Naledi Modisaatsone is a CIPE-Atlas Corps Think Tank LINKS Fellow at the Urban Institute.
The demographic dividend is the accelerated economic growth that may result from a rapid decline in a country’s fertility and the subsequent change in the population age structure.
According to the latest UN population projections, Africa will have two billion people by 2040, with the share of 12-to-24-year-olds growing from 18 percent to 28 percent. The increment in size of this age cohort in Africa will be parallel to a decline in the same age group in every other region of the world. This anticipated rapid growth of the labor force possesses serious development challenges, as well as opportunities. The rising question is: how should Africa best prepare in order to benefit from the demographic change in the coming generation?
On January 24 at the U.S. Department of State, CIPE, Atlas Corps, and the Office of the U.S. Special Envoy for Sudan and South Sudan co-hosted a welcome event for the new class of Atlas Corps Fellows including five participants of the CIPE-Atlas Corps Think Tank LINKS Fellowship.
As mentioned in a previous post, this year’s Think Tank LINKS fellows represent various regions around the world and either come from leading think tanks back in their home countries or will be serving at top-tier organizations in Washington, DC.
South Sudan just successfully hosted one of the largest events in the country’s short two-year history. On December 4 and 5 an impressively diverse crowd of potential investors and business owners from more than 60 countries came together in the capital Juba for the South Sudan Investment Conference, titled “Investment for Economic Diversification and Prosperity.” With more than 800 people registered to attend the two-day event, and at least 500 actually in attendance, observers and participants alike were relatively pleased that the event was carried out with only a few hiccups.
Logistically, it was just shy of a miracle. With only one major paved road in the entire country, a nascent hospitality and service industry, and a lack of local transportation options, it is noteworthy that an event of this magnitude even took place.
“When we entered the room where the President received us, he put the briefcase by the wall and left it there. After the meeting we collected the briefcase from where we had left it. On the departing journey I looked in the briefcase and saw that the money had been replaced with fresh corn.”
Nasir Ibraham Ali, the chief executive officer of World Duty Free, told the International Centre for the Settlement of Investment Disputes (ICSID) how, in 1989, a representative of former Kenyan President Daniel arap Moi explained to him that protocol in Kenya required that he make a “personal donation” to the president in order to establish duty free shops at the Nairobi and Mombasa airports. Ali understood “that this was payment for doing business with the Government of Kenya.” The price of this contract: $2 million.
Three years later, after spending $27 million to construct and equip his shops, Ali found himself in the middle of the infamous Goldenberg scandal. President Moi’s emissaries fabricated documents purporting to export gold and diamonds to World Duty Free. Moi’s emissaries then illicitly funneled the money they received in export compensation to Moi’s re-election campaign. The price of this fraud: estimated at a minimum of $438 million.
After World Duty Free claimed it was unwittingly part of the fraud, the government took over the shares and assets of the company to stop Ali from cooperating with the prosecution. When he responded by making statements to the press, he was arrested and then deported to the United Arab Emirates. Ali never recovered his assets, and Kenya never held any officials accountable in connection with the Goldenberg scandal.
Although these events occurred more than two decades ago, Kenya continues to fare poorly on Transparency International’s Corruption Index: 139 out of 176. It ranks in the 19th percentile for control of corruption, despite initiatives such as the restoration of the Ethics and Anti-Corruption Commission (EACC). However, some new initiatives are seeking to reinvigorate the fight against corruption. The private sector, led by the Kenya Private Sector Alliance and the Kenya Association of Manufacturers, established the UN Global Compact Network in 2005, which now has 83 companies that voluntarily adhere to the principles, including a commitment not to engage in corruption.
Today we all pay tribute to one of the world’s greatest democrats, who overcame many challenges and whose leadership and life inspired millions around the world.
Nelson Mandela spent 27 years in prison fighting against injustice of South Africa’s apartheid government. Shortly before entering prison in 1964 Mandela gave a speech about “cherishing the ideal of a democratic and free society in which all persons live together in harmony and with equal opportunities.”
This passion for trying to create a better world served as Mandela’s guiding principle and served him well when he faced the greatest challenge of his life in building a new nation of South Africa when he was elected President in 1994. At his inaugural he said “We enter into a covenant that we shall build the society in which all South Africans, both black and white, will be able to walk tall, without any fear in their hearts, assured of their inalienable right to human dignity – a rainbow nation at peace with itself and the world.”
Malach Onditi started Elemach Scales, a small business that manufactures weighing scales, in Nairobi, Kenya twelve years ago with a startup capital of $120 and one employee. Today the company has an annual turnover of $52,000 dollars, has twelve employees, and sells the scales not only in Kenya but also in Uganda and Tanzania. To exist this long in an environment where over 90 percent of business start-ups do not survive to the third year has not been an easy undertaking. Elemach Scales has experienced several challenges along this journey including inaccessibility of affordable credit, barriers to regional trade and access to markets, and harassment by county government officials in regards to licensing and workspace
Elemach Scales typifies a majority of small businesses in Kenya — a sector which currently provides 78 percent of the country’s total employment, more than 90 percent of new jobs, and 18 percent of GDP. CIPE has worked with its partners over the last five years in efforts to build awareness for micro and small enterprise policy reform, facilitating extensive stakeholder input and building capacity for its advocacy which culminated in the signing into law of the MSE Act in December 2012.
Not counted: Nigeria’s GDP model is based on the year 1990. (Photo: Wayan Vota)
In 2014, one small policy tweak will grow Nigeria’s economy by 40 percent, causing it to overtake South Africa as the largest in the region. A similar change in Ghana caused that country’s economy to grow 60 percent, while in Guinea-Bissau and Gambia the economy doubled in size. Even the United States increased its output by 3.6 percent using the same technique. What happened?
GDP rebasing. Simply put, these countries are all changing the way they measure their Gross Domestic Product — the sum total of all economic activity in a country in a given year — to better reflect what’s really happening the economy.
When Nigeria’s rebasing is complete, it won’t mean the country is actually producing 40 percent more goods and services. Living standards won’t jump by 40 percent — the government will just be counting more accurately. But it’s still hugely important.