellent. Currently we are supporting the future. At UNIDO, we do not approve
We cannot talk about empty themes. Ethiopia to set up a project for testing so projects for implementation unless they
Third, support with financial resources, that they meet the criteria for exporting meet our environmental standards.
capacity building and training. Fourth, to other countries. Actually, African agri-
provide an environment for SMEs culture can connect to the global value Are African leaders receptive to your
to thrive. Lastly, link the agricultural chain. ideas?
sector to agro-industry, agribusiness and Most leaders I’ve met request UNIDO’s
manufacturing. Countries may set up agro-industries support. Except for countries in diffi-
in areas where they have a competi- cult situations such as those in conflicts,
Not long ago, a World Bank report tive advantage, but the lack of tech- others need to show a strong commit-
stated that Africa’s agribusiness nical skills and inadequate infra- ment to industrialization.
could be worth $1 trillion by 2030. structure, particularly roads and
Could agribusiness be a game changer electricity, is still an issue. Are you seeing such commitments?
for the continent? We have the traditional toolboxes, Yes, in Côte d’Ivoire, Ethiopia, Kenya,
Yes, although I wouldn’t say that the $1 including vocational training. Capacity Senegal, Tanzania and Zambia—many
trillion figure is exactly accurate. But training is a very popular UNIDO leaders are showing a commitment. The
agriculture is a very important sector programme. With donor support, we new Nigerian president is committed
for Africa. The job creation element in develop training programmes like we did to industrialization. However, coun-
the sector requires innovation. If you try in Tunisia and Ethiopia, where young tries in conflict, such as the Democratic
to grow wheat, corn, fruits, etc without engineers received training in how to Republic of Congo [DRC], may have
connecting to agro-processing food pack- operate big equipment. The second difficulties industrializing. The DRC
aging and the global value chain, there is example is that countries need large- has many resources, including gold and
very little opportunity for job creation. scale agro-processing projects. For oil. They have a vast land—you can grow
Some people argue that if you introduce instance, Ethiopia developed hundreds of anything there—and a huge population.
modern technology, some farmers may industrial parks that are helping develop But internal conflict is slowing indus-
lose jobs. I don’t accept this argument the capacity to manufacture many more trialization. Yet a peaceful Rwanda is
because farming services connect to the products. moving very fast with industrialization.
market. With agro-processing, farmers So it depends on a country’s situation, the
have more time and capacity to do things Most foreign investors target Africa’s commitments of its leadership and the
beyond planting and growing crops. extractive sector, which generates few efficiency of its administrative systems.
jobs. How do you encourage invest-
The goal of the African Agribusiness ments in the agriculture sector? How do you see Africa in about 10 years?
and Africa Development Initiative, The best approach for Africa is not to Many countries will move up the soci-
which UNIDO supports, is to link say, “Don’t export raw materials.” Look oeconomic ladder and become middle-
farmers to big markets. But African at Australia and other countries that income countries. There will be more
farmers cannot compete in the global still export raw materials. They did their industries to manufacture goods and
marketplace because many Western cost-benefits analysis and decided not to create jobs. I think it’s possible. The
governments subsidize farming. set up manufacturing companies. What global community is ready to support
What’s your take? is needed is market discipline. But this Africa. Most importantly, African
Africa can be innovative about this. doesn’t mean that all countries must countries are committed to industrial
For instance, cocoa-producing African export raw materials. If they have the progress and economic growth.
AfricaRenewal August - November 2017 11An integrated Africa: A
boon to the private sector
Intra-African trade can help boost profit
By Ihuoma Atanga
C
an developing nations thrive in a their capacity. It can do this by providing
global economy without a global, physical infrastructure, competitive
collective mind-set? This is a markets, business support and financial
question every developing economy must services, according to the report.
ponder if it plans to have its economy Once an enabling environment is
scaled up and stay up. created for public-private partnerships
International organisations such as at the country level, governments should
the United Nations Conference on Trade scale up further and seek bigger part-
and Development (UNCTAD) and the nerships at the regional level. In the
International Monetary Fund affirm that words of UN Secretary-General António
for sustainable and collective growth to Guterres at the 2017 G7 Summit, held in
happen in a globalized era, large African May in Taorimina, Italy, it is important
economies must remove the walls sepa- to “support the continent’s aspiration to
rating them from the continent’s under- achieve regional integration, including
developed economies. through the free movement of people and
According to UNCTAD’s 2016 report goods, and in investments in infrastruc-
African Continental Free Trade Area: ture and info-structure…” He said inno-
Advancing Pan-African Integration, vation was key to linking regions.
regional integration is needed to further Mr. Guterres’s remarks are correct,
technology and economic innovation in since African countries where multi-
Africa. nationals and other big investors have PARTNERSHIPS FOR DEVELOPMENT
Up until the 1980s, the public sector presence, like Ghana, Nigeria and South
failed to create a sustainable upward Africa, create enterprise-friendly envi-
trajectory in Africa’s economic growth. ronments. This could easily cause some conflict, as
Although countries like Côte d’Ivoire, To foster intra-African trade, African “clashing regimes may conspire against
Ghana and Kenya thrived in the 1960s, leaders have formed regional trade expedited clearance at the border, and
government-dependent economy slowed blocs like the Economic Community often require political intervention to
growth for most countries due to their of West African States (ECOWAS), resolve conflicts, reducing the benefits of
limited capacity to meet consumption the Community of Sahel-Saharan automaticity (the ‘spaghetti bowl effect’).”
needs and a lack of competitive markets States (CEN-SAD), the East African Other impediments to regional
for goods and services. Community (EAC), the Southern African integration benefits include currency
However, African leaders are now Development Community (SADC) and controls, high transport costs, nontariff
throwing their nets wider and increas- the Common Market for Eastern and barriers (NTBs) and high trade costs and
ingly courting entrepreneurs and the Southern Africa (COMESA). The goals of tariffs.
private sector in general for partnerships these trade blocs are free trade, opportu- Some of the multinationals that have
in development. They have realised that nities for economic cooperation and the benefited from regional trade blocs and
sustainable economic growth on the elimination of tariffs and trade barriers. free trade areas include ShopRite, United
continent cannot be achieved quickly Bank for Africa (UBA), the Dangote Group
without investments from both private Challenges and Ecobank. In the case of ShopRite,
and public sectors. Ongoing efforts to foster free trade Africa’s largest food retailer, free trade in
According to a report by the United between the regions are laudable; southern Africa has had a major impact
Nations Industrial Development however, a few challenges still linger. on the company’s profitability. The
Organization (UNIDO), Capacity According to UNCTAD, most African company has expanded operations into
Building for Private Sector Development countries belong to more than one neighbouring Lesotho and Zimbabwe and
in Africa, the public sector needs to regional trade bloc and intergovern- is now making forays into Kenya in East
encourage private-sector partnerships mental organization, some of which set Africa, and in Ghana and Nigeria in West
in development projects and increase out conflicting regulations and benefits. Africa, among other areas.
12 AfricaRenewal August - Noverber 2017deploy their business capital into those
African countries in need of investment.
They are proponents of intra-African
trade and include financial services and
investment companies, such as UBA
and Heirs Holdings, the latter currently
chaired by its founder Tony Elumelu, an
avid believer in boosting private-sector
businesses across Africa under a theory
he calls “Africapitalism.”
Mr. Elumelu used the phrase in 2010
to refer to the philosophy that the African
private sector has the power to transform
the continent through long-term invest-
ments, creating both economic pros-
perity and social wealth.
Mr. Adegboyega Festus, who heads
UBA’s business development and
treasury in North America, says, “UBA’s
banking innovation has greatly facili-
tated regional integration, economic
growth and the commercial interests
of entities across Africa. The benefits
include an increase in internal efficien-
cies and capabilities, volume and scope of
business, and overall value creation and
value capture for our customers and our
businesses.”
Membership in regional trade blocs
magnifies UBA’s role in facilitating intra-
Africa trade, which has become more
significant over the years as the bank’s
footprint continues to grow in Africa.
Despite increased revenue, NTBs Ecobank in Kumasi, Ghana. Banku
continue to block smooth trade. Room for growth
According to Imani Development, a South The benefits of intra-trade in these While giving a talk at Oxford University
Africa-based private economic and devel- regions are evidence that trading cross- in 2015, Mr. Elumelu cited Transcorp,
opment consultancy firm, ShopRite, a border has the capacity to significantly a subsidiary of Heirs Holding, as an
South African retailer, spent $5.8 million boost profits. Some African governments example of how multinationals and
dealing with red tape in 2009 to gain are instrumental in facilitating regional financial services can increase private-
$13.6 million in duty savings under integration. and public-sector capacity. Transcorp is
SADC. Nevertheless, there are benefits to The economic potential of northern investing in Nigeria’s ailing power sector,
easing intra-African trade through these and western African regions is enormous, and is currently generating 20% of total
regional trade blocs. and the recent Nigeria-Morocco Gas electricity output in the country. This
Regional Pipeline is a harbinger of means new jobs, more access to power,
Opportunities for multinationals new growth possibilities from this and an opportunity for small businesses
In the West African region, billionaires type of partnership. The pipeline will to operate and grow, said Mr. Elumelu.
like Tony Elumelu and Aliko Dangote directly impact over 300 million people. According to a 2017 Guardian report,
have partnered with companies and According to King Mohammed VI of Transcorp plans to generate 25% of total
governments within and outside the Morocco, this deal will create “a regional power capacity of the plant by 2018.
ECOWAS regional trade bloc. For electricity market and be a substan- Although regional organizations
example, in the construction sector, tial source of energy, which will help need to streamline trade regulations
Dangote Cement has invested billions in develop industry, improve economic for regional trade to thrive, businesses
the manufacturing of plants and import competitiveness and speed up social cannot grow without a strong community
terminals in Cameroon, Congo, Ethiopia, development.” to trade with, hence African leaders must
Senegal, South Africa and Zambia, among Some private-sector businesses in think beyond their borders. Building
others. African economies constantly seek to economies of scale starts from within.
AfricaRenewal August - November 2017 13PARTNERSHIPS FOR DEVELOPMENT Tristate Heart and Vascular Centre in Nigeria. Tristate Heart and Vascular Centre Philanthropists join forces to fund Africa’s cash-strapped health sector Billionaires Bill Gates, Aliko Dangote come together to fund health care projects By Pavithra Rao I n the 2017 World Happiness Report such as the Democratic Republic of Congo care system, private entities and individ- by Gallup, African countries score (DRC), Madagascar and Niger, spend just uals are also increasingly making contri- poorly. Of the 150 countries on the list, half of that per person annually. butions. For example, Africa’s richest the Central African Republic, Tanzania In 2010 only 23 countries were person, Aliko Dangote, and the world’s and Burundi rank as the unhappiest spending more than $44 per capita on second richest person, Bill Gates, have countries in the world. health care, according to the World Health formed a partnership to address some of Some of the factors driving unhappi- Organization. These countries got funding Africa’s key health needs. ness are the poor state of the continent’s from several sources, including govern- In 2014 the Nigerian-born cement health care systems, the persistence of ment, donors, employers, non-govern- magnate made global headlines HIV/AIDS, malaria and tuberculosis, and mental organisations and households. after donating $1.2 billion to Dangote the growth of lifestyle diseases such as Private investment is now critical to Foundation, which used the money to hypertension, heart disease and diabetes. meet the considerable shortfall in public- buy equipment to donate to hospitals in Few African countries make signifi- sector investment, say experts. Nigeria and set up mobile clinics in Côte cant investments in the health sector— While many international organi- d’Ivoire. the median cost of health care in sub- sations, such as UNICEF and the A philanthropist himself, Mr. Gates Saharan Africa is $109 per person per International Committee of the Red wrote of Mr. Dangote in Time magazine: year, according to Gallup. Some countries, Cross, continue to support Africa’s health “I know him best as a leader constantly in 14 AfricaRenewal August - Noverber 2017
search of ways to bridge the gap between after rumours started circulating that
private business and health.” the vaccines were adulterated and would
The Bill & Melinda Gates Foundation cause infertility and HIV/AIDS.
focuses, among other projects, on strength- In 2014, during the Ebola crisis,
ening Africa’s health care resources. villagers chased and stoned Red Cross
According to the Gates Foundation, as workers in Womey village in Guinea,
of May 2013 it had earmarked $9 billion accusing them of bringing “a strange
to fight diseases in Africa over 15 years. disease”.
In 2016 the foundation pledged to give The big players may be Mr. Dangote and
an additional $5 billion over a five-year Mr. Gates, but others less well known are
period, two-thirds to be used to fight HIV/ also making important contributions to
AIDS on the continent. Africa’s health care. After the 2014 Ebola
While acknowledging the Gates’ gener- outbreak in West Africa, for example,
osity, locals noted that for many years the which resulted in the loss of about 11,300
Foundation had invested in the oil compa- lives, private companies in the three most
nies that have contributed in making The Foundations had already signed affected countries—Guinea, Liberia and
health outcomes extremely poor in some a deal to work together to foster immu- Sierra Leone—partnered with the govern-
areas of Nigeria. These companies include nization programmes in three northern ment to fight the virus.
Eni, Royal Dutch Shell, ExxonMobil, states: Kaduna, Kano and Sokoto. The Sierra Leone Brewery, for
Chevron and Total. The Gates Foundation states on its example, helped in constructing facilities
Facing a backlash, the Gates website, “Contributions towards the for Ebola treatment. Individuals, such
Foundation sold off some 87% of its costs of the program by the Bill & Melinda as Patrick Lansana, a Sierra Leonean
investments in major coal, oil and gas Gates Foundation, Dangote Foundation, communications expert, also volun-
companies, leaving approximately $200 and state governments will be staggered teered their services for the Ebola fight.
million in these stocks as of 2016. Groups across three years: 30% in year one, 50% He said: “I joined the fight against Ebola
such as Leave It in the Ground, a non- in year two, and 70% in year three, with because I wanted to help my country. My
profit organization advocating for a the respective states taking progressive efforts, and those of others, made a differ-
global moratorium on fossil exploration, responsibility for financing immuniza- ence. It would have been difficult for the
are pushing for divestment. tion services.” government and international partners to
“The link between saving lives, a The future of about 44% of Nigeria’s combat the virus alone.”
lower birth rate and ending poverty was 170 million people would be “greatly
the most important early lesson Melinda damaged if we don’t solve malnutri- Public-private partnerships
and I learned about global health,” said tion,” said Mr. Gates, at a meeting with Private and public sectors need to collab-
Mr. Gates recently. The Gates Foundation President Muhammadu Buhari. orate to help Africa’s health care system
supports reducing childhood mortality Despite the many international from collapse, notes a report by UK-based
by supplying hospitals with necessary and local efforts, cultural and religious PricewaterHouseCoopers consultancy
equipment and hiring qualified local factors often impede efforts to address firm. The report states that public-
practitioners to take care of patients and Africa’s weak health infrastructure. For private partnerships, or PPPs, when fully
their children. example, in 2007, religious leaders in synergised can bring about quality health
northern Nigeria organized against aid care. Under a PPP in the health sector, for
Dangote-Gates collaboration workers administering polio vaccinations example, a government can contribute by
In 2016, the Dangote Foundation and the providing the health care infrastructure,
Gates Foundation formed a philanthropic while private entities can be involved in
dream team when they announced a the operations.
$100 million plan to fight malnutrition In a widely published joint opinion
in Nigeria. The new scheme will fund piece last April, Mr. Dangote and Mr.
programmes to 2020 and beyond, using Gates stated that improving health care in
local groups in the northwest and north- Africa depends on a “successful partner-
east Nigeria. The northeast has for the ship between government, communities,
past seven years been ravaged by the religious and business leaders, volunteers,
Boko Haram’s Islamic militant insur- and NGOs. This ensures that everyone is
gency, affecting all health care projects rowing in the same direction.”
in the region.
Malnutrition affects 11 million (Top) Bill Gates, co-chair of the Bill and Melinda
children in northern Nigeria alone, and Gates Foundation and (bottom) Aliko Dangote,
Mr. Dangote said the partnership would Founder and Chief Executive of the Dangote
address the problem. Group. UN Photos
AfricaRenewal August - November 2017 15PARTNERSHIPS FOR DEVELOPMENT
Henri Konan Bédié Bridge linking the north and south of Abidjan, Côte d’Ivoire. Bouygues Construction
Partnerships at work in Africa
SDGs envisage that PPPs can promote sustainable development in Africa
By Joyce Mulama
T
he construction of a liquefied natural gas meet the growing demand, which the National Energy
terminal in Ghana to support power genera- Policy of 2010 estimated would be about 5,000 mega-
tion in the Kpone Power Enclave in the port watts by 2016.
city of Tema, near Accra, is reawakening hopes of an “We hope the project will address the dumsor once
end to the energy crisis that has plagued the country and for all,” says Nancy Osabutey, a resident of Accra.
in recent years. Dumsor (“on-off”) is a Ghanaian term commonly used
Power outages have led to a rationing schedule that
involves cutting power for 24 hours every two days.
to describe the erratic power availability in the country.
A recent report by the Institute of Statistical, Social
$100bn
Businesses have been forced to connect standby power and Economic Research, a Ghanaian-based think tank, is needed
sources such as generators, incurring extra costs. Some estimates that the economy has lost $24 billion as a
have had to lay off workers. result of the energy crisis since 2010.
per year
The $600 million project, being implemented under Like many African countries, Ghana is facing an for Africa’s
a public-private partnership (PPP) between Quantum infrastructure financing gap. Policy makers are starting infrastructure
Power Ghana Gas and the Ghana National Petroleum to realise that PPPs can help fill such gaps. investment.
Corporation, is expected to provide the West African “Africa has been growing over the last few years. It
nation with a reliable and efficient power supply. will be challenging to achieve economic growth without
The plant will add about 220 megawatts of elec- addressing the huge infrastructure financing and
tricity to Ghana’s national grid. The country now has access gap in energy generation and transmission, roads
2,900 megawatts of generation capacity, not enough to and ports,” says Tilahun Temesgen, the chief regional
16 AfricaRenewal August - Noverber 2017bridge in the capital, Abidjan, is considered in the initial stages of PPP implementa-
one of the most successful PPP-funded tion “because their use of PPP schemes is
projects in the post-conflict country. still uncommon and PPPs are complex to
The $265 million bridge, opened in implement.”
2014, connects two of Abidjan’s major The report indicates that PPPs have
districts—Riviera in the north and Marcory historically been scarcer in sub-Saharan
in the south—and has done away with over Africa than in the rest of the world.
10 kilometres of traffic congestion. About a Telecoms transactions account form the
hundred thousand vehicles use the bridge bulk of PPPs on the continent, but energy
each day. PPPs have recently started growing signifi-
“This facility enables us to enjoy the cantly.
benefits of better traffic conditions. We “PPPs are not easy. They need a number
now take less time in traffic, meaning more of issues to be successful. Above all, a stable
time for productivity at work. A while ago macroeconomic environment is neces-
we would spend more than three hours in sary,” explains Mr. Temesgen.
traffic,” says Abraham Kone, a resident of However, an environment character-
Abidjan. ised by inadequate regulatory frameworks,
The bridge has also opened up the neigh- unclear rules and procedures and lack of
bouring hinterland, simplifying freight political commitment inhibits growth of
transportation to the Port of Abidjan, the PPPs.
largest port on Africa’s west coast.
Public-private partnership is also Uganda PPPs
diversifying the country’s energy sector. Uganda is one of the countries with a solid
The expansion of the Azito thermal energy PPP programme. According to the AfDB
plant involving the construction of two document, this is the result of many factors,
144-megawatt power plants will save $4 including support from the presidency
million in energy costs each year and will and the ministry of finance, an earlier
enable Côte d’Ivoire to move from being successful privatisation programme and a
a net importer of electricity to being a net well-designed framework.
economist at the Eastern Africa Resource exporter. At a meeting in South Korea last
Centre of the African Development Bank With the expansion, the energy plant, November, Ajedra Gabriel Gadison Aridru,
(AfDB). located six kilometres west of the port of Uganda’s state minister for finance,
The AfDB maintains that the conti- Abidjan, is producing over 30% of elec- planning and economic development,
nent needs about $100 billion per year for tricity generated in Côte d’Ivoire, with cited the PPP Act enacted in 2015 as a
infrastructure investment, yet the total some of it going to neighbouring countries, major enabler of the country’s PPPs. The
spending on infrastructure by African including Ghana. law spells out the specific engagements of
countries is just about half that, leaving a Partnering with the private sector to private partners in such partnerships. It
financing gap of about $50 billion. promote sustainable development is some- also regulates the roles and responsibilities
“This difference should come from thing the government is talking a lot about. of government bodies during the develop-
somewhere. Tapping into private-sector According to Albert Toikeusse Mabri ment and implementation of PPP projects.
investment by unleashing the potential of Abdallah, the Ivorian minister for planning Concerns have been raised about severe
PPPs is one innovative way of attracting and development, “Public-private partner- environmental hazards following PPPs.
financing for infrastructure in Africa, ship is in line with Côte d’Ivoire’s National Ghana Gas Company, for example, has
as this has a very high development and Development Plan, which outlines building been accused of failing to act as areas such
poverty reduction impact in Africa,” states and renovating the country’s infrastruc- as Atuabo, in western Ghana, continue to
Mr. Temesgen. ture to accelerate development.” The suffer the effects of oil and gas exploration
He adds, “Governments and devel- minister adds that “such collaboration will that have led to widespread air and water
opment partners cannot fully close the also ensure job creation and poverty alle- pollution.
current huge infrastructure financing gap. viation.” Because of concerns like this, govern-
It is therefore vital to mobilise private- The Sustainable Development Goals ments are being urged to disclose informa-
sector financing to support infrastructure (SDGs) envisage that PPPs can promote tion on risk assessments, including poten-
developments.” sustainable development in Africa. A key tial environmental and social impacts, of
Private-sector financing is succeeding priority of the UN-founded SDG Fund is to such mega-projects. Institutions such as
in different parts of the continent, just bring together public and private entities the Bretton Woods Project would like to
as it soon may in Ghana through the to jointly address development challenges. see more informed consultations, broader
Kpone power plant. However, many African countries, civil society involvement and closer moni-
In Côte d’Ivoire, the Henri Konan Bédié according to an AfDB report, are still toring of PPPs by all stakeholders.
AfricaRenewal August - November 2017 17You can also read
