OP-ED: Redefining Africa’s narrative – Why Africa needs wealth creation and not just job creation, By Richard Munang and Robert Mgendi

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 “The most beautiful fig may contain a worm” – this African proverb calls us to question what we have always believed to be good. From the savannas of southern Africa; to the mountains of East Africa; to the forests of central Africa; to the coastlines of West Africa and the golden sands of Northern Africa- it is undisputable that “job creation” is a universal priority of development blue-prints of almost every country in the continent. Most of these blue-prints were developed in the late 2000’s and span 20–30years. 2019 marks the lapse of a significant period of implementation – an acceptable time to audit their performance – by asking, a fundamental question – are economies significantly creating jobs more effectively?

 

Richard Munang
Richard Munang

 

The reality-check

“Double digit economic growth”, “an expanding GDP”, “Africa Rising”, “attaining middle income status” – these are among popular headlines and indicators used to inject optimism in Africa’s developmental sojourn. But they pale in significance in the minds of a majority who gauge development with more practical indicators – like how well they can feed, cloth, house & school their children and how easily they can find productive work. To them, Africa is a continent of adversity – a world view that is difficult to disprove. Let’s face it – when we talk of malnutrition and infant mortality, Africa with 200 million undernourished people and where 50% of mothers are unable to feed their children to live beyond the age of five is a significant statistics. When we turn to hunger, over 240 million people go to bed hungry every day.

Furthermore, 1/3 of all food is lost as post-harvest losses (PHLs), amounting to $48 billion annually. Worse still, to cover for shortfalls, the continent spends $35 billion each year to import food depleting her reserves. This alone amounts to over $80 billion in income and enterprise opportunities going down the drain each passing year. It is no wonder that the unemployment scenario in the continent gets scarier with time. With more people aged below 20 than anywhere in the world and growing, up to 12 million of these youth join the labour markets annually to compete for just 3 million jobs. Over 70% of these youth, live in poverty on less than $2 daily. Going forward, under status quo, the number of job seeking youth in the continent is projected to exceed the rest of the globe combined to reach over 350 million competing for much less jobs in less than 17 years from today.

While the urgency to create opportunities for millions is apparent, Africa’s economies stand out for low productivity – an estimated 2000% lower that of developed regions, with whom Africa competes in a globalised economy. The divide, of lofty headlines that don’t make much sense to the majority boils down to one fundamental – an economic paradigm in Africa that has never prioritised wealth creation. To address the critical challenge of ballooning unemployment, focus has been on –firefighting approaches like projects and programmes aimed at creating jobs. Yet rightfully, the cure is in wealth creation, as jobs are a subset of wealth creation.

Contrasting wealth creation with fire-fighting job creation mentality – An illustration

He who conceals his disease, cannot expect to be cured” – the first step to healing Africa’s unemployment malady, starts with honest diagnosis. An illustration from Kenya provides a great case in contrasting jobs with wealth creation. In 2009, at the height of the global financial crunch, the government came-up with a stimulus programme to shield the local economy, from negative aftershocks. At the core of this package, was an admirable, yet scarcely scrutinised action – that of leveraging on people to earn a reward by solving the countries challenges. Great lessons accrued.  A youth empowerment project referred to as “kazi kwa vijana” – loosely translated “work for youth” – which focused on engaging youth in labour intensive public works, like roads maintenance, water & sanitation, garbage collection among others to earn a salary. The investment here was KES15 billion. This created jobs – but these were tied directly to the project cycle – peaking only at the time of project construction and ending with termination of the project.

At the same time, the government invested KES2 billion in the aquaculture value chain – where unlike the first case, the aim here was not direct “job creation” per se, but enabling enterprise development. Empowering fishers to build enterprises out of what they do. This initiative accelerated aquaculture development – increasing aquaculture fish production from 4,000 to 22,000 metric tonnes per year – a 450% increase. At a least optimistic market price of KES200 per kg of fish, this translated to about KES4 billion in direct returns on the KES2 billion invested. And this at the farm-gate level alone – not to mention additional off-farm income opportunities along the entire value chain from breeding fingerlings to transport & logistics, distribution and processing — as well the indirect benefits of nutrition & food security. Essentially, if Kenya had invested the former KES15 billion into a similar logic of enhancing agricultural productivity through empowering people for enterprise development along the value chains they engage in, and even diversifying to cover several lucrative value chains, Kenya would have expanded its economy by at least Sh30 billion a year. This is wealth creation exemplified.

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The eye crosses the river before the body” – in this context, the difference in achievement between these two initiatives attests of the level of progress Kenya would have achieved if more effort was put on the latter. And the determinants were the elements of wealth that were present in the latter but missing in the former – that is enterprise creation through leveraging  people and their skills, talents and on-going projects towards maximising productivity in an area of comparative advantage for Kenya – the fisheries. By this, a challenge was converted into an opportunity. In contrast, the former initiative did not focus on enterprise creation neither was it linked to maximising productivity in an area of comparative advantage –for instance prioritising roads maintenance works on roads that would ensure farmers are efficiently linked to markets. Such a strategic approach would lower marketing costs for agro-enterprises, enhance their profitability which would spill-over to enable them employ more. This would be wealth creation, automatically unlocking jobs with guarantee longevity.

 

Wealth creation – What is it

Simply, wealth is the accumulation of capital – human and material. Of all the components of wealth, human capital – the skills, creativity, talent, energy and ongoing initiative of citizens, and especially the youthful super-majority, constitute the most sovereign and critical. With human capital, one can generate material. South Korea demonstrates this. In the 60s, South Korea was a country in economic trouble. A population facing acute starvation prompted goodwill from nations – including from Africa. Fast-forward to today, South Korea, with no minerals unlike Africa, a mineral rich region, and roughly five times smaller than many African countries, has an economy estimated at 15times the combined size of Africa’s economies. The Samsung smart phones in our pockets, TVs in our living rooms, and fridges in our kitchens, are all South Korean. Most significant however is how this rise was achieved.

One of my favourite African proverbs summarises the core of this rise – that “he who has no pond should not breed crocodiles”. In context, the message is simple – we must leverage on our basic, yet fundamental strengths, to progress in the ladder of competitiveness and wealth creation. South Korea focused on maximizing on strategic industries for which it held a comparative advantage. It then convened its human capital across various sectors, towards complementing productivity maximization & global competitiveness in this strategic area. Leveraging on their human capital to build globally competitive enterprises around sectors of comparative advantage was how South Korea built a formidable economic foundation that led to its rise. This is a lesson in wealth, creation which citizens of the continent must learn.

Unlocking wealth creation in Africa – An opportunity in disguise

Every adversity carries with it the seed of an equal or greater benefit” – this African proverb underlies the argument of wealth creation. Challenges are disguised opportunities – where the challenge of one actor, provides an enterprise opportunity for another who has the solution. But it doesn’t stop here. This needs to be tied to addressing productivity maximisation challenges in an area of comparative advantage – and all this undertaken not at the expense of the environment – especially considering that climate change and environmental degradation stands to erode 75% of economies across Africa, to wipe out hard-earned benefits.

As an example, a small-holder farmer depending on their small plot of land for income needs to be linked to multiple interventions to maximise earnings of their farm. They need not only inputs but clean energy solutions like solar driers that are crucial to enabling them to preserve their harvest for longer. This will give them the flexibility to hold onto their harvest for longer and speculate for better market prices as opposed to selling in a rush in fear of spoilage. They also need to be linked effectively to lucrative markets to maximise their earnings. These are among challenges that offer opportunities for incomes not only for the farmer, but also the array of actors from ancillary sectors that hold the solutions. By this create enterprise opportunities for many and unlock inclusive wealth opportunities.

 

The trigger of all this must be people, and especially the youth who are the majority in the continent, leveraging their skills, talents, ongoing initiatives and forging complementary partnerships towards creating enterprises that solve these productivity challenges. This is what a group of youth in Kenya is already doing. They have combined their skills in marketing, ICT and clean energy to come up with  a connecting the “dots” enterprise – EBAgroPamoja – that connect the dots  to link agro-value chain actors to clean energy solutions like solar driers, solar powered irrigation among others – that they need to process, preserve, and increase their productivity. EBAgroPamoja also links these agro-value chain actors to consumer markets and provide youth with income opportunities for themselves, while solving a major challenge of postharvest losses in Kenya amounting to $500million each year. This is done without adding onto aggregate emissions that compound climate change since their enterprise incentivises clean energy use.

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This combination of skills aimed at creating enterprises towards maximising productivity in areas of comparative advantage – and all done without compounding climate change – is the formula for building wealth that now needs to be natured and scaled. The following key messages for policy & operational actors expound on how this progress can be nurtured to become the norm;

Prioritise maximising productivity in catalytic sectors: “those who are born on top of an anthill take a short time to grow tall”. This African proverb underscores what we mean by “catalytic”. The primary source of competitiveness for any enterprise is comparative advantage. It is no different for Africa’s wealth creation journey. An agro-value chain powered by clean energy stands out as the most catalytic area in the continent. This for three reasons; first, Africa holds a comparative advantage in the areas of clean energy & sustainable nature-based agriculture in terms of natural endowment compared to the rest of the globe; second, they are economically inclusive engaging a majority in the continent.

 

The implication is that maximising earning potential in these areas will create income opportunities for the majority to enhance inclusive income creation. Third, they provide an accessible route to solve multiple challenges – climate and socioeconomic – in one go. People, especially the youth must channel their skills towards maximizing productivity of these comparative advantage sectors. Decentralizing clean energy where Africa has a considerable comparative advantage – e.g. the best solar resource in the planet – to power agro-value addition e.g. by preservation & processing to maximise productivity in a sector where the continent also holds significant global comparative advantage of having over 60% of global arable land, & over 60% of workforce engaged, stands out and is recorded as capable of solving key challenges like high PHLs costing Africa over $48 billion annually and drive towards creating a $1trillion dollar economy.

As an example, in Kenya, decentralising solar driers to maize farmers, who produce a major staple crop for the country, will be converting $200 million worth of PHLs every year into enterprise opportunities. In Nigeria, Africa’s second largest tomato producer, such an approach will be unlocking $15 billion each year in recouped tomato PHLs. And this goes beyond linking agriculture with clean energy. Maximising productivity also calls for efficient connection to markets, where ancillary enablers like transport & logistics, ICT etc. becomes critical.

The novelty here is that maximising productivity in this area of comparative advantage calls for input across multiple other ancillary sectors – creating opportunities for actors with skills in different sectors & disciplinary backgrounds. This is catalytic and maximises on the continent’s human capital towards creating sustainable incomes hence wealth. And all this achieved in a manner that incentivises use of clean energy, a major mitigator of climate change. Through such, productivity challenges in the continents comparative advantage sector can be converted into food secure homes, and enterprises that put more money in more pockets.

 

Policy coherence in implementation: engaging multiple sectors towards the common end of maximising productivity of the comparative advantage sectors of clean energy & nature-based agriculture will require that policies in different line ministries representing the various ancillary sectors be implemented to complement this maximisation, not in sectorial silos as traditionally done. For example, implementing transport infrastructure policy aims to increase the network of tarmacked roads should be implemented informed by agriculture’s need to connect producers efficiently to markets. This will ensure roads development is tied directly to spur enterprise creation by citizens in an area that a country holds comparative advantage to enables such enterprises compete favourably at the global level. Globally competitive enterprises transition a country to wealth through sustainable earnings across multiple sectors. The policies for this exist. What needs to happen is mass sensitisation, an aspect that will come through maximising on whatever policies we already have in the continent just like the ebagropamoja youth are doing. Success stories like these will provide a great basis to amend & re-structure policy processes to where coherence towards maximising the catalytic area becomes the norm.

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Market incentives: just about a year ago, heads of state and government from across the continent signed off to the African Continental Free Trade Area (AfCFTA) deal. The significance of this deal is that it will consolidate a 1.2 billion people strong market with a combined GDP of over $3.4 trillion. Trade directly implies a market opportunity which is the fuel that drives enterprise development. The urgent need is to now domesticate this agreement through practical tools towards ensuring the consolidated market drives enterprise creation in the comparative advantage areas of clean energy and nature-based agriculture. One key tool to this end is standards enforcement. National standards regulators in the continent need to leverage on benchmarks in the areas of clean energy, nature based / organic agriculture, quality, health & safety among key areas to create a market niche for enterprises among health, environment and climate conscience consumers who are increasing. The consumer market the world over is becoming more sophisticated with environmental, health and sustainability consciousness becoming a major decider – especially among the millennial generation (born between 1980 and 1999). In Africa, this is a 720 million person strong market of current and future consumers tapped to drive wealth creating enterprises across Africa.

 

Skills re-tooling: diverse skills exercised by youth across economies in the continent will need to be re-tailored to tap opportunities in the comparative advantage area. This basically means passionate youth with skills across disciplines – be it in agriculture, in administration, in technology and ICT, engineering & innovation, in marketing, in law, in anthropology, in research among many areas, need to be guided on how they can effectively leverage their skill to tap into enterprise opportunities arising from bridging gaps along Africa’s agro-value chain. It could be a gap in linking agro-actors to clean energy solutions so they can add value, or a gap of linking producers to markets, or to inputs, advisory services etc. This is already happening through a continental movement called #InnovativeVolunteerism. For instance, the youth who developed EbagroPamoja earlier discussed did so through Innovative Volunteerism. Innovative Volunteerism is structured guidance and inspiration to Africa’s sovereign capital, its people, and especially the youth, to trigger them to purpose-driven actions, leverage their skills, talents, interests and ongoing initiatives as the premium to build mutually beneficial and complementary partnerships with the end goal of closing gaps along the agro-value chain towards sustainably industrialising it using clean energy.

 

In the process, they benefit by creating enterprises while solving Africa’s developmental challenges. An agro-value chain powered by clean energy stands out as the most catalytic area for wealth creation in Africa. As an example, a youth who finishes school with a degree in anthropology – is guided to leverage on their refined research skills and meticulous attention to details that anthropology requires, to apply these to closing specific gaps in the agro-value chain by working with another youth with agribusiness skills & who understands value chains. And by collaborating, they identify their value chain of interest, map actors, establish their clean energy needs and other needs e.g. markets, transport etc., link them to potential solutions and in the cause of doing so, earn a commission, build networks and refine their skills to position themselves to creating an enterprise that taps a $1trillion dollar industry that is a maximised agro-sector in Africa. Passionate, driven youth guided well to engage in the catalytic area are Africa’s big bet to creating inclusive wealth.

 

 

Conclusion

Wealth can only be created through inclusive sectors, of comparative advantage. Areas through which countries in the continent can mobilise the disciplinary diversity in skills, talents, interests & ongoing work of its people, to purposeful actions, building globally competitive enterprises. Maximising productivity of Africa’s agro-value chain by sustainably industrialising the chain stands out as most catalytic to this end. It will pull in ancillary sectors like clean energy to power processes, transport, logistics to connect to markets, cross-cutting areas like law for administrative functions among others. By this, engage most of the population in productive, income generating actions aligned to their disciplinary preferences to ensure capital accumulation and hence wealth. This is how exuberant headline growth will be reconciled with the reality faced by the majority – as more jobs will be created to reduce the despair of joblessness and more money put in more pockets to enable families better school, feed, clothe & house their children.

 

 

 

Dr. Richard Munang is currently the United Nations Environment Programme (UNEP) Africa Regional Climate Change Programme Coordinator. He tweets as @RichardMunang.   Mr. Robert Mgendi is an Adaptation Policy Expert at UNEP. He tweets @RobertMgendi. The views expressed here are those of the authors and do not necessarily represent those of the institution with which they are affiliated; neither the editorial policy of African Newspage

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