Spotlight on Africa

The World Bank this month published its latest analysis of Africa’s economic outlook. The international financial institution says growth in sub-Saharan Africa is picking up, although not quite as fast as it originally forecast last year. The increase in growth has been helped by rising commodity prices such as oil and metals. Spotlight on Africa spoke to Punam Chuhan-Pole, the World Bank’s lead economist for the Africa region…

You say economic recovery is underway in sub-Saharan Africa – what are the main drivers of this?

The recovery that began in 2017 is continuing. Some of the same factors that helped facilitate growth last year are helping to support growth this year. We expect commodity prices to be fairly stable - last year they went up quite strongly. But we expect stability in commodity prices moving forward with a slight upward trend in oil. We also expect continuing robust growth in global trade and generally supportive global financial market conditions. So overall we expect growth to pick up from 2.7 per cent in 2017 to 3.1 per cent this year and forming to 3.5 per cent next year and above 3.7 per cent in 2020.

Nigeria has come out of more than a year of recession, according to your research. What are the reasons for this?

The recovery in Nigeria which began last year and picked up momentum in the second half of the year is being led by a recovery in oil production, commodity prices going up, which is helping the economy generally. Agriculture was also growing last year. We expect that moving forward oil production and the oil sector will continue to grow. The area that we think is lagging is non-oil industry and services.

Is the increase in economic growth in sub-Saharan Africa really likely to lead to improvements in the standard of living for people on the ground?

The recovery is good news of course. But the pace of the recovery is moderate and that reflects the gradual pickup in growth in the largest economies like Angola, South Africa and Nigeria. However, there’s a lot of diversity within the region and we have countries that are growing at a fairly robust pace; and were growing at a robust pace last year and we expect them to continue to grow at a robust pace. For example, Cote d’Ivoire, we also have Ethiopia, which is one of the fastest growing countries in the world. So there is a fair amount of diversity. If you actually exclude the three largest countries, growth is expected to be at about 4.7 per cent in sub-Saharan Africa. What does it mean in terms of people’s livelihoods? Are they seeing an improvement? At growth rates that are below population growth rates on aggregate for the region, you don’t see an increase in per capita income last year. This year, there will be a growth in per capita income in real terms. But we think that growth has to be a lot faster to be able to accelerate poverty reduction and to deepen the gains that the region has made in terms of poverty reduction.

What’s the significance of more countries issuing sovereign bonds, selling their debt?

One of the issues that we examine in the Pulse is to see what is happening in terms of the evolution of debt and debt risks. We find that for the region as a whole, debt has been rising relative to GDP [Gross Domestic Product]. Actually the rise has been fairly rapid between 2013 and 2017 after a period when public debt burdens were falling through 2012. So debt has picked up, the public debt burden - the median increase is about 20 percentage points relative to GDP. But there’s a lot of variation across countries and so you do have countries that have had a more rapid increase in debt burden and some that have not. One thing that we do find is that composition of public debt has changed and that comes to the question of more countries borrowing on commercial terms, borrowing Eurobonds. We do find that there has been a shift away from concessional and multilateral debt towards more market-based borrowing and market sources of debt. We also find that countries in the region have been borrowing domestically, governments have been borrowing domestically. Yes, composition of debt has changed, the risk profile has changed - it’s on more market-based terms, shorter maturities – all of which does raise issues of managing the risk that comes from the nature of the borrowing.

Are you worried about the levels of debt or the composition of that debt?

It's a combination. When we look at the standard debt sustainability analysis that’s done for low income countries, we find that the number of countries that are now being categorised as being at high risk of debt distress has gone up. And I think that points to the need to actually manage debt well and manage the risks that emanate from debt. But I think one thing I want to emphasise is that debt by itself is not bad because countries borrow to finance much needed spending on infrastructure, be it in the electricity sector or in terms of transportation. So it’s an important way to finance development, but it’s important to also have the capacity to repay that debt.

You pick out Ethiopia as likely to remain the fastest growing economy in sub-Saharan Africa. Is this likely to be affected by the appointment of the new prime minister recently?

We have been looking at the global trends and the potential of the country, so the answer on that is - our projections on that have not been affected by that.

Your outlook highlights one of the main risks as the situation in the US. Could you explain what threat you see here in terms of Africa’s economic growth?

The risks are more balanced moving forward although they are on the downside. The risks globally coming from the US would be more in terms of a faster pace of normalisation of monetary policy. So if interest rate adjustments were faster than expected, that could affect financial market conditions globally. Which then comes to market risks for countries having to manage their borrowings in Euro markets or external borrowing. Then of course there is that faster growth in the US is actually a plus for the global economy and for sub-Saharan Africa. Trade tensions could be a downside risk. But I think all that remains to be seen.

The conflict in the Central African Republic has pitted sectarian militias against each other at the cost of thousands of lives. But could it be resolved through a game? That's the aim of one African developer called Teddy Kossoko, whose new game Kissoro Tribal Game hopes to create a virtual peace that could inspire the whole of the African continent.

The ability of small and medium-sized businesses to access financing is described as one of the biggest challenges to economic growth in sub-Saharan Africa. One startup is trying to change the landscape using innovative technology to reach entrepreneurs who would otherwise miss out on funding by traditional banks and credit organisations.

Tunisian authorities need to boost investment and continue with economic reforms to help create new jobs, according to a new report by the Organisation for Economic Cooperation and Development. The international economic body has published its first economic survey of Tunisia since the 2011 toppling of President Zine al-Abidine Ben Ali.

The ability of small and medium-sized businesses to access financing is described as one of the biggest challenges to economic growth in sub-Saharan Africa. One startup is trying to change the landscape using innovative technology to reach entrepreneurs who would otherwise miss out on funding by traditional banks and credit organisations.

“Ovamba provides small and medium enterprises with short-term capital to fund the purchase of inventory from both domestic and international sources,” Viola Llewellyn, co-founder of Ovamba, told Spotlight on Africa on the sidelines of the Afric@Tech event in Paris.

Traditional banks and microfinance credit organisations are too slow at decision making, says Llewellyn - “they're the bottleneck”. Ovamba currently operates in Cameroon and Cote d’Ivoire and has originated some 144 million euros in funding for small and medium-sized businesses.

The five-year-old startup’s first customer was a female pharmacist who could not get a loan to buy medication, including anti-retroviral drugs for HIV treatment. She was turned down by the banks because she was a woman and a scientist, says Llewellyn. Nevertheless, Ovamba provided 12,000 euros in funding and the entrepreneur returned a number of times for further financing.

Ovamba’s innovation lies in the way in which it assesses risk and compliance in an African context, says Llewellyn, outlining how Western financial institutions have created a system that does not necessarily fit to a continent with different cultures and societies. The startup instead concentrates on what it describes as “African data”.

“We look for information – anecdotal or otherwise – and run it through our machine learning, in order to test certain hypotheses to see whether or not they stand up honesty and repay-ability,” the Ovamba president says.

Llewellyn does not want to reveal Ovamba’s “secret sauce”, however, their analysis might for instance look at different ethnic groups’ relationship with authority or role in society. The startup, which is incorporated in Maryland, US, uses algorithms to recognise patterns in the data they collect.

“For example, you take a person who comes from a family or an ethnic group that has been purely involved in agriculture and they suddenly decide that they want to be in business – there are certain skills sets and hurdles, the way African societies are set up, that are going to have an impact on that,” says Llewellyn.

Llewellyn, who grew up in the UK with her Cameroonian parents, is keen to point out that Ovamba is not providing loans, it is funding the purchase of goods and taking ownership of them, with the business in question buying them back over time. It also boosts returns of more 15 per cent for investors.

“The need and the credit gap in Africa is very real,” says Llewellyn. A 2017 report by the International Finance Corporation, part of the World Bank group, estimates a 312 billion dollar shortfall in financing for micro, small and medium-sized enterprises in sub-Saharan Africa.

“Lack of access to finance is one of the biggest hurdles small businesses face that prevent them from growing and creating jobs,” Philippe Le Houérou, chief executive officer of the International Finance Corporation, says in the report.

The Ovamba co-founder says one of the businesses she is “truly excited” about at the moment is one providing supplies and parts for motorbikes and cars. She describes one entrepreneur who is on his “third or fourth transaction for 500,000 euros” providing engine oil.

“This guy was low on the totem pole and is accelerating and has shown 450 per cent growth,” says Llewellyn, describing a moment the entrepreneur’s rapid growth led to his Moroccan supplier getting in touch with Ovamba and asking - “who are you people?” – incredulous at the speed of the entrepreneur’s development.

Another business she likes is supplying tyres. “They were only ordering one case of tyres every two or three months,” Llewellyn says, “they’re now doing four every two months,” after receiving Ovamba funding.

The startup is looking at expanding into Sudan or Ghana. “Sudan is a key opportunity where they have to rebuild the banking sector.” The company's technology hub is based in India and its funds are domiciled in Mauritius.

Furthermore, Llewellyn says Ovamba provides a “pan-African solution” that works anywhere with “a formal or informal sector that has a problem with financial service access”. She says the startup has also had interest from Latin America where small and medium-sized businesses face similar challenges.

The Ovamba co-founder spoke to Spotlight on Africa following her participation in the Afric@Tech panel organised by VivaTech on 21 March. The French startup event organiser will hold its 2018 edition in Paris on 24-26 May at Porte de Versailles.

After months of uncertainty, Kenyan President Uhuru Kenyatta and his rival Raila Odinga agreed to put aside their differences on 9th of March, for the good of the country, but also the economy. Their dispute has cost Kenya around €800,000 and seen some of its trade re-routed to Tanzania.

After months of uncertainty, Kenyan President Uhuru Kenyatta and his rival Raila Odinga agreed to put aside their differences on 9th of March, for the good of the country, but also the economy. Their dispute has cost Kenya around €800,000 and seen some of its trade re-routed to Tanzania.

"When Kenya sneezes, East Africa catches a cold." The saying, which is widely known in the region and was often quoted by commentators at the height of Kenya's 2007-08 violence to explain the impact of the fallout for Nairobi's neighbours.

Fast forward ten years later and Kenya's latest crisis has instead sparked feverish activity in countries like Tanzania.

"There’s talk of a railway connecting Rwanda with Tanzania, and President [John] Magufuli for all that people criticize him for, pried away the prized Total oil pipeline away from us that should have been coming through Kenya," Aly Khan Satchu, a financial and political analyst in Nairobi said.

He is a very potent adversary Satchu said, in reference to Magafuli's ability to spot the opportunity created by Kenya's political crisis. "I think we’ve been caught napping," he said.

The political crisis rattled investors and Kenya's business community, with the KEPSA Private Sector alliance warning that trade from Uganda and Rwanda was being diverted towards Tanzania.

"That’s been damaging for Kenya," acknowledges Piers Dawson, a consultant with the London-based risk firm Africa Matters Limited, told RFI.

Nontheless he said it is too soon for Dar Es Salam to overtake Nairobi as the economic capital of East Africa.

"You can’t get away from the fact that it is easier for Rwanda and Uganda to export goods via Kenya and Mombasa, and there is better infrastructure in place for them to do this," he said.

Coupled with that, is Kenya's new Standard Gauge Railway connecting the port city of Mombasa to Nairobi, which is only going to increase Mombasa’s preeminence as the main port for the exportation of goods in East Africa, Dawson says.

Titan with feet of clay

Kenya, however, has flaws to overcome: first and foremost being debt.

"Kenya’s GDP has been climbing quite dramatically," explains Satchu, arguing that projects like the Standard Gauge Railway have further entrenched the country in debt," he says.

"I think the government cannot now undertake a project like the railway again. They’ve got to make sure that these projects they’ve undertaken make money and are sustainable.

Kenya's debt crisis is so bad that it has had to slash about around 12 billion euros for the budget of some counties, affecting doctors and county workers' salaries.

On Tuesday 13th of March, Nairobi was given a six-month extension by the International Monetary Fund (IMF) to a €1.2 billion standby facility on the condition it brings spending under control.

The worry is that this will tie up Kenya's economy further with half of its GDP used to pay back loansk;  Denis Owino, a political analyst with the Nairobi-based think tank Kenya Insights, says.

Worse still, a recent auditor general report indicated that about €32 billion could not be accounted for and pointed the finger at corruption.

All of this means, that beyond the veneer of reconciliation, Kenya's challenges may only just be beginning.

New research published this month reveals that Cameroon’s President Paul Biya has spent at least four and a half years on private travel during his time in power. A group of journalists analysed copies of the state-backed Cameroon Tribune newspaper spanning the last 35 years to determine exactly how much time Biya spends outside of the country. The reporters discovered that the Cameroonian head of state spends the bulk of these holidays in Geneva, France and the US. The report estimates that the president has spent some 65 million dollars on accommodation and almost 120 million dollars. The researchers indicate that it is not entirely clear how the trips are funded. Spotlight on Africa spoke to Emmanuel Freudenthal, a freelance journalist who contributed to an investigation supported by the Organized Crime and Corruption Reporting Project…

New research published this month reveals that Cameroon’s President Paul Biya has spent at least four and a half years on private travel during his time in power. A group of journalists analysed copies of the state-backed Cameroon Tribune newspaper spanning the last 35 years to determine exactly how much time Biya spends outside of the country. The reporters discovered that the Cameroonian head of state spends the bulk of these holidays in Geneva, France and the US. The report estimates that the president has spent some 65 million dollars on accommodation and almost 120 million dollars. The researchers indicate that it is not entirely clear how the trips are funded. Spotlight on Africa spoke to Emmanuel Freudenthal, a freelance journalist who contributed to an investigation supported by the Organized Crime and Corruption Reporting Project…

Why did you decide to do this research?

Paul Biya’s travels have been highlighted for quite a long time and have caused quite a lot of frustration in Cameroon. I thought it would be a good idea to know exactly how much time he spends abroad, how much time he actually spends in Geneva.

How much time does President Biya spend abroad?

Overall he’s spent at least five-and-a-half-years abroad since he came to power in 1982. That’s a minimum figure, basically that’s the number of days of travel we could calculate based on the copies of the Cameroon Tribune we got. Out of that, four-and-a-half-years were on what his office calls ‘short private visits abroad’. Mostly he’s visiting Geneva, staying at the InterContinental Hotel, but sometimes he also goes to France or the US. So it’s basically time where nobody really knows what he’s doing, he’s on private business.

The vast majority of this is personal travel. It also seems, according to your analysis, that the number of trips is increasing and the length of time away from Cameroon has increased over the years.

It’s pretty hard to know exactly if that is the case. He was travelling quite a bit in the earlier years and it does seem like he’s travelling more recently, especially more on these private trips. But we have a bias in the data - it’s harder to get the older editions of the Cameroon Tribune.

What are his favourite destinations? We’ve mentioned Geneva, France and the US.

By far, Geneva is his favourite place to spend time. When he’s in Geneva he stays at the InterContinental Hotel. According to what we heard, he stays inside the hotel - has his meals there and so on - with a suite and a delegation of about 30 to 50 people. Other than that - France, the US – they’re the other countries, he mostly goes to European countries whether it’s for official or private travel. He doesn’t seem to like travelling in Africa much.

Who pays for these trips?

According to what little information we have about his wages, the official wage would be around 270 dollars [per month]. On top of that he gets a lot of bonuses for travel, for expenses, for being the head of this or that commission. But it seems unlikely [for him] to be able to cover the roughly 65 million dollars that were spent on this [private travel], according to our estimates, since he started on these private trips. So it seems like it comes from government coffers, exactly where it’s coming from is also a bit difficult to know because it’s quite opaque. We’re just kept guessing about exactly where the money’s coming from.

Who goes with him on these trips? Who’s in his entourage?

So there are quite a few ministers who go with him. He’s got a very big government, about 65 ministers and secretaries of state. I don’t know exactly how he picks them, but some of them get to go with him. Those names are announced in the Cameroon Tribune when they write an article about him. People of lower rank don’t get mentioned in the articles, so we don’t know exactly who they are. But according to one list of guests at the InterContinental hotel, those people include a maître d’hôtel, bodyguards, assistants and so on. These guys - we don’t really know who they are. There’s two people who feature in most of his recent travel, Joseph Fouda and Martin Belinga Eboutou, who’ve been on around 80 trips with him, if my memory serves me correctly, and travelled about three years with him. Joseph Fouda is one of his special advisors. Martin Belinga Eboutou used to be chief of protocol and now he’s director of the president’s civil cabinet.

What does he do with all of this time that he spends on private trips?

No one really knows, because he’s actually quite a recluse. He doesn’t actually end up speaking to many people, so the information doesn’t leak very easily. One rumour is that he goes to different hospitals in Geneva, which are much better than those in Cameroon, which are falling into disrepair. Paul Biya doesn’t go to hospitals in Cameroon, he goes to hospitals in Geneva it seems. That’s one possible reason for these trips. What is clear is that he doesn’t work during those trips. He signs very few laws and very few decrees when he’s in Geneva.

How does he travel? Because you estimate that he spent almost 120 million dollars on flights since he came to power.

He spent a lot of money on flights since he came to power because he has to rent private jets every time. We had one invoice for around 855,000 dollars for Yaounde – Geneva return flight, which if you take economy class would be 800 dollars. Of course, the comfort’s quite a bit better – you have your own bed, you have an office, some of the planes also have a shower and so on. He rents his planes because in 2004 he tried to buy a plane, but then his staff apparently didn’t spend all the allocated money on the plane. They bought some old plane that nearly crashed and killed him. So since then he’s preferred to rent a plane each time.

Does he actually have allocated holidays as president?

I don’t know what the allocated holidays are as president of Cameroon. But whatever they are, it seems to be pretty good! The other cost of his travels - I think probably the biggest cost to the country, other than the hundreds of millions that were spent on the actual travel – is his governance style. He basically doesn’t take decisions. His trips are a way to show that he’s the president. That he’s able to travel in great luxury abroad and be received by heads of state. That gives him some kind of legitimacy. When it comes to his own country he doesn’t take strong decisions and that has some impact. For example, in the Anglophone region, there’s been for years, for decades, a resentment by the Anglophone minority, in the west of Cameroon, and this has been left to rot. Recently it has blown up into a full-on guerrilla war against the government. People protested first, then the government responded by arresting and killing people, and then that started what is today guerrilla war with the killing of [members of the] security forces and then massive burning of villages and killing of civilians in the west of the country. This might have been solved quite easily and peacefully if it had been dealt with. So that’s the hidden cost of his travel and governance style. What actually happens is that his lack of action trickles down to all levels of government, even to the clerk who is supposed to stamp your papers. So no one really does anything and the government – because there’s a whole apparatus of government there – doesn’t necessarily take decisions. It’s basically a predatory government.

Response from the government

RFI's French service contacted the Cameroonian government for their view on this research. The authorities in Yaounde said they did not want to comment.

A new report published by advocacy group Internet Without Borders says that telecoms companies operating in Europe and Africa are affording their users different digital rights. The study compares Orange and Vodafone’s subsidiaries to ask whether users in Senegal and Kenya are given the same right to access, use and create digital media as well as access and use devices and networks. The research provides a detailed assessment of respect for freedom of expression and privacy, concluding that users in Europe are treated differently to those in sub-Saharan Africa. Spotlight on Africa spoke to Julie Owono, Executive Director, Internet Without Borders…