"Aid for Trade: The NABA perspective" by Janvier Nzigo (Norwegian-African Business Association)
”AID FOR TRADE: Pavingthewayfor futureinvestments andGrowth in Africa”Janvier M. Nzigo
WHY POVERTY IN AFRICA:1. Colonial Period2. Independence and Post-Independence period3. Africa and Cold war4. Bad governance; which has brought/ influence:• Absolute poverty• High level of unemployment• High level of inequality• Lack of Human capital structures(…)
• Foreign debt: USD 300 billions, in 2009(NEPAD)• Wars, Conflicts and uprisings (47 countriessince independence)• Bad (or non existing) infrastructures• Capital flight• Lack of Trade and FDI
• The USA gives +/- USD 25 billions per year• Germany: USD 13 billions• Scandinavian countries, Luxembourg and theNetherlands gives each 1% of their GNI to aid• Other OECD countries: 0.7%• ”Over thepast 60 years at least $1 trillionofdevelopment-relatedaid has beentransferredfrom richcountries to Africa.” (DambisaMoyo)
Case: Fighting Malaria• An estimated 3.3 billion people throughout theglobe were at risk of malaria in 2010.• Malaria has been reduced worldwideby approximately 17% since 2000.• 91% of all malaria deaths worldwide occur in Africa.• Delivery of insecticide-treated bed nets (ITNs) hasrisen from 5.6 million in 2004 to 145 million in2010.• The most effective treatment for malaria (ACT) hasincreased in availability from 11.2 million in 2005 to181 million in 2010.
• MileniumDevelopment Goals:- The Africancontinent has thehighestimprovementsin terms ofaccess to education for women and girls.MDG 2 (Achieve Universal Primary Education ismost likely to be achieved by 2015)- ”With onlythreeyearsleft to achievethe MillenniumDevelopment Goals, Africa is reportingmixedprogress in achievingthegoals: there is still a lotofwork to do in specific areas such as gender andhealth, and manychallengesremain…”Mr. Nnadozie, UNECA Press Release No010/2012
REMITTANCES: an alternative solution (?)• Remittancesdominateaidyetremainunspoken• The World Bank believes global remittanceswill beclose to $600 billion a year.• ”Money transfers from workersabroad to familyback home have tripled in a decade and arethreetimes largerthan global aidbudgets”. – TheGuardian
• AID has helped reduce child and maternal mortality,malaria and other deadly diseases• AID has helped African countries to score points onthe Millennium development goals• AID has helped maintain poor countries budgets;…• But, after 60 years AID did not lift Africa out ofpovertyIS IT THE TIME TO TRY SOMETHING ELSE?
Connecting Africa to the rest of the WorldGlobal shipping routesSource: seaweb.org
• ” Africa is disconnected from the global economy,which is very bad news for a continent thatdesperately needs international trade (thedisconnection is both symptom and cause of thelack of trade). Lack of international trade = povertyfor small economies. This lack of trade links reflectsmany factors:rich country protectionism, domesticpolicies on customs & tariffs & foreign investment,poor port and road infrastructure, thus very highland transport costs within Africa, barriers crossingborders within Africa; Africa stereotypes thatdiscourage foreign investors and so on…- William Easterly
Africa’slioneconomiesThe Africancontinent is thenextfrontier. Withsevenoftheten fastest growingeconomiesoftheworld beingAfricancountries, this is a marketthatcan not be overlooked by Norwegianinvestors orcompanieswithinternationalambitions.- NABA
• IMF World economic Outlook 2012:Iraq: 10.80China: 8.37Niger: 7.96Mozambique: 7.86Ghana: 7.74Zambia: 7.66Congo: 7.57Ivory Coast: 7.56Rwanda: 7.23Cambodia: 7.17
WHY INVESTMENTS IN AFRICA• From “the Hopeless continent” to “Africa rising (Theeconomist)• Massive Chinese investments in a decade• “100 millions Africans lives like an average Norwegian”(Aftenposten, Web edition Dec 24, 2010)- In contrast to Aid, Investments creates job opportunities- Jobs generates economic growth- Investments lifts people from poverty to middleclass.
• OnlyfourAfricancountrieswereembroiled inarmedconflict in 2010, comparedwith 14 at theend ofthe 1990s. (Ban Ki-Moon, july 2010)• In 22 countriesofsub-SaharanAfrica, the HIVincidence rate declined by more than 25percentbetween 2001 and 2009 (UNAidsreports)• And the most under-communicatednewsflash isthis: Africa is currentlyoneoftheworld’sfastest-growing regions in the world.
SUSTAINABLE INVESTMENT• CSR and Local Content: The Norwegian way• Respecting international Laws on Trade,Human rights• Example: STATOIL in Angola (23 out of 46 arelocals)
AID+ INVESTMENTS• Aid that focuses on Education, the Environmentand the transfer of technology• Aid that pave the way for future investments• WHY EDUCATION?InnovationKnowledge transmissionNatural resources managementSelf disciplineModernity
ConsciousnessImprovement of Standard of lifeDecreases/ fight Child labourEntrepreneurshipAttractive to Foreign InvestmentTransparency and Criticism to state Insight and Knowledge of (Basic and general)Human Rights Aspirations to Democracy and the rule of law
”For thepastdecades,Norway’srelationshipwiththeAfricancontinent hasbeencharacterised by aid. Ourjob is to contribute toAfrica’s progress by focusingoninvestments,businessand trade.”Trond Giske, Norway’s Minister of Trade andIndustry (keynotespeech at theNorwegian-AfricanBusiness Summit 2011)