Thursday, July 31, 2014

On my radar: Africa50

A recurring theme at African Development's Bank annual meeting is that after insecurity, the continent's infrastructure deficit is responsible for the difference between her positive growth rate on paper and the realities of her people.Africa is growing yet that growth is not meaningful for her people due to poor and unavailable infrastructure. For instance, high prices of food items is associated with high transport costs occasioned bad road conditions. 
Africa Progress Panel Report 2013 notes that "Like financial systems, infrastructure occupies a pivotal position in social and economic life. Companies use energy to produce the goods and services on which employment depends. Transport systems link people and markets. Social infrastructure – such as water and sanitation – enables people to avoid health risks. But Africa’s poor infrastructure acts as a bottleneck constraining growth, driving up the costs of producing and marketing goods. The costs are spread across society, but the poor, smallholder farmers, and small and medium-sized enterprises bear the brunt." 
To become infrastructure-compliant, the continent needs about $100 million annually to fund the provision of basic amenities. Of that amount, $50million is provided by governments and development finance institutions (DFIs) and $50 million is unfunded. That amount remains unfunded because African countries do not have financial means to provide it. On this account, the African Development Bank has come up with a financing medium labelled Africa50 to provide funding.

What is it?
According to Donald Kaberuka,AfDB's president, Africa50(which has been approved by governments and the AU and launched in partnership with the Made in Africa foundation in 2013) is about " transformational, commercially viable projects of regional significance. It is about using Africa's savings to leverage the private sector".It is a financial pool of resources from the reserves of central banks across the region, the AfDB, private African investors that will provide private financing for projects to accelerate the speed of  infrastructure delivery across the continent with the aim of fast tracking growth. It promises about 10/100 rate of return. It seeks investors such as SWFs, pension funds and other interested parties to invest in Africa rather than Euro and US bonds 

Why is it different from it's parent DFI? 
Infrastructure projects are perceived as risky thus AAA organizations like AfDB shy away from investing in such projects. 

Why Africa50?
- A number of projects are not bankable that is, they are not presented in a manner that  will attract investors to the project. Thus, while they may look good on paper, they do not become reality. Africa50 will help translate projects into feasible  projects and de-risk (i.e provide initial financing) for a project to make it appealing to other investors. Project preparation which is vital to implementing any plan is also lacking. Africa50 through AfDB will close that gap by providing expertise. AfDB will act as the bridge between investors and the government 
- It will help reduce the perceived riskiness of investing in Africa. When investors begin to see returns, the fear of investing in the continent will be reduced. 
- It will make it easier to demand for reforms: Aids/loans provided by DFIs usually come with some reform riders which may or may not be acceptable by the recipient country. in the case of investments, it is easier to tie reforms with investment and this results in a win-win situation. 

What is the Business model?
There are no specifics yet on the business model and how it would run. However, investments will be on a first come first serve basis in terms of project readiness and not by the equity provided by countries.

Is it too good to be true?
Though the instrument has been hailed as an innovative and creative answer to the Continent's lack of amenities, how to balance profitability for investors without impacting the people it seeks to help remain unclear. For instance,if investors provide equity for a regional road project, how will the investment be recouped without pricing out lower-income citizens via tolls? Would a government that accesses the loan also subsidize usage for her citizens? Equality issues such as this have to be addressed to ensure that the poor  that are being targeted are not further mired into poverty.What  measures will be put in place to ensure that governments are not at the losing end of whatever agreements are reached?

What does this mean for me?  
Someone once noted that three factors are required to drive the change needed in Africa. They are: capital and financial resources, human capital and  insights. The last two- human capital and insights- depend on each individual. There are entrepreneurial spirits amongst us. We should hone in our skills and develop them. Who knows, they may be useful for the next big project

More readings:

Saturday, July 26, 2014

Il était une fois

This video clip of Alhaji Abubakar Tafawa Balewa's trip to the United States in 1961 shows the promise and hope Nigeria once had as a nation. I am unsure any other Nigerian ruler has been a recipient of the treatment the Prime Minister received.
It is unimaginable that Americans will line up the streets to welcome a foreign ruler or that the Congress will warmly welcome an address by a foreigner in its chambers. It is even more poignant and astonishing that the Prime Minister enjoyed this hospitality in a period where Black Americans were denied their civil rights.
I'd let the  clip tell its story...

Tuesday, July 15, 2014

Bits and bobs

Just before I sign out on probable links between the insurgents in Kenya and Nigeria, this article from Time  magazine tells how potential native terrorists are on the radar of their nipping future threats.  The alleged mastermind of the Nyanya bomb blast had been identified as as a potential terrorist. He was arrested in 2011 on terrorism charges but was released and Nyanya happened. Similarly, Asari Dokubo, leader of the Niger Delta People's Volunteer Force,was trained under Muammar Ghaddafi to sponsor conflict in Nigeria. Ghadaffi's student in the 1990s became Nigeria's problem in the 2000s. Is someone keeping track of potential security threats? 

On another note, the ongoing talkshop has recommended rotational distribution of electoral positions from the Federal to local government levels. I had my 1st experience with federal character (what the principle of rotation connotes) in primary 6. I scored 529/600 in the Federal Common Entrance examination yet didnot get into the  unity school of my choice because as a someone from the South West my scores were low whilst my mates with lower scores from other geopolitical zones were able to get in to promote education. Even now, I know people who qualify for positions in public institutions who do not get those jobs because they are not from area the position has been allocated to. I recall the experience of someone who was told something along the lines of: if you had applied last year, you would have gotten the job, it was allocated to your LGA
That we are still in the phase of promoting federal character shows that tribalism and ethnicity will continue to be promoted over merit and competency and we may never truly become unified. People should compete for positions not because of where they come from but what they can do. Federal character has gave us presidents Obasanjo, Yar'Adua and Jonathan. Where did that get us? For progress sake we need move to merit and competency. Federal character looks good in principle but is bad in practice because it not rectifying a past wrong but entrenching entitlement and incompetency . 

The talkshop also recommended the creation of an additional 19 States to the present 36 States. Considering that most states are civil service states without any tangible form of internally generated revenue are additional states the answer to agitations for recognition and independence?

Saturday, July 12, 2014

Transforming Makoko

Makoko. Credit: Daily mail
Lagos aims to be a mega city.  In terms of population, it is already one but it is not inclusive. An inclusive city is defined as “one that values all people and their needs equally. It is one in which all residents—including the most marginalized of poor workers—have a representative voice in governance, planning, and budgeting processes, and have access to sustainable livelihoods, legal housing and affordable basic services such as water/sanitation and an electricity supply.”  In addition to being non-inclusive, research estimates that 70% of Lagos residents  live in slums i.e dwellings deplorable and unfit for humans. 
To address the "problems of slums", the state government embarked on slum demolition projects especially in  Makoko (a floating slum near Ebutte- Meta, population:100,000) in 2012. Rather than resolve the issue, the demolition worsened housing problems for residents as some converted their canoes to houses whilst others live under the bridges or school buildings.
An alternative to slum demolition is to reconstruct the slum as a floating community. The notion of floating homes is not new- it has been around for years and became popular after WW1 as an alternate source of housing due its affordability. It  exists in Asia, USA and Netherlands. A floating home is  a structure similar to land houses permanently attached to a dock. Houses can be built such that it rises under flood situations while it remains normal during non-flood times. To ensure that the homes are sturdy and resilient, researchers have advised that the foundation of  these  houses are made of water tight concrete and stone with a column-and-sleeve- unit for restraint. Well built floating homes survive floods.  For instance, a community built on river Maas in Netherlands in 2005 survived a flooding  in 2011. 
Concerns around amenities are addressed because sewage facilities  and utilities can be provided onshore. 
Floating home kitchen. Credit:

The benefits of transforming the slum into a floating community include:

  • Its affordability: After WW1 and till date, floating homes are popular in the United States. 
  • The human dignity of residents will be restored: they will have access to social amenities and no longer have to bath or defecate in public.
  • For the aesthics-driven government, a row of well built houses like below on the Atlantic speaks to its “progressiveness” and “meganess

Can Lagos State think of transforming Makoko to this?