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Africans driving African development

 InDepth News 13 May 2019

(Originally published: 05/2010) Contrary to widespread gloom over Africa, a new study says that the economic landscape of Sub-Saharan Africa has changed dramatically since the mid-1990s, with stagnation giving way to dynamism in a broad swath of countries. (808 words) - Jerome Mwanda

NAIROBI, Kenya - Contrary to widespread gloom over Africa, a new study says that the economic landscape of Sub-Saharan Africa has changed dramatically since the mid-1990s, with stagnation giving way to dynamism in a broad swath of countries.

Aggregate GDP (Gross Domestic Product) growth climbed from less than 2.5 percent in the 1990s to around six percent in 2003-2007. The region has also begun to make headway on poverty reduction and on achieving the Millennium Development Goals (MDGs).

"As a result, although Africa's medium- and long-term development challenges remain large and complex, the progress underway is remarkable and undeniable," says the World Bank study 'Yes Africa Can: Success Stories from a Dynamic Continent'.

As part of the study, the Bank is examining more than 20 recent development successes from the continent and is disseminating lessons learned from each of them. A forum was held in Washington on April 27, 2019 to discuss the initial findings.

"This study is not searching for a universal formula for success," said Punam Chuhan-Pole, a lead economist at the World Bank who authored the report. "Rather, it is motivated by the idea that sharing knowledge on successful African experiences, strategies, and approaches will help other countries and communities in the region to design their own development strategies and programs."

According to Chuhan-Pole, the study offers practical lessons to inform policy making in Africa, with particular attention to transferability and adaptation. As such, the primary audience of the study is African policy makers, researchers, civil society, and development partners and donors.

"A confluence of factors has contributed to the economic and development turnaround taking place in Africa: stronger leadership, better governance, an improving business climate, innovation, market-based solutions, a more involved citizenry, and increasing reliance on home-grown solutions. More and more, Africans are driving African development," states the study.

'Yes Africa Can' focuses on successful development interventions across the continent.

In Mali, a landlocked country, the implementation of a multi-modal (road, rail, and sea) transportation system was key to overcoming infrastructural constraints. This, coupled with improved phytosanitary, orchard management and post-harvest handling training programs, increased mango exports to the European Union by five-fold between 2003 and 2008 and boosted incomes for Malian farmers.

Mali's experience underlines the importance of bringing together a combination of ingredients - public-private investment, technical expertise, national capacities, and innovation - that are likely to drive positive economic change. It emphasizes the importance of sustained development over time and highlights the significance of leveraging established bilateral relationships (in Mali's case, with France and Côte d'Ivoire) in supporting value-chain improvements and export growth.

In Rwanda, liberalization efforts in the coffee sector combined with national strategies specifically aimed at capturing a larger share of the specialty coffee market have made important contributions to the country's post-war economic recovery.

Rwanda's approach to coffee sector reforms has resulted in the country's 500,000 coffee farmers being able to sell higher-quality beans for a higher price (the export price of Rwandan coffee nearly doubled between 2003 and 2008). In addition, the proliferation of coffee washing stations led to the creation of at least 4,000 jobs (by 2006) and provided expanded informal business cooperation opportunities.

Aloys Havugimana, a Rwandan coffee farmer, was a business owner with a shop and a car until [the genocide when] he lost everything. "Then I decided to grow coffee," Havugimana said. "I was able to put my three children through school. I gave four people cows, built houses with good construction material, and planted a forest of four hectares, all because of coffee."

In Kenya, M-PESA, an electronic payment system accessible from ordinary mobile phones, was launched in mid-2007 by mobile network operator Safaricom. The system has been adopted by nine million customers as of late 2009 - 40 percent of Kenya's adult population - and is facilitating an average of $320 million per month in person-to-person transfers (roughly 10 percent of Kenya's GDP on an annualized basis).

Extremely rapid uptake of M-PESA is a strong vote of confidence by local users in a new technology as well as an indication of significant latent demand for remittance services. In recent months, M-PESA has begun allowing institutional payments, enabling companies to pay salaries and collect bill payments.

Three major lessons have emerged from M-PESA, according to the study. First, it demonstrates the value of leveraging mobile technology to extend financial services to large segments of unbanked poor people.

Second, it shows the importance of designing usage-based rather than float-based revenue models for reaching poor customers with financial services. Unlike a traditional bank, which typically distinguishes between profitable and unprofitable customers based on the likely size of their account balances and ability to absorb credit, M-PESA serves any Safaricom mobile customer who pays for an account.

And third, M-PESA reveals the need for a low-cost transactional platform that enables low-income customers to meet a range of payment needs.

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