Food prices must drop in Africa: How can this be achieved?

By Thomas Allen, Sahel and West Africa Club Secretariat (SWAC/OECD)

After the 2007-08 crisis, we got into the bad habit when discussing food prices of focusing almost exclusively on volatility and overlooking the question of the level of prices. Of course, reasons were good for this; between February 2007 and February 2008, world food prices jumped 60%. These increases combined with local factors had dramatic effects, particularly in West Africa, where millions of households already had insufficient income to cover their basic nutritional needs. Today, according to OECD and FAO projections, food prices are expected to remain stable in the medium-term. This is a good time to re-examine some important questions.

Are food products cheap in sub-Saharan Africa?

The question may seem surprising, as food is no doubt cheaper in the poorest countries. This is the first thing that any tourist would tell you, and it is confirmed by statistics. Sub-Saharan countries do indeed have the lowest prices in absolute terms (see figure). African food products are therefore much more affordable…for the European consumer. What about for the African consumer? Continue reading

Energy for the 2030 Agenda

By Dr. Fatih Birol, Executive Director, International Energy Agency

Birol
Africa’s night sky could change dramatically if we achieve “energy for all” by 2030.

The 2030 Agenda for Sustainable Development has been ratified, and access to affordable, reliable, sustainable and modern energy for all by 2030 is a target in its own right (SDG 7). Modern energy is central to achieving global development: it has never been a more important time to understand where the world stands on achieving this target, and to propose pragmatic strategies for achieving universal energy access.1

Achieving modern energy for all is within reach. The number of people without access to electricity fell below 1.1 billion in 2016, from 1.7 billion in 2000. We have undertaken an in-depth assessment of each country’s progress, finding some staggering successes. Half a billion people gained access to electricity in India alone, with government policies putting the country on track to universal access by the early 2020s, a tremendous achievement. Moreover, some countries in sub-Saharan Africa, including Kenya and Ethiopia, are on track to universal electricity access by 2030. However, progress overall has been uneven. Despite current efforts, over 670 million people will still be without electricity by 2030, 90% in sub-Saharan Africa.

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Financing African SMEs: can more of the same help bridge the gap?

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By Rodrigo Deiana, Junior Policy Analyst, and Arthur Minsat, Head of Unit for Europe, Middle East and Africa (acting), OECD Development Centre


The topic discussed here builds on the success of the 2017 Africa Forum


Africa-SMEsAfrican firms don’t have it easy. Among the many constraints faced by formal companies, access to finance consistently ranks as a top issue. Almost 20% of formal African companies cite access to finance as a constraint to their business.1 Overall, African micro, small and medium enterprises (SMEs) face a financing shortfall of about USD 190 billion from the traditional banking sector.2 African firms are 19% less likely to have a bank loan, compared to other regions of the world. Within Africa, small enterprises are 30% less likely to obtain bank loans than large ones and medium-sized enterprises are 13% less likely.3

To bridge this gap, governments and market players need to strengthen existing credit channels as well as expand new financing mechanisms.

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La promesse du « made in Africa » ne sera tenue qu’en misant sur les entrepreneurs locaux

Par Victor Harison, commissaire aux affaires économiques de la Commission de l’UA. et Mario Pezzini est directeur du Centre de développement de l’OCDE et conseiller spécial auprès du secrétaire général de l’OCDE chargé du développement.


The topic discussed here builds on the success of the 2017 Africa Forum


Les politiques et stratégies industrielles joueront certes un rôle essentiel, mais elles doivent être repensées profondément. D’abord parce que les efforts d’industrialisation après les indépendances n’ont remporté qu’un succès limité, mais aussi parce que les technologies de production ont subi une révolution, qui n’est pas seulement numérique. L’économie mondiale a radicalement changé, et l’Afrique aussi.
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Services, informality and productivity in Africa

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By Tabea Lakemann, Research Fellow, GIGA Institute of African Affairs and University of Göttingen, and Jann Lay, Acting Director, GIGA Institute of African Affairs, and Head of GIGA Research Programme Growth and Development


Learn more about this timely topic at the upcoming
17th International Economic Forum on Africa


Services, informality and productivity in AfricaEconomic development and a sustained, broad-based increase in living standards on the African1 continent are critically connected to the capacity of African economies to create decent jobs at a rate that keeps up with the rapid growth of the workforce. This, in turn, depends on the ability of African governments to develop innovative, tailor-made strategies towards private sector development taking full advantage of countries’ comparative advantages. Private sector development strategies require governments to recognise the significance of informality and to look beyond industrialisation — to the service sector — for private sector growth and job creation.

The potential of informal firms

On average, the informal economy is estimated to make up almost 40% of GPD in Africa.2 Informal firms are typically much smaller than formal ones, but even when controlling for size, they are on average less productive, less likely to access external finance and have less educated managers.3 At the same time, heterogeneity between informal firms is considerable. Some firms exhibit very high marginal returns to capital, and between 28% and 58% of informal entrepreneurs in West Africa are identified as “constrained gazelles” with low capital stocks, but some unrealised growth potential.4 Many informal firms thus have the likely potential to provide an improved livelihood to their self-employed owners and family members engaged in the business.
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Helping entrepreneurs thrive in Africa

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By Rémy Rioux, Director General of Agence Française de Développement


Learn more about this timely topic at the upcoming
17th International Economic Forum on Africa
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Africa-AFDAfrican entrepreneurs are a key driving force for the continent’s emergence. 80% of Africans view entrepreneurship as a good career opportunity. Take African start-ups. They pioneer social innovations. Thanks to the fintech industry, for example, the diaspora can connect with their relatives and directly finance their health expenses, as in the case of Leea. This company benefitted from Digital Africa, an initiative of the Agence Française de Développement (AFD) to help African start-ups through financing, coaching and business training. African entrepreneurs and customers show the way forward and accelerate the continent’s leapfrogging in terms of technology innovation in banking, health, agriculture, urban mobility, education, and more.

However, at a macro level, 80% of Africa’s labour force works in the informal sector. Unemployment is high, especially amongst the youth, who are three times more likely to be unemployed than adults. Development banks can play a role in addressing the macro policy, nurturing job-intensive growth across the continent and financing gaps. How?
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The blurred boundaries of political violence in the Sahel-Sahara

By Olivier Walther, Visiting Associate Professor, Center for African Studies at the University of Florida and Associate Professor, University of Southern Denmark


Explore the OECD West African Papers series for more work on African socio-economic, political and security dynamics.


The Sahel and the Sahara are faced with exceptional political instability involving a combination of rebellions, jihadist insurgencies, coups d’état, protest movements and illegal trafficking. Analysis of the outbreaks of violence reveals that the region is not just the victim of an escalation of wars and conflicts that marked the 20th century. The Sahel-Sahara has also become the setting of a globalised security environment, in which boundaries between what is local and global, domestic and international, military and civilian, politics and identity are blurred.

Local grievances, global reach

A shared characteristic of many conflicts in the Sahel-Sahara is that belligerents often leverage global ideas to pursue local and national claims. Boko Haram, for example, simultaneously exploits the pan-Islamist vision of a unified Muslim world, whose boundaries transcend national borders to embrace all believers, and the historical narrative of the Kanem-Bornu empire that reigned over the Lake Chad region for around 1 000 years. These players also rely on the investment of global resources into struggles that are driven by local and national aspirations. For Al Qaeda in the Islamic Maghreb (AQIM), in particular, the unofficial ransoms paid by foreign governments in exchange for hostages represent amounts estimated at several tens of millions of dollars.
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