Manufacturing job losses spike to 108.7% in Nigeria. Analysts call for urgent policy reforms.



The Manufacturers Association of Nigeria (MAN) has reported a 108.7% increase in job losses within the manufacturing sector for the first half of the year in Africa’s biggest economy, marking the highest point in three years.



In comparison to the same period in 2022, the number surged from 1,709 to 3,567. This trend follows a 31.7% rise in job losses during the second half of the previous year, totaling 2,708.



This comes as the International Monetary Fund (IMF) revised Nigeria&#8217;s economic growth forecast down to 2.9% from the initially projected 3.2% in April. Major contributors to this downturn include demonetization effects, high inflationary pressures, and shocks in agriculture and hydrocarbons. The IMF&#8217;s World Economic Outlook underscores the challenges facing Nigeria.



MAN&#8217;s latest half-yearly review report attributes the decline in job creation to &#8220;an unfriendly business environment, primarily influenced by hastily implemented policies. The residual effects of the currency redesign policy, leading to a naira crunch, further compound the challenges faced by the manufacturing sector.&#8221;



The report emphasizes the urgent need for a reevaluation of these policies to stimulate job growth and ensure economic stability.



Despite the gloomy outlook, there is a glimmer of hope as the IMF suggests a potential moderation to 3.1% growth in 2024.



President Bola Tinubu&#8217;s administration&#8217;s recent reforms, including energy subsidy removal and the unification of exchange rates, are acknowledged as positive steps. The IMF expresses optimism that these measures could contribute to an upward trajectory in growth, offering a silver lining amidst the prevailing economic challenges.



The call for decisive and positive policy changes resonates with analysts as stakeholders grapple with the challenges in Nigeria&#8217;s manufacturing sector and the broader economy.



In response to these developments, Nigerian analyst Damilare Asiwaju expresses deep concern about the economic implications, emphasizing the inevitable consequences.



&#8220;It was bound to happen, the shutting down of big industries and Micro, Small, and Medium Enterprises (MSMEs). The cost of doing business under these current economic realities is unimaginable. If it is not a total shutdown, then downsizing,&#8221; Asiwaju remarks to FORBES AFRICA.



He laments the potential repercussions of the decline in MSMEs, underscoring their substantial contribution to the country&#8217;s Gross Domestic Product (GDP). &#8220;Sadly, with MSMEs being a significant contributor to our GDP, we might be in for more trouble,&#8221; he warns.



Asiwaju does not shy away from pointing fingers at both the previous and current administrations, accusing them of failure to implement business-friendly policies. &#8220;The previous government failed to promote and establish policies that make running a business in Nigeria easy and seamless, and this current administration has continued in that path.&#8221;



Expressing urgency, Asiwaju concludes with a stark prediction for the future: &#8220;If there isn&#8217;t a drastic turnaround in terms of policies, we might be heading into something more terrible than this.&#8221;



Also responding to the issues, business analyst Liadi Oluwaseyi Jimoh tells FORBES AFRICA: &#8220;The increase in job losses is alarming and underscores the challenges facing the manufacturing industry in Nigeria. This could have far-reaching implications for our economy.&#8221;



Jimoh highlights the multifaceted nature of the challenges.



&#8220;Various factors such as economic downturns, weak market demand, production costs, poor infrastructure, and global supply chain disruptions contribute to the challenges faced by the manufacturing sector.



&#8220;The consequences of these job losses extend beyond the sector itself,&#8221; he continues. &#8220;Unemployment can lead to income inequality, poverty, and social unrest, hindering overall development.&#8221;



Jimoh acknowledges the downgrade of Nigeria&#8217;s growth prospects, stating, &#8220;This further intensifies the challenges. A lower growth rate means slower economic expansion, impacting job creation and investment opportunities. Policy interventions and structural reforms are urgently needed.&#8221;



Providing insights into potential solutions, Jimoh emphasizes, &#8220;Creating a favorable business climate, investing in critical infrastructure, promoting vocational training, facilitating access to financing, encouraging diversification, and improving trade facilitation are key areas for policymakers to focus on.



&#8220;Addressing these areas and implementing appropriate policies is crucial for revitalizing Nigeria&#8217;s manufacturing sector, generating employment, and fostering sustainable economic growth.&#8221;

Man working in aluminium can processing plant

Manufacturing Job Losses Hit Three-Year High In Nigeria In H1 Amid IMF’s Downgraded Growth Forecast To 2.9%

A crucial strategy to mainstream rectifying the gender gap has been announced by the IMF in light of the pandemic, the Ukraine war, and crises impacting women’s lives and livelihoods.



On July 22, the executive board of the International Monetary Fund (IMF) approved its first gender strategy, adapting to the evolving needs, challenges and priorities in member countries, according to Kristalina Georgieva, Managing Director of the IMF.



Georgieva added in a video making the announcement: “It sets a vision to mainstream macro-critical gender issues in our core activities – in surveillance, in lending, in capacity development. We start with the strategy implementation immediately, but we will do so in a gradual, measured pace.



“What the IMF board has done is to recognize that women’s financial and economic empowerment is critical for reviving global growth at this juncture, and also for building resilience for a more shock-prone world.”



The gender strategy has four pillars: Empowering IMF staff with access to relevant gender-disaggregated data and modelling tools to conduct policy analysis; setting up a robust framework to ensure that macro-critical aspects of gender are integrated in IMF country work based on an even handed approach across membership countries and creating a supportive internal organizational structure; strengthening collaboration with external partners to benefit from knowledge sharing and peer learning, leveraging complementarities, and maximizing the impact on the ground and efficiently utilizing resources allocated to gender by realizing economies of scale and avoiding duplication of effort.



It will certainly have consequences for Africa too.



“I always support all gender strategies in whatever field they are. Because, contrary to popular belief, I still believe there&#8217;s a glass ceiling and I still believe women are paid less, and are less valued,” says Mara Glennie, Founder and Director of TEARS, a non-profit organisation specializing in the assistance and support network for survivors of rape and sexual abuse in South Africa.



On February 1 this year, South Africa&#8217;s President Cyril Ramaphosa signed three gender-based violence (GBV) bills into legislation.



“But I do think that any gender strategy has to start at another place. I don&#8217;t think that we as a society are training our women sufficiently. We don&#8217;t encourage a young girl to set out on her own, and we encourage a young boy to go out. So a woman suddenly ends up in a situation where she&#8217;s vulnerable, and can&#8217;t cope, because she hasn&#8217;t been trained.”



Glennie says the pillars are necessary as a vision statement, and that is important to ascertain how the strategy will be implemented. She says women are entering the system ill-prepared. She suggests a special forum where women can take their problems, and adds that another avenue for implementation could possibly be ambassadors.



“If I&#8217;m a girl, who&#8217;s never fought for myself, and I&#8217;m in a situation where I need help, my boss is picking on me – could be a he or a she – how do I understand the gender role? Because I do think that we do not explain the gender roles properly. So I think that the first part has to start off with a great deal of education.”



Glennie is also a founding member of the Businesswomen’s Association of South Africa (BWA), founded before the dissolution of apartheid.



“We felt black women in business and white women in business should work together. A very important aspect of that is that you personally have to take responsibility – and we are personally responsible for our own ways that we help other women.”

Rear View Of Woman Looking Through Window While Standing At Home

IMF’s Global Gender Strategy: How It Is Important For African Societies Too

<div class="wp-block-image"><figure class="aligncenter size-large is-resized"><img loading="lazy" decoding="async" src="https://www.forbesafrica.com/wp-content/uploads/2020/05/UN-Avenue-1024x460.jpg" alt="" class="wp-image-45196" width="902" height="404" srcset="https://cms.forbesafrica.com/wp-content/uploads/2020/05/UN-Avenue-1024x460.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2020/05/UN-Avenue-300x135.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2020/05/UN-Avenue-600x270.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2020/05/UN-Avenue-768x345.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2020/05/UN-Avenue.jpg 1179w" sizes="auto, (max-width: 902px) 100vw, 902px" /><figcaption>UN Kenya/Newton Kanhema The usually busy UN Avenue in Nairobi, Kenya where traffic is bumper to bumper on the best of days, is almost empty as people stay at home to avoid spreading the coronavirus. March 2020</figcaption></figure></div>



We live in a different world to the one we inhabited six short months ago.



With more than 4 million people infected and over 290,000 dead globally by mid May 2020, Covid-19 has ruthlessly exposed the vulnerability of a globalised world to pandemic disease. People are slowly coming to terms with the frightening and heartbreaking death toll, and we are still not out of danger.



The Greek philosopher Herophilus said, “When health is absent, wisdom cannot reveal itself, art cannot manifest, strength cannot fight, wealth becomes useless and intelligence cannot be applied.”&nbsp;



The bio-threat has already upended our notions of community interaction, with face masks, latex gloves and physical distancing becoming the new normal. Science has been challenged and experts in various fields struggle to understand the short and long-term consequences of the pandemic.



Lack of robust global public health systems has proven to be a chink in the world’s armour. It has also revealed a truth that we ignore at our peril: healthcare systems around the world have been sorely tested in managing this outbreak, and without substantial reprioritisation of investment in health and research globally, we will be no better equipped when the next pandemic strikes.



Describing&nbsp;<a href="https://news.un.org/en/story/2020/05/1063022">COVID 19 as a threat multiplier</a>, the UN Deputy Secretary General, Ms Amina Mohammed said, “We have a health emergency, a humanitarian emergency and now a development emergency. These emergencies are compounding existing inequalities”.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" src="https://www.forbesafrica.com/wp-content/uploads/2020/05/AJM.Tedros-1024x461.jpg" alt="" class="wp-image-45200" width="672" height="302" srcset="https://cms.forbesafrica.com/wp-content/uploads/2020/05/AJM.Tedros-1024x461.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2020/05/AJM.Tedros-300x135.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2020/05/AJM.Tedros-600x270.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2020/05/AJM.Tedros-768x346.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2020/05/AJM.Tedros.jpg 1178w" sizes="auto, (max-width: 672px) 100vw, 672px" /><figcaption>UN Photo/Eskinder Debebe Leading UN reforms &amp; ensuring the UN is fit for purpose in the countries they serve, the Deputy Secretary-General Amina Mohammed (centre), at the first-ever high-level meeting on the fight against tuberculosis. Dr. Tedros Adhanom Ghebreyesus (left), Director- General of World Health Organization (WHO) and María Fernanda Espinosa Garcés(right), President of the 73rd&nbsp;Session of the UN General Assembly. September 2018, New York, USA</figcaption></figure>



While no country has been spared, the impact upon families and individuals has varied around the world, exposing huge global and local inequalities.&nbsp;



The consequences of high uninsured rates and high out-of-pocket health costs are being revealed. Even before the Covid-19 outbreak,&nbsp;<a href="https://www.who.int/health_financing/topics/financial-protection/key-policy-messages/en/">more than 100 million people per year risked being plunged into poverty by a ‘shock’</a>&nbsp;in terms of unanticipated expenditure on medical treatment.



World Food Programme analysis shows that, due to the Coronavirus, an additional 265 million people are marching towards the brink of starvation by the year end because of the virus’s effects on jobs and family finances.



The social and economic upheaval we face today has changed the world and will go on changing it for many years. Behind the headlines of an economic decline that might rival the&nbsp;<a href="https://blogs.imf.org/2020/04/14/the-great-lockdown-worst-economic-downturn-since-the-great-depression/">Great Depression of the 1930s</a>&nbsp;are families separated by closed international borders, some mourning relatives they never managed to see and comfort and millions who no longer have jobs.



What must we do to prevent the next pandemic striking the world.



Like rain that exposes a leaking roof, the coronavirus crisis has revealed unanticipated problems inherent in our dependence on global supply chains and amplified longstanding structural deficiencies in health systems around the world. We can see now that under-investment in public health in one country is a threat to global health security everywhere. Responses to health emergencies cannot succeed if any part of the world is left behind.&nbsp;



The central importance of universal health coverage and&nbsp;ensuring healthy lives and promote wellbeing for all at all ages, as manifested in&nbsp;<a href="https://www.who.int/sdg/targets/en/">Sustainable Development Goal 3</a>,(SDG3) by 2030, is clear.



With Africa&#8217;s population expected to grow to 2.3 billion by 2050, for Africa to reap a <a href="https://news.trust.org/item/20170810142204-j0nwd/">demographic dividend,</a> as well as prevent disease outbreaks, Governments should:



<ol class="wp-block-list" type="1"><li>Reassess policy priorities and direct greater funding to health.</li><li>Invest more in disease prevention.</li><li>Improve working conditions for medical staff.</li><li>Offer fit-for-purpose health insurance to their people.</li><li>Harness big data, technology, and innovation to <a href="https://news.trust.org/item/20180209112650-s1njv/">leapfrog universal health coverage.</a></li><li>Forge public private partnerships to <a href="http://daghammarskjold.se/wp-content/uploads/2018/06/UNDG-CountryStudy-Kenya.pdf">address the gaps to attain SDG 3.</a></li><li>Create an army of community health workers.&nbsp;</li></ol>



The WHO Chief, Dr. Tedros Adhanom Ghebreyesus, a public health champion, who as Minster of Health in Ethiopia, a country once notorious for the highest maternal and child mortality in Africa, ensured the country achieved the health related&nbsp;<a href="https://www.afro.who.int/news/making-ethiopian-people-healthier-through-mdgs">Millennium Development Goals</a>,&nbsp;by unleashing the full potential of community health workers. He said that, “By fully harnessing the potential of&nbsp;<a href="https://www.who.int/hrh/community/guideline-health-support-optimize-hw-programmes/en/">community health workers</a>, including by dramatically improving their working and living conditions, we can make progress together towards universal health coverage and achieving the health targets of the Sustainable Development Goals.”



Doctors, nurses, carers and paramedics around the world are facing unprecedented workload in overstretched health facilities. The heroism, dedication and selflessness of medical staff allow the rest of us a degree of reassurance. In fact health workers are the frontline soldiers battling the pandemic.&nbsp;They deserve the same recognition and respect as women and men from the Armed Forces who are sent into battle in service of their country.



Additionally, the creation of robust health surveillance infrastructure in low-income countries will benefit the whole world in terms of early warning of disease outbreaks, and the ability to focus resources where and when they are needed.



To achieve this,&nbsp;<a href="https://www.cnbcafrica.com/coronavirus/2020/04/17/multilateralism-through-public-private-partnerships-are-key-to-flattening-the-covid-19-curve/">new models of multilateral and public private partnerships&nbsp;must develop</a>, as well reform, invest and give greater power to the&nbsp;World Health Organisation to protect the world from disease.



As citizens of the world we depend on one another. We are linked by trade and migration and the fact of our humanity as much as we are sometimes divided by politics and faith.



Consider this. Maria Branyas is a 113 year old <a href="https://www.thetimes.co.uk/article/spains-oldest-woman-113-year-old-maria-branyas-beats-coronavirus-sbjtjc6z3">COVID 19 survivor from Spain.</a> It means she has lived through the flu pandemic of 1918-19, the two World Wars, the 1936-39 Spanish Civil War and now the coronavirus. When asked what was the secret of her long life, she said, “good health”.



In a post-Covid-19 world, global health must be seen as a key component of national and global security as well as of the global economy.



SDG 3 must become pivotal in our post COVID 19 response or we may be sitting ducks,&nbsp;when another pandemic&nbsp;strikes, whose velocity and virulence could surpass what we are witnessing now.



Siddharth Chatterjee is the United Nations resident coordinator to Kenya. He has served in various parts of the world with UNFPA, UNICEF, UNDP, UNOPS, UN Peacekeeping and the Red Cross Movement. A decorated Special Forces veteran, he is an alumnus of Princeton University. Follow him on twitter-<a href="https://twitter.com/sidchat1?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor" target="_blank" rel="noreferrer noopener">@sidchat1</a>



The views expressed in this article are the author’s own.​​​​​

WITHOUT UNIVERSAL HEALTH COVERAGE WE ARE SITTING DUCKS WHEN THE NEXT PANDEMIC STRIKES

The Speaker of the Zambian National Assembly, Patrick Matibini, has <a href="http://www.enca.com/africa/zambias-parliament-suspendes-48-opposition-lawmakers" target="_blank" rel="noopener noreferrer">suspended 48 opposition legislators</a> for 30 days as a punishment for unauthorized absence from the parliament. Their offence? To have been missing for President Edgar Lungu’s state of the nation address in March.
The suspension of the MPs does not come as <a href="https://theconversation.com/we-need-to-talk-about-zambia-as-it-falls-from-grace-under-president-lungu-77520" target="_blank" rel="noopener noreferrer">a great surprise</a>. Hardliners from the ruling Patriotic Front have been pushing for something along these lines for some time. The ruling party was quick to try and disassociate itself from the Speaker’s actions. But, as Zambian commentators have pointed out, the action fits into a broader web of measures designed to intimidate those who question the president’s authority.
The most significant was the arrest of opposition leader Hakainde Hichilema, who remains in jail on trumped up <a href="http://www.africanews.com/2017/05/20/zambia-s-political-climate-and-treason-trial-of-hichilema-worrying-eu-mps//" target="_blank" rel="noopener noreferrer">treason charges</a>.
While the latest development in Zambia’s growing political crisis doesn’t come as a shock, it will disappoint those who were hoping that Lungu would be persuaded to moderate his position. Instead, it appears that the decision by the International Monetary Fund (IMF) to <a href="http://www.imf.org/en/News/Articles/2017/06/11/pr17214-zambia-imf-staff-concludes-visit" target="_blank" rel="noopener noreferrer">go ahead with a bailout</a> package despite the government’s democratic failings has emboldened the president to pursue an authoritarian strategy.
As a result, a swift resolution to the current political standoff seems unlikely.
<h2>Roots of the crisis</h2>
For some time Zambia was considered to be one of the more competitive democracies in Africa. But a period of backsliding under Lungu has raised concerns that the country’s inclusive political culture is <a href="https://theconversation.com/we-need-to-talk-about-zambia-as-it-falls-from-grace-under-president-lungu-77520" target="_blank" rel="noopener noreferrer">under threat</a>. The current impasse stems from the controversial elections in 2016 when Lungu won a narrow victory that <a href="http://af.reuters.com/article/topNews/idAFKCN10Q163" target="_blank" rel="noopener noreferrer">remains contested</a> by the opposition United Party for National Development.
Hichilema, the leader of the United Party for National Development (UPND), has stated that his party will not recognize the legitimacy of Lungu’s victory until its electoral petition against the results is heard in court. The initial petition was <a href="http://allafrica.com/view/group/main/main/id/00045643.html" target="_blank" rel="noopener noreferrer">rejected by the Constitutional Court</a>. But its decision was made in a way that had all the hallmarks of a whitewash. The UPND subsequently appealed to the High Court. Hichilema’s decision to make his party’s recognition of the president conditional on the petition being heard was designed both as an act of defiance, and as a means to prevent the government from simply sweeping electoral complaints under the carpet.
Until the court case is resolved, the opposition is committed to publicly challenging the president’s mandate by doing things like <a href="https://diggers.news/guest-diggers/2017/06/14/the-wholesale-suspension-of-upnd-mps-legal-but-undemocratic/" target="_blank" rel="noopener noreferrer">boycotting his addresses to parliament</a>. In response, members of the ruling party have accused the United Party for National Development of disrespect and failing to recognize the government’s authority. It is this that appears to lie behind Hichilema’s arrest on treason charges.
<h2>Punishing parliamentarians</h2>
The suspension of UPND legislators needs to be understood against this increasingly authoritarian backdrop. It is one of a number of steps taken by those aligned to the government that are clearly designed to intimidate people who <a href="http://democracyinafrica.org/called-professor-nic-cheeseman-causes-zambia-controversy/" target="_blank" rel="noopener noreferrer">don’t fall into line</a>. Other strategies include public condemnation of the government’s critics and proposals to break up the influential Law Association of Zambia.
Efforts by the <a href="http://en.rfi.fr/africa/20170614-zambian-government-played-no-part-suspension-opposition-mps-says-spokesman" target="_blank" rel="noopener noreferrer">president’s spokesman</a> to disassociate the regime from the suspensions have been unpersuasive. The official line of the ruling party is that the speaker of parliament is an independent figure and that he made the decision on the basis of the official rules. It’s true that the speaker and the parliamentary committee on privileges, absences and support services have the right to reprimand legislators for being absent without permission.
Nonetheless the argument is disingenuous for two reasons. The speaker is known to be close to the ruling party, a fact that prompted Hichilema to <a href="https://diggers.news/guest-diggers/2017/06/14/the-wholesale-suspension-of-upnd-mps-legal-but-undemocratic/" target="_blank" rel="noopener noreferrer">call for his resignation</a> earlier this year. And the committee’s decisions are clearly driven by the Patriotic Front because it has more members from it than any other party.
The claim that the suspension was not government-led lacks credibility. This is clear from the fact that Patriotic Front MPs have been the most vocal in calling for action to be taken against boycotting UPND MPs.
<h2>IMF lifeline for Lungu</h2>
There are different perspectives on the crisis in Zambia. Some people invoke the country’ history of more open government to argue that Lungu will moderate his position once the government feels that the opposition has been placed on the back foot. Others identify a worrying authoritarian trajectory that began under the presidency of the late <a href="http://www.forbesafrica.com/politics/2013/10/01/power-comes-fall/" target="_blank" rel="noopener noreferrer">Michael Sata</a>. They conclude that things are likely to get worse before they get better.
One of the factors that opposition leaders hoped might persuade President Lungu to release Hichilema and move discussions back from the police cell to the negotiating chamber was the government’s desperate need for an economic bail out. Following a period of bad luck and bad governance, Zambia faces a <a href="https://www.lusakatimes.com/2017/04/03/zambia-facing-debt-crisis-fundanga/" target="_blank" rel="noopener noreferrer">debt crisis</a>. Without the assistance of international partners, the government is likely to go bankrupt. This would increase public dissatisfaction with the Patriotic Front and undermine Lungu’s hopes of securing a <a href="http://democracyinafrica.org/zambia-president-lungu-third-term/" target="_blank" rel="noopener noreferrer">third term</a>.
But the willingness of the IMF to move towards the completion of a <a href="https://www.bloomberg.com/news/articles/2016-08-10/zambian-leader-sees-swift-subsidy-cuts-in-1-2-billion-imf-deal" target="_blank" rel="noopener noreferrer">$1.2 billion rescue package</a> suggests that authoritarian backsliding is no barrier to international economic assistance. In turn, IMF support appears to have emboldened the government to continue its efforts to intimidate its opponents.
IMF officials, of course, will point out that they are not supposed to take political conditions into account and that their aim is to create a stronger economy that will benefit all Zambians. This may be true, but the reality is that by saving the Lungu government financially the IMF is also aiding it politically. Whatever its motivation, the agreement will be interpreted by many on the ground as tacit support for the Patriotic Front regime, strengthening Lungu’s increasingly authoritarian position. &#8211; Written by <a href="https://theconversation.com/profiles/nic-cheeseman-180800" target="_blank" rel="author noopener noreferrer">Nic Cheeseman</a>, Professor of Democracy, University of Birmingham
Originally published in <a href="https://theconversation.com/africa" target="_blank" rel="noopener noreferrer">The Conversation</a>
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Zambia slides towards authoritarianism as IMF props up government

Accra’s central business district, located at Ring Road, is popular with start-ups because everyone walks past it, from tourists to townsfolk. This doesn’t count for much if Ghana’s economy continues to stumble.
Felix Oppong runs a small printing business in this bustling area. He has a staff of five who serve around 10 companies, mainly from the telecommunications and financial sectors.
The company prints posters, fliers, banners and office documents. In the past year, Oppong has lost two of his biggest clients, telecoms giant, MTN, and Fidelity Bank, due to power cuts, known here as dumsor. He has also had to increase his prices to break even.
“Our business has really taken a hit, the dumsor situation right now means we cannot service a lot of the orders we get from clients. We are relying on the generator every day to make sure we can meet demands and the cost of petrol is very high as well,” says Oppong.
“We cannot continue running the business like this. Our clients are complaining about the increase in prices and I had to sack three staff, there have been at least two petrol shortages last year which meant we had to close our business for a week and that is when we lost MTN.”
Ahead of elections on November 7, the Ghanaian economy is facing several challenges. Once a shining light of economic prosperity, the country, according to the International Monetary Fund (IMF), is now experiencing a decline in growth from 8% in 2012 to 3.5% in 2015. The current woes are largely due to the protracted energy dilemma and what many industry experts believe to be poor macro-economic management.
With elections coming, a restrictive IMF program has been implemented to prevent previous bouts of excessive spending. The organization has disbursed a third installment of $116 million, which amount to a total of $900 million over three years, to aid economic recovery in the West African country. Consequently, Consumer Price Index (CPI) inflation is forecast to rise to 8.7% in 2016, up from 8.3% in 2015.
Franklin Cudjoe, the Founder and CEO of IMANI Center for Policy and Education, a leading think-tank in Ghana, says the plight of the Ghanaian economy is not specific to one sector.
“I would say all the industries in the country are having some challenges, all emanating from production costs that have gone high over the last couple of years. One of the sources of the high production cost for almost all the industries is because of the energy challenge that we have,” he says.
“If you take it on a per capita basis, the cost of energy, for instance, has tripled over the past few years alone and that significantly affects the budget for food. The disposable income for the household has significantly been reduced. The Ghanaian economy has also suffered from the global shocks because most of our products depend on them and there has been plummeting oil prices. Cocoa production also hasn’t quite matched this, not to mention a decline in gold as well.”
Cudjoe says the country’s woes are also self-inflicted. Ghana is borrowing more money but, according to some experts, these funds are not utilized well. The currency, according to Reuters estimates, has plummeted by around 20%, with a corresponding total external debt of $24.3 billion in 2015.
“Austerity measures being used at the moment are all fiscal and based on levying tax on everything. The government has incurred so much debt and the only way it can service those debts is to increase taxes. There is no sensible government that will be seen introducing taxes in an election year, but it seems the only way the economy can sustain itself… because, quite frankly, the coffers are empty,” says Cudjoe.
Nigeria’s fiscal challenges have also led to the country banning some imports, which significantly affected Ghana’s agricultural sector. Farming contributes around 19.9% to the economy, according to the Ghana Statistical Service (GSS).
“This also has a way of affecting our balances. It is similar to 2005 where Nigeria banned close to 93 products from Ghana and I think we are seeing echoes of that sentiment again. I don’t think it is right to erect barriers, especially with both countries belonging to the Economic Community of West African States (ECOWAS) which is supposed to lead to deeper economic integration,” says Cudjoe.
He, however, believes that the services sector, together with technology, will drive growth in Ghana. According to GSS figures, the sector contributes a whopping 50.2% to the economy.
“Ghana at the moment is doing $900 million a month, that is 24 million transactions, in mobile money. Ninety nine percent of these transactions are peer to peer, which simply means one takes and transfers money to the other. We are so far away from creating a cash-lite economy in Ghana, which is what mobile money is supposed to do. So we sat down and looked at how to create a platform that enables us to use the mobile money for retail payments. Zeepay’s idea is to be able to move from predominantly peer-to-peer transactions into retail payments as well,” says Andrew Takyi-Appiah, Co-founder of Zeepay, a mobile payments company.
He has, so far, invested just over $500,000 in his new venture and is hoping the growth in the Ghanaian services sector will help boost his mobile app service. Takyi-Appiah’s major challenge in scaling his business is the lack of funds. Financial institutions, who are traditionally apprehensive about lending to start-ups, have taken an even tougher approach to mitigate risk against bad debts. The government, however, has set up the Ghana Infrastructure Investment Fund (GIIF), to provide resources and attract investment. But Cudjoe says the approach of the government in implementing this leaves little to be desired.
“I know for a fact that the Ghana infrastructure fund that is being set up is being funded by the country’s oil money as seed capital, instead of using private funding from abroad. You ask yourself if this is the most prudent way of utilizing resources in an austere economy. I don’t really believe that austerity measures are the [solution] but I think the way we are going about it is to use the tax to solve it, and I think taxation is the last measure you want to resort to in a time like this,” he says.
As voters prepare to make their mark, the Ghanaian economy is on shaky ground. Business in the country is still firmly in the grips of the energy crisis, which has reduced output from the manufacturing and agricultural sectors, while increasing production costs.
The recent growth in the economy has achieved certain goals – such as reducing poverty – but ballooning costs and debt has left many wondering if Ghana’s progress is about to be stunted.

The Coffers Are Empty

Chris Bishop: You believe that US foreign policy is becoming more isolationist. What does that mean for Africa?
Steve Forbes: In terms of the US turning its back on the world, it’s not good for Africa. Turning outward to the world means more trade, greater sense of security which means more investment. Africa has enormous opportunities, even beyond a commodities boom and a lot of entrepreneurship there. What you need is more and more of an environment, structures where entrepreneurship can build real assets. That’s where things like the World Banks’ survey of doing business is helpful, structural changes that you need to make… people don’t realize that there are hundreds and hundreds of millions of people in Africa – that’s a big place.
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Bishop: What about the visit of President Barack Obama to East Africa?
Forbes: He was going to get applause, and he got some, but I don’t think he fully recognizes what you need to do to get an economy growing. And Africa is up for it. Take Kenya, who would have thought that a place like Kenya would be at the forefront of electronic banking, or world banking, but they are.
Bishop: What would be your advice for foreign policy towards Africa?
Forbes: Well, certainly in the north, you’ve got to have more sense of security and the sense that the bad guys are not going to have the sway in places like Nigeria. Then urge people to put in reforms. What you don’t do is let the IMF give the advice, they still give mostly bad advice, economic malpractice.
Bishop: What about the entrepreneurs of Africa?
Forbes: Without entrepreneurs you don’t flourish, you don’t get the breakthroughs and there’s no lack of energy in Africa.
Bishop: If you were the president of a country in Africa, would you say flat tax from tomorrow?
Forbes: Yes I would. I’d ask the IMF what to do and do the opposite. Putting in a flat tax, tying the currency to the euro, which many African countries have already done. So even though the euro is not the best currency, people trust that more than they do a local currency. So you can say, ‘don’t worry about our central bank, we’re with the euro or the dollar’, so we’ll invest with the sense of security that you’re not going to have a hyper-inflation like it hit Zimbabwe. Then you do that and you put in ease of starting a business. Start practicing real property rights, then you’re going to start to see, rapidly, an emergence of a middle class.
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Bishop: And how likely do you think that is, reading the situation from this side?
Forbes: I think that people recognize that foreign aid was a disaster for Africa. That the Africans are quite capable, in an economic environment, of prospering? I think they’ve already demonstrated that.
Bishop: You haven’t missed a column for 43 years. As a fellow journalist I’d like to say that’s quite something. What sort of legacy do you want to leave in the world of business journalism?
Forbes: I think simply carrying out my grandfather’s vision when he said: “The purpose of business is to produce happiness, not pile up money.” So whether it’s books, or anything else, laying out how we can create that environment where entrepreneurs can flourish, because when they flourish we flourish.

FORBES ON AFRICA IN NEW YORK

Just how well Africa is rejuvenating its geopolitical space, including its trade and scientific ties with its sovereign states and the rest of the world, will be the crux of discussions at this year’s meeting of the World Economic Forum (WEF) on Africa, in Abuja, Nigeria’s administrative and diplomatic capital, in May.
For Africa’s most populous nation, the benefits of hosting the prestigious event will go beyond the superficial. For starters, Nigeria is a land of speeches, conferences and seminars. If grandiose eloquence from politicians, community, business and religious leaders was all it took to transform a nation, then the country would be the most developed nation south of the Sahara. The presence of the world’s most influential people in Abuja will be an unprecedented opportunity for Nigeria to showcase its vast economic opportunities and deepen the dialogue on economic reform between the international and Nigerian private sectors.
Nigeria’s reputation is constantly in flux. Its quest for global leadership and respect is reflected in its diplomatic forays around the world, its contributions to global culture and the arts, its youthful and entrepreneurial populace, its consumer base and its emerging status as a leading South-South economy. Its recently concluded the sale of several state-owned assets in its power sector, and government should earn well over $10 billion when this phase of its privatization program ends in 2016.
In November, Nigeria’s president Goodluck Jonathan appointed his top economic adviser, Nwanze Okidegbe and finance minister, Ngozi Okonjo-Iweala, as co-chairs of the 2014 WEF in Africa steering committee to prepare the country for the meeting of heads of government and chief executive officers of global firms.
The steering committee is supported by the Nigerian Economic Summit Group and led by Frank Nweke, a former minister of information. The group also includes Aliko Dangote, Africa’s richest man and president of Dangote Industries; Tony Elumelu, the chairman of Heirs Holdings; Bisi Onasanya, the group managing director of First Bank of Nigeria, the country’s oldest and largest bank by assets; Nduka Obaigbena, the publisher of ThisDay newspaper and Wale Tinubu, the group managing director of Oando, Nigeria’s leading home-grown energy company.
Nigeria is arguably one of the fastest growing economies on the African continent, posting an average 7% GDP growth each year for the past decade, and poised to achieve increased revenues from the non-oil sectors in 2014, according to the IMF. West Africa’s leading economy is also plagued by industrial spats and strikes in its hospitals and schools, widespread graft and internal terrorism, mostly from the militant Boko Haram group.
The Nigerian government grabbed the opportunity to host the 2014 edition of the WEF on Africa summit with relish, eager to showcase its hospitality and status as a developing nation, while further cementing Abuja’s reputation as West Africa’s conference capital.
More than 800 delegates from around 70 countries are expected to review the progress the continent has made since the previous meetings and to do justice to the theme for this year’s event: ‘Forging Inclusive Growth, Creating Jobs’.
The WEF Africa team in Geneva are clearly seeking to advance the debates and consensus for action reached during previous meetings which focused on the need for sustained economic growth, improvements in governance, improving agricultural output, accelerating investments, competitiveness and collaboration with other reemerging economies, and scaling innovation.
“The theme aligns perfectly with the medium- and long-term aspirations and commitment of the Federal Government of Nigeria,” says Okonjo-Iweala.
“With the whole economic and political world focused on Nigeria during the meeting, it places enormous responsibilities on the country.”
Focusing on issues particular to the region—whether in the Middle East, Africa, East Asia, or Latin America—the regional WEFs are different from the annual retreat in Davos, Switzerland which has a much wider scope of examining global political, economic and social issues.
“Africa’s remarkable growth trajectory is projected to remain above 5 percent in 2014 with West Africa the fastest growing sub-region, representing the continent’s largest business opportunity. Nigeria, sub-Saharan Africa’s second-largest economy and most populous nation—with over 160 million inhabitants—already plays a crucial role in advancing the continent’s growth; yet it is also emblematic of the challenges of converting natural wealth into solutions that address persistent social challenges, says the WEF.
“Nigeria currently receives a very significant share of Africa’s foreign direct investments (FDI), and I reckon that discussions at the 2014 WEF on Africa summit would reveal the need for even more FDI for important economies like Nigeria, and attract broad-based investments that will lead to the creation of millions of new jobs,” Ogho Okiti, the special adviser to President Jonathan’s chief economic adviser, tells FORBES AFRICA.
Unlike debates and resolutions at the United Nations (UN) which are usually confrontational and perceived as quixotic by critics of the global body, the WEF has maintained a collegial culture over the decades. Three days of thematic talk comprising of workshops, interactive sessions, working breakfasts and lunches, and cultural events in Abuja are expected to facilitate pragmatic responses to insightful queries such as why nations continue to experience jobless growth and, in Africa’s case, growth bereft of sustainable development; why African nations trade more with the rest of the world than they do with themselves; and which regional blocs score top marks for infrastructure improvements, economic integration and HIV/AIDS reduction in its communities.
The WEF’s rich database and extensive use of research methodologies helps it produce reports such as the ‘Global Risks Report’, the ‘Global Gender Gap Report’ and the ‘Global Competitiveness Report’—there is also an ‘African Competitiveness Report’.
Dangote has described the WEF’s non reflection of Nigeria’s involvement and impact in Africa’s development over the years as unfortunate. On a broader scope, Africa’s numerous challenges, such as poor governance; diseases; widespread access to affordable shelter, education and clean water; poverty and poor electricity supply have been at the core of many of the forum’s initiatives. WEF gatherings encourage partnerships and the commitment of its corporate members towards solving some of these problems. Perhaps this event in Abuja might offer a solution to the Boko Haram scourge.
One candid moment that has etched the WEF permanently in the annals of Africa’s global experience was the 1992 Davos meeting where former South African president FW de Klerk shared a podium with the late Nelson Mandela. This was where Mandela reportedly made his very first speech on South Africa’s economic future under the ANC government. That speech laid the foundation for social harmony and global support for South Africa.
Founded by a University of Geneva professor of business policy, Klaus Schwab in 1971, the WEF is positive evidence that discerning conversation will never go out of fashion.
Two remarks made during the 2013 WEF in Davos illustrate why the meetings will continue to inspire the world’s business and political elite to create positive change. The first is an excerpt from United Nations secretary general Ban Ki-moon’s speech.
“As a boy, I studied in the dirt. There was no classroom. Education made me what I am; it made my dream come true… I shared my message with refugee children: Don’t lose hope, study hard. I did it, you can do it too,” he says.
The second is an observation by Rwanda’s president Paul Kagame.
“Africa’s story has been written by others; we need to own our problems and solutions and write our story.”

Africa Must Pen Its Own Story

Being on top of your game is key to being successful in business. But when trading internationally, there is an additional factor that is at play: cultural differences. Understanding these cultural differences can have a serious impact on business and may be the deciding factor for signing or losing a deal.
Bunga Kiala knows well about such pitfalls. As an Angolan working for a German company doing business in Africa, he is at the coalface of juggling two fundamentally different business cultures. Kiala, who grew up in Angola but has lived in Germany since the age of 16, had to quickly learn that, for better or worse, many stereotypes about the two nations contain an element of truth. And that knowing how to handle them can open many doors.
“The business environments in Germany and African countries are completely different,” explains Kiala.
They are often the reason why potential business opportunities fall through. There are two common deal-breakers, says Kiala: being late for a meeting, which Germans interpret as being unreliable. And focusing on camaraderie instead of research, academic credentials and skill.
“To Germans, only the quality of the product counts. Liking somebody is not essential,” he explains.
Those were tough lessons to learn for Kiala, who came to Germany as a teenager in the early 1990s, to escape Angola’s three-decade-long civil war. After growing up in a children’s home and attending high school in the city of Karlsruhe, he trained as an electrician and started to work for the city’s public utility company. But Kiala wanted more from life.
“The dilemma was that I didn’t have the money to study. So I continued working and went to a technical college in the evenings, for six years, to become an electrical engineer.”
His efforts paid off. After his graduation, Kiala was soon promoted, first to the position of project manager, leading a team of 40 people. His ambition and drive were also noticed by the competition. In 2007, SebaKMT, a Bamberg-based developer and manufacturer of measuring equipment that locates faults and leaks in power, water and communication networks, headhunted him.
“Like many other German companies, SebaKMT didn’t have an Africa division. For a long time, European countries believed that only South Africa and the Maghreb had economic potential, while the rest of the continent wasn’t deemed worth the investment. But in early 2000, the thinking somewhat changed,” says Kiala.
Showing impressive economic growth figures of up to 10%, African countries gained interest in the eyes of foreign investors. According to International Monetary Fund (IMF) forecasts, the future continues to look rosy for the continent. Seven of the world’s ten fastest-growing economies will be in sub-Saharan Africa by 2015, the IMF predicts, thereby soon outweighing Asia’s economic growth. It was this trend that gave a boost to Kiala’s career.
“SebaKMT decided to explore the African market,” he says.
As SebaKMT’s new sales director for Africa, Kiala, then in his early 30s, set up a new export division from scratch. It was a challenging task, he says, but it helped to have a product that met growing demand.
“Few African countries manage their water and electricity networks efficiently,” says Kiala.
In most nations, 40% to 60% of treated water gets lost on the way to the customer. Finding leaks quickly can therefore save millions of dollars. The same goes for faulty electricity and communications networks.
In less than five years, he brought SebaKMT’s equipment to 25 African countries, practically half of the continent. It is during those trips, he says, that he has to draw on one of his most valuable skills: understanding two very different business cultures. It all begins with the first encounter, when Germans’ famous virtue, punctuality, collides with the African thinking that good things take time and making someone wait is a sign of authority.
“It’s common to have an appointment at 2PM but your business partner won’t appear for another hour or so. It has even happened to me that my meetings were postponed for two or three days,” he says.
In a German business context, that’s an unthinkable scenario. And so, more often than not, Kiala finds himself in the difficult situation of having to straddle the divide: showing patience for “African time”, while trying to placate his fervent German bosses.
“It’s a different mentality. You have to understand it and treat people accordingly.”
It doesn’t end here. Who doesn’t understand Germans’ need for surety might perceive their let’s-get-down-to-business attitude as offensive.
“Small talk is kept to a minimum. Nobody asks how your family is doing,” Kiala explains.
And those who hope to seal a deal with a handshake will get a rude wake-up call, too.
“Germans are incredibly accurate. Their business culture is about careful planning and sticking by the rules. They want 100% assurance.”
That comes with detailed written communication, which is passed back and forth repeatedly before a contract is signed.
After 20 years of living in Germany, Kiala can offer sound advice on how to deal with Europe’s powerhouse. He explains it in true, three-point German style: “First, it’s all about competence. You need to have the best product, be able to offer maintenance plans and assistance.”
Second comes preparedness.
“Be professional. Have an excellent presentation ready. Know your product inside out.”
And third—it can’t be stated often enough—be on time.
It might seem to be hard work, but it’s worth the effort, says Kiala, who over the years has come to prefer Germans’ conservative approach to doing business.
“In return, you get longer-term investments, stable economic activity and a business environment that is separate from political power and friendships. Germans don’t take a lot of risk. Everything is double secured. As a result, you don’t see big losses, even in difficult economic times.”
Kiala didn’t always think this way. When he first arrived in Karlsruhe, it took him time to appreciate the German mentality. He struggled with people’s reserved attitude, which was so different from the outgoing nature of the people in his home country, Angola.
“Germans take time to open up. But once you get warm, it’s really a good friendship. It has substance,” he says.
He stresses that this also translates to the business environment. The initial approach is cautious, but once a business relationship is built, it is sturdy.
His appreciation for German culture has led to some snide remarks from his countrymen.
“In Angola, people call me ‘the German’ because I have adopted a different way of life,” Kiala jokes.
He believes it’s less about losing his roots, it’s about making the best of both worlds.
“I try to pick the good things out of each culture,” he explains.
In his professional life, this has certainly stood him in good stead. And it’s something he plans to hold on to for a while: “I might go back to Africa one day. But for now, Germany is the place for me”.

Explaining The Unthinkable  To The Germans

According to the World Bank’s Doing Business Survey, Rwanda is the 45th (out of 183) easiest country in the world to do business in. It takes only two procedures and three days to open a business in Rwanda, compared to an average of eight procedures and 37 days on the rest of the continent.
<div id="attachment_329" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-329" class="size-large wp-image-329" src="/wp-content/uploads/2017/04/iStock_000016937094Medium-1024x685.jpg" alt="" width="474" height="317" />Early morning view from a hill into the tropical cloud forest in Nyungwe</div>
Rwanda by far offers the most business friendly environment in the East African Community (EAC). Truly remarkable for a country scarred by a genocide, less than two decades ago, that saw 800,000 people die in 100 days.
Rwanda’s strong performance is thanks to the government’s drive for regulatory reforms. In 2011 alone, the government has: lowered registration fees for businesses; introduced a credit bureau to provide credit rating data and reduced the frequency of value-added tax filings, from monthly, to quarterly. Reforms have also been underway in the banking sector. The International Monetary Fund (IMF) noted government’s restructuring and modernizing in oiling the wheels of the financial sector and concluded that although the financial sector has a few vulnerable banks, overall the sector can withstand a major shock.
Reforms are likely to continue in years to come given the ruling, Rwanda Patriotic Front’s political dominance. President Paul Kagame secured a landslide victory in 2010, which not only ensured his presidency until 2017, but also ensures policy continuity. Political stability, coupled with policy certainty, will go a long way to attract investors.
A central policy focus for the government will be an East African Community initiative in pursuit of a powerful and sustainable economic and political bloc. The European debt crisis could slow the EAC’s pace of establishing monetary and fiscal union. Member states will avoid rushing matters to ensure that they do not wind up in the same mess as the Europeans.
The economy grew 7.5% in 2010. The government expected growth to decline to 7.0% in 2011, but given the performance of the economy as of the second quarter of this year the government revised its forecasts. Government expects growth to average 7.2% per annum between 2011 and 2015. Growth will be supported by investment expenditure to improve the infrastructural base.
The recently signed Bilateral Investment Treaty (BIT) with the United States is likely to boost trade and investment between the two countries. This was the first new BIT with an African country and signals Washington’s seal of approval on Rwanda’s macroeconomic outlook and reform agenda.
Inflation in Rwanda remains benign in comparison to its neighboring countries. Inflation increased to 7.8% year-on-year in October, from 6.6% in September. Rising inflation pressures prompted the central bank into action in October. The National Bank of Rwanda increased benchmark interest rates to 6.5% from 6.0% in a bid to stem these rising inflation pressures. Rising inflation poses a risk to growth and the central bank has to strike a delicate balance. With inflationary pressures being external—food and oil—the impact of monetary tightening is likely to be limited.

Steady As She Rises

<div id="attachment_162" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-162" class="size-large wp-image-162" src="/wp-content/uploads/2011/11/iStock_000013732621Large-1024x675.jpg" alt="" width="474" height="312" />Growth will be driven by government expenditure as revenues increase through higher oil production and prices</div>
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Following a remarkable run of double-digit growth, the Angolan economy took a hit in 2009 and 2010 due to a fiscal and balance of payments crisis. However, the signs of a strong recovery are in the offing and economic prospects are now looking brighter. Already all three main rating agencies, Moody’s, Fitch and Standard &amp; Poor’s, have raised the country’s sovereign rating. The International Monetary Fund (IMF) expects GDP growth of 3.7% in 2011, building on the 3.4% of 2010. The IMF expects growth to accelerate to 10.8% in 2012. Growth will be driven by government expenditure as revenues increase through higher oil production and prices. The IMF’s stand-by arrangement (SBA)—a credit line—which runs until February 2012, is likely to anchor macroeconomic policies in the medium-term at least.
<div id="attachment_134" style="width: 360px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-134" class="size-full wp-image-134" src="/wp-content/uploads/2017/04/angola.jpg" alt="" width="350" height="376" />Growth will be driven by government expenditure as revenues increase through higher oil production prices</div>
Government expenditure will focus on massive social and infrastructural gaps in the economy. The construction sector will continue to play a central role. The mining sector is likely to get a boost as the government plans to diversify the economy away from oil and gas production, as recommended by the IMF. Angola has substantial mineral deposits which include iron ore, copper and diamonds. The mining sector was deemed unviable during the civil war and neglected. After the civil war, the sector took a back seat to oil and gas production and attracted little investment. A major development in the mining sector will be the introduction of a new mining code that is aimed at boosting investment into the sector. The code was passed by parliament in July this year and is set to come into eff­ect by year-end. The state, through its mining company Endiama, aims to play a major role and to take 51% in all diamond mines.
Infrastructural bottlenecks and robust domestic demand are likely to keep infl ation elevated in the months ahead. On the political front, the ruling Movimento Popular de Libertacao de Angola (MPLA) continues to dominate.
<div id="attachment_161" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-161" class="size-large wp-image-161" src="/wp-content/uploads/2011/11/iStock_000015823770Large-1024x683.jpg" alt="" width="474" height="316" />Oil Platform offshore Angola</div>
It holds 191 of the 220 seats in parliament. The fractured opposition will only help the MPLA keep power. Elections are set for late 2012. The incumbent president, Jose Eduardo dos Santos, is expected to stay in power. In February 2010, the country adopted a new constitution whereby the president is no longer elected by popular vote; instead the president will be from the party with the most seats in parliament. The government has faced huge challenges since the end of the civil war. Poverty is still prevalent despite the country’s huge mineral wealth. Infrastructure remains poor following decades of civil war. There is discontent among the people, who feel they should be getting their fair share of economic prosperity. This discontent is unlikely to see a repeat of the “Arab Spring” on the south-west coast of Africa, though. Angolans are weary of conflict.
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Tag: IMF

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