Date: June 06, 2016
Contact: Eron Henry
Media Relations Coordinator
Unleashed Marketing Team
Green shoots and plants in African economies
The June issue of the Unleash Africa newsletter, while highlighting challenges facing Africa and Africans, reports on exciting developments on the continent.
Modeled off China’s Alibaba, one of the most successful and largest ecommerce companies in the world, UK-Nigerian e-commerce site Cokodeal has visions of filling the large gaps that exist in online commerce on the African continent.
Gayle Cottrill points out that “with all of the vast resources across the continent, over half of trade in Africa is in the informal sector.” This leaves ecommerce sites such as Cokodeal much room for growth as “the site offers a platform for farmers, artisans, and manufacturers to be able to sell their products at wholesale.”
Cottrill indicates that “Cokodeal.com also helps find new buyers in new markets for the merchants selling on the site, and in turn continues to work toward its mission to be an important factor in the growth of intra-African trade.” It operates on a low cost model. “There is little overhead tied to Cokodeal.com as the products do not need to be managed or delivered by the site.”
Enterprises such as Cokodeal may help African economies to grow even further. While there have been laggards, a number of these countries have experienced stellar economic growth over the past few years. Harry Broadman, CEO of Pro Global Partners, writes, “from an historical perspective, the economic performance of the bulk of Africa—the 48 countries comprising sub-Saharan Africa—has been far stronger than popularly believed.”
He notes, “from 2000 through 2015—the average annual growth rate of ‘real’ GDP (that is, GDP adjusted for inflation) was 5.5 percent for sub-Saharan Africa as a whole.” This compares favorably with the 5.9 percent growth among all emerging markets, which include star performers India and China. Over the same period, advanced economies grew at a mere 1.8 percent.
Among the star performers were Angola, Botswana, Chad, Cote d’Ivoire, Democratic Republic of Congo, Ethiopia, Ghana, Kenya, Malawi, Mauritius, Mozambique, Namibia, Nigeria, Rwanda, Senegal, Tanzania, Uganda, and Zambia.
Eron Henry believes that if African nations were to harness the power of their diaspora populations, these economies would find another avenue for growth and investment. Henry notes that two countries, India and Israel have, over the past several decades, issued diaspora bonds aimed largely at Indians living outside India and Jews living outside Israel. These bonds have brought in billions of dollars.
The potential for Africans is vast, as Africans in the diaspora have billions of dollars in savings. For instance, Ghanaians had $2 billion, Ethiopians $1.9 billion, Kenyans and Somalis $1.8 billion each, Zimbabweans $1.6 billion and the Democratic Republic of the Congolese $1.1 billion.
In addition, Africans in the diaspora send home about US$160 billion in remittances annually, most of which is used for education and consumption purposes. Henry argues that incentives should be offered for portions of such funds to be diverted to savings and hence, investment capital. He also indicates that African countries should encourage Africans with requisite skills and capital to return to their home countries and invest, a trend that begun in Ethiopia a few years ago.
Joseph Hammond, a former Cairo correspondent for Radio Free Europe, declares that a fall in oil prices poses some risks for oil producing African economies, such low prices provide “an opportunity for African countries and governments to broaden the base of their economies and engage in export-orientated growth and away from merely commodities.” Nations such as Ethiopia, “who realized this opportunity early on have already seen some benefit.”
It is acknowledged that one of the greatest weaknesses faced by countries in Africa is weak governance. John Akhile recommends John Hoskyn’s “Wiring” Diagram as a model that can help nations “identify all the issues plaguing society” and to devise policy prescriptions. The model examines the forces behind a dysfunctional socio-economic structure, poor industrial performance, high unemployment, degradation in the standard of living and high inflation.
Akhile says this approach will, among other things, help determine why corruption, which he insists is not endemic to Africa, “has occupied a larger-than-life footprint in post-independence Sub-Saharan Africa countries and what to do to eradicate the scourge.”
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