By Motoki Aoki
Long the pariah in Sub Saharan Africa’s economic integration, Zimbabwe has recently made an effort to re-engage with the global community. In February 2015, the EU lifted its 12-year sanction and resumed aid to Zimbabwe. In June, after a decade-long freeze, an IFC delegation visited Harare to seek ways to reinvigorate Zimbabwe’s private sector and help the country’s economy continue trending upwards after it shrank by nearly 40 percent from 2000 to 2008. After what was essentially a lost decade, leaders in Zimbabwe are now seeking long-term, inexpensive funding for the country’s economy and undercapitalized firms. They have found willing partners in multilateral institutions.
The Political Landscape: The Root of Economic Underperformance
Zimbabwe has rich human capital, characterized by a high adult literacy rate of 86.5 percent. It is the political landscape, however, that Zimbabwean chief financial officers specify is the largest risk to business performance. Recognized as the world’s oldest leader, President Robert Mugabe will run for another term in 2018, when he will be 94 years old. Mugabe’s economic policies have been notoriously inconsistent and unfriendly to FDI. Continue reading
By Ariel Gandolfo
Chinese official foreign direct investment (OFDI) stock in Africa reached $21.73 billion in 2012, and China’s Premier Li Keqiang stated that total investment will reach $100 billion by 2020. Over 2,000 Chinese companies have invested in sectors such as infrastructure, natural resource extraction, finance, and power generation.
In some cases, Chinese companies are involved in multi-million dollar contracts with multilateral finance institutions. The recent $300 million partnership between state-owned China International Trust and Investment Corporation (CITIC) and the International Finance Corporation to provide affordable homes in African cities is just one example. While few African companies possess the technical skills to build on such a massive scale, African workers can at least take advantage of the employment opportunities that these construction projects generate, right? Continue reading
By Ariel Gandolfo
On May 29, the International Finance Corporation (IFC) and the state-owned China International Trust and Investment Corporation’s subsidiary CITIC Construction launched CITICC (Africa) Holding Limited, a $300 million investment platform to develop 30,000 African homes over the next five years. Projects would begin in Nigeria, Rwanda, and Kenya and expand throughout the continent.
The deal addresses a crucial regional gap in housing finance. Kenya is short 2 million housing units, Nigeria a whopping 17 million units, and these numbers are set to grow. According to the World Bank Group, three billion people, or 40 percent of the world’s population, will need new homes in the next 15 years, most of them in Africa. The United Nations Human Settlements Program (UN Habitat) states that the African continent is experiencing the highest rate of urbanization in the world, with approximately 40,000 people migrating to cities every day.
The graphic illustrates the scope of population growth in major cities across Africa. Source: Niti Bhan
A number of African cities already face housing shortages, with notorious informal settlements such as the massive Kibera slum outside Nairobi, Kenya, home to almost 1 million people. UN Habitat reports that in some countries, including Nigeria, Sudan, and the DRC, over half of urban populations live in slums. Continue reading
By Michael Jacobs
Last month’s signing of the long-delayed U.S.-Afghan Bilateral Security Agreement (BSA) allows American troops to remain in Afghanistan beyond 2014, providing a measure of security and stability for the country. The BSA is significant, but eventually American troops will head home. While U.S. military advisers and intelligence capabilities will likely remain in place for years, sometime soon Afghans will be substantively responsible for their own security and stability.
The BSA provides an opportunity for the U.S. to secure the progress we’ve established in Afghanistan over the past thirteen years. So far the cost has been high in both dollars and lives, and as we’ve seen in Iraq, those gains can be erased very quickly. At a minimum, Afghanistan’s long-term stability will hinge on a capable military and an inclusive government, but also on broad economic development: countries with an additional 2 percentage points of economic growth sustained over 10 years have been shown to have their risk of civil war reduced by 28% when compared to the risk of civil war in a typical low-income country.
U.S. Ambassador James B. Cunningham signs the BSA with Afghan National Security Adviser Hanif Atmar (September 30,2014)