<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="799" height="533" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/UNFSS2023_Dr-Mayaki.jpg" alt="" class="wp-image-555777" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/UNFSS2023_Dr-Mayaki.jpg 799w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/UNFSS2023_Dr-Mayaki-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/UNFSS2023_Dr-Mayaki-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/UNFSS2023_Dr-Mayaki-768x512.jpg 768w" sizes="auto, (max-width: 799px) 100vw, 799px" /><figcaption class="wp-element-caption">Dr. Ibrahim Mayaki, Chair of the <a href="https://www.zerohungercoalition.org/en">Zero Hunger Coalition</a> and African Union Special Envoy for Food Systems</figcaption></figure>



Africa’s relationship with the world is changing.



Since the end of the second world war, the prevailing multilateral model has largely seen Africa through the prism of dependency on overseas development assistance, or “ODA” – where public funds are sent to support development for either humanitarian or politically strategic reasons.&nbsp;



It is becoming increasingly clear now that we are transitioning to a “post-ODA” world. Many historically important government donors are slashing their ODA budgets, for instance France’s <a href="https://focus2030.org/france-reneges-on-its-official-development-assistance-commitments">€742 million budget cut</a> in 2024 and plans are underway for similar levels of cuts in <a href="https://www.devex.com/news/money-matters-what-next-for-the-shrinking-german-aid-budget-108120#:~:text=Germany%20is%20planning%20to%20cut,humanitarian%20aid%20budget%20next%20year.&amp;text=Sign%20up%20to%20this%20weekly,in%20your%20inbox%20every%20Monday.">Germany </a>&nbsp;and the<a href="https://www.bbc.co.uk/news/articles/c4gz29yn00no"> United States</a> next year.



Meanwhile, Africa is forging ahead in drafting an ambitious and broad transformation agenda. In the agriculture sector, for instance, its new Comprehensive African Agricultural Development Programme (CAADP) will set growth targets to scale up sustainable food production, agro-Industrialization, and trade while promoting inclusive and equitable livelihoods.



Why does this matter? In any era of change, it is easy for international collaboration to simply recede. But instead, we must reimagine how the relationship between Africa and the world is structured, based upon the principles of mutual self-interest and agency.



By 2100, Africa is projected to be home to <a href="https://ourworldindata.org/region-population-2100#:~:text=In%202023%2C%20Africa%20is%20home,live%20in%20Asia%20or%20Africa.">four in 10</a> people on the planet. Between now and 2030 alone, Africa’s food and agriculture economy could potentially <a href="https://www.weforum.org/stories/2024/04/unlocking-africas-1-trillion-food-economy/">more than triple</a> from $280 billion to $1 trillion in value annually. The continent is home to 65 per cent of the world’s <a href="https://www.afdb.org/fileadmin/uploads/afdb/Documents/Generic-Documents/Brochure_Feed_Africa_-En.pdf">uncultivated</a> arable land, and its young and growing work force has the potential for huge productivity gains of <a href="https://ourworldindata.org/africa-yields-problem#:~:text=The%20amount%20of%20'value%20added,half%20of%20this%20regional%20average.">as much as 50 per cent</a> if given the right skills and resources.



Take Sierra Leone’s “<a href="https://feedsalone.gov.sl/wp-content/uploads/2024/10/PRINT-FEED-SALONE-1-Y-REPORT-FINAL.pdf">Feed Salone</a>” strategy as an example. <a href="https://feedsalone.gov.sl/wp-content/uploads/2024/10/PRINT-FEED-SALONE-1-Y-REPORT-FINAL.pdf">In just one year</a>, Government-led initiatives generated over 10,000 agricultural jobs, reduced rice imports by 15 per cent, and raised cocoa exports by 20 per cent, translating directly to enhanced food security, economic growth and resilience.



The world would be short-sighted to not see the opportunity that Africa presents on the global stage in terms of both growth but also stability. As countries become stronger, they are better able to stem migration, encourage innovation and contribute to global development goals. One should remember that faced with economic stagnation, political turmoil or environmental challenges, in the past, countries like Spain, Italy, Portugal and Sweden were once, also, nations of emigration.



Despite this potential and progress to date, African nations remain at the very sharp end of global challenges. They <a href="https://www.ipcc.ch/report/ar6/wg3/">bear the brunt </a>of climate change despite accounting for the smallest share – <a href="https://cdn.cdp.net/cdp-production/cms/reports/documents/000/005/023/original/CDP_Africa_Report_2020.pdf?1583855467">less than 4 per cent</a> – of global emissions.



Southern Africa, for example, has suffered its worst drought in 40 years this past year. In Zambia, where <a href="https://openknowledge.worldbank.org/entities/publication/07d6fc7c-3271-53bf-9390-7a4e8368c9c4">70 per cent</a> of the population is employed in the agricultural sector, <a href="https://www.actionagainsthunger.org/story/climate-change-is-a-tragedy-for-farmers-in-zambia-a-successful-harvest-needs-more-than-just-seeds/">6.6 million</a> people were in urgent need of humanitarian assistance and 1.35 million faced hunger as a result.



Serving national debt in many countries has also become unwieldy as a result. In fact, the Global South paid out<a href="https://www.devex.com/news/global-south-now-repays-more-in-debt-than-it-gets-in-grants-and-loans-107490#:~:text=Development%20finance-,Global%20south%20now%20repays%20more%20in%20debt%20than%20it%20gets,receive%20in%20grants%20and%20loans."> tens of billions more </a>in debt repayments last year than they received in new lending or in development aid.



So what does a win-win outcome look like for Africa and the rest of the world? For starters, it should focus on empowering smallholder farmers – who are the true &#8220;foot-soldiers&#8221; in Africa’s development – by ensuring they have access to much-needed climate finance and to innovative, low-cost, people-driven solutions to boost their yields and resilience.



Additionally, supporting Africa’s burgeoning small and medium-sized enterprises can play a transformative role in building the continent’s agri-food economy&nbsp; – <a href="https://www.unido.org/sites/default/files/unido-publications/2024-11/Ending%20Hunger%20is%20Possible.pdf">including</a> access to technologies and finance; skills training; investment in infrastructure; and trade, both within Africa and beyond.



Brazil, in its role of President of the G20 this year, is already catalysing formidable political momentum towards this goal. Its newly launched <a href="https://www.g20.org/en/tracks/sherpa-track/hunger-and-poverty">Global Alliance on Hunger and Poverty</a> aims to catalyse funds and knowledge to accelerate this transformation.



The World Bank is seeking <a href="https://www.cgdev.org/publication/abcs-ifis-understanding-world-banks-ida21-replenishment#:~:text=What%20is%20the%20financing%20outlook,target%20figure%20of%20%24100%20billion.">over $100 billion </a>replenishment for its International Development Association (IDA), which provides concessional loans to low- and lower-middle-income countries, helping to reduce poverty. Some countries, including Spain, Latvia, Denmark, Poland, Brazil, have already committed to increasing their funding pledges to this work.



History has shown us how quickly countries can shift in their development trajectory – <a href="https://www.worldbank.org/en/country/korea/overview">Korea</a>, for example, has transformed in little over one generation from an aid-receiving to a high-income country. Africa’s turn could quite well be next, and it’s in everyone’s interests to help realise this potential.

UNFSS2023_Dr Mayaki

The global multilateral order must be reimagined to address Africa’s development challenges

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="669" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/52426176087_a1ae82ce2f_o-1-820x669.jpg" alt="" class="wp-image-555774" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/52426176087_a1ae82ce2f_o-1-820x669.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/52426176087_a1ae82ce2f_o-1-300x245.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/52426176087_a1ae82ce2f_o-1-110x90.jpg 110w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/52426176087_a1ae82ce2f_o-1-768x627.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/52426176087_a1ae82ce2f_o-1-1536x1254.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/52426176087_a1ae82ce2f_o-1-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Ousmane Badiane, Executive Chairperson, <a href="https://akademiya2063.org/">AKADEMIYA2063</a></figcaption></figure>



The 2023–2024 El Niño-induced drought, regarded as one of the most powerful El Niño–Southern Oscillation events in recorded history, has resulted in widespread droughts, flooding, and other natural disasters across the globe and in <a href="https://akademiya2063.org/publications.php?type=el_nino_induced_drought">Southern Africa</a> in particular. Meanwhile, East Africa recently experienced the <a href="https://earthobservatory.nasa.gov/images/150712/worst-drought-on-record-parches-horn-of-africa#:~:text=A%20combination%20of%20human%2Dinduced,University%20of%20California%2C%20Santa%20Barbara.">worst recorded</a> drought in the region in at least 70 years.&nbsp;



These disasters are getting worse with each passing year, exacerbating the effects of climate change on Africa, which is already affected <a href="https://unfccc.int/news/africa-climate-week-2023-charting-a-fresh-course-for-climate-action">disproportionately</a>.



Agriculture is the primary channel through which climate change disrupts African economies, but it is also the sector with the biggest potential to lead adaptation to climate change. There is a real opportunity for Africa to better leverage its own resources to devise a robust response to the climate crisis.



Trade can be a huge part of the solution. A <a href="https://www.resakss.org/node/6906">recent report</a> on trends and drivers behind Africa&#8217;s agricultural trade performance explores the intricate relationship between climate change and trade. While climate change poses a threat to trade, there are numerous opportunities for win-win solutions. Trade can serve as a robust mechanism for adapting to and mitigating the impacts of climate change, steering Africa toward its food security and sustainable development goals.



<h2 class="wp-block-heading" id="h-optimization-of-scarce-water-resources-through-trade">Optimization of scarce water resources through trade</h2>



Water is a critical factor in growing crops and putting food on the table across the globe. In fact, commodities traded globally embody specific quantities of water required to produce and export them. Therefore, trading with commodities is also trading with water virtually. While water is growing scarcer across the globe, and climate change is worsening this issue, trade provides opportunities to alleviate the pressures of future water scarcity on food production.&nbsp;



<a href="https://www.resakss.org/sites/default/files/2024_aatm_individual_chapters/Chapter%203_AATM%202024.pdf" target="_blank" rel="noreferrer noopener">Virtual water</a> trade — the water content embedded in traded agricultural products — can be strategically leveraged to transform food systems and bolster resilience to shocks such as droughts and floods. For instance, Africa could realign the production of &#8220;thirsty&#8221; commodities like millet, mangoes, beans, sorghum, and rice to water-rich regions, while drier nations focus on less water-intensive yet nutritionally essential foods, such as vegetables.



Complemented by investments in infrastructure, irrigation, and water management practices, trade in virtual water presents an opportunity for specialization and cooperation between water-rich and water-stressed nations to sustainably exploit Africa’s agriculture potential to transform intra-African trade and ensure the continent&#8217;s food security.



<h2 class="wp-block-heading" id="h-minding-future-emission-intensity-of-african-food-trade">Minding Future Emission Intensity of African Food Trade</h2>



There is <a href="https://www.resakss.org/sites/default/files/2024_aatm_individual_chapters/Chapter%202_AATM%202024.pdf">evidence</a> to demonstrate the extent to which greenhouse gas emissions are embedded in trade flows and are likely to expand with increased trade. The key to tackling climate change and bolstering food systems is to produce smarter and trade better. There are innovations ready and waiting that can contribute to lowering the carbon footprint in the production and trading of commodities across Africa.



A key priority is to embrace artificial intelligence (AI) and remote sensing innovations for better tracking and measuring of greenhouse gas emissions. Emissions tracking in real-time and across land cover and land use with sufficient continent-wide coverage provides granular understanding of emissions dynamics required for informed decisions to support mitigation strategies and shift toward more sustainable and climate-friendly agrifood systems.&nbsp;



<h2 class="wp-block-heading" id="h-prioritizing-technology-innovations-and-infrastructure-nbsp">Prioritizing Technology Innovations and Infrastructure&nbsp;</h2>



Africa has been experiencing the <a href="https://www.resakss.org/sites/default/files/2024_aatm_individual_chapters/Chapter%202_AATM%202024.pdf">third-fastest growth</a> in agricultural exports, after the Americas and Asia, and the second-fastest growth in imports, after Asia. In years to come, the continent will have an increasingly important role in feeding the world.&nbsp;



As the continent’s agriculture sector expands, the threat of climate change must be at the forefront of our minds. There is an urgent need for governments to invest in technology innovations and infrastructure to address resource scarcity, along with investments in emissions-lowering innovations. Mainstreaming these measures into Africa’s trade policy frameworks to ensure that trade can play its role as a strategy to adapt to climate change will pay dividends – many times over – in generations to come.

52426176087_a1ae82ce2f_o 1

Intra-African Trade: The Secret Ingredient for Climate-Proofing the Continent’s Agrifood Systems

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1200" height="628" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/CMEP-socials-02_03.jpg" alt="" class="wp-image-553828" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/CMEP-socials-02_03.jpg 1200w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/CMEP-socials-02_03-300x157.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/CMEP-socials-02_03-820x429.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/CMEP-socials-02_03-160x84.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/CMEP-socials-02_03-768x402.jpg 768w" sizes="auto, (max-width: 1200px) 100vw, 1200px" /></figure>



A mid-career executive program opens perspectives to market development in emerging economies



It’s a recurring problem in developing countries. Governments and local businesses lack the liquidity to finance pressing development projects and priorities. Borrowing money from distant financial hubs leaves them vulnerable to currency fluctuations.



This underscores the urgent need to develop local capital markets that connect investors to the critical needs of the economy. By doing so, these markets can reduce dependence on foreign debt and support stable growth. Yet in developing countries, capital markets often struggle to thrive, increasing the demand for knowledge sharing to advance their development.



In 2016, International Finance Corporation, the private-sector arm of the World Bank Group, partnered with the Milken Institute to create an ambitious program to transfer that knowledge by building the capacity of capital market regulators and financial professionals in middle- and lower-income countries.



The program equips participants with advanced skills, knowledge, and experience to develop effective and sustainable local capital markets in their home countries. In 2021, the English program was expanded to include francophone countries in partnership with Paris Europlace.



So far, the <a href="https://ifc.org/cmp">Capital Markets Postgraduate Program</a> has brought 270 officials from 64 developing and emerging economies to George Washington University in Washington, D.C., USA and Université Paris Dauphine-PSL in Paris, France. In August 2024, the U.S. side of the program moved to Georgetown University.



The participants undergo nine months of rigorous training on financial markets and on how they can be leveraged to address their home countries’ development needs.



Just as important as the training itself is the networking in the years that follow. Graduates return home and exchange ideas and expertise with each other and other colleagues, mentoring junior staff and sharing knowhow.



IFC recently carried out a <a href="http://wrld.bg/yTIf50TokT3">survey</a> of the program’s graduates on their professional growth and impact. It’s a diverse bunch—officials from the central banks of Madagascar, Egypt, and Botswana, regulators from Kenya, Pakistan, Uzbekistan, and the Philippines, to cite but a few examples. What joined them was a conviction that the program had helped their careers and given them useful knowledge they could share with colleagues.



At their home institutions, a striking 77% of respondents reported taking on new responsibilities, highlighting a significant shift in their roles. Nearly half said they were promoted, and 94 percent said they had gone on to mentor others with the knowledge derived from the program—a good sign that vertical knowledge-sharing has led to the horizontal variety, as the program’s designers had hoped.



The program has spread valuable knowledge across ministries of economy and finance, central banks, securities and exchange commissions, and stock exchanges throughout the emerging market economies.



Testimonies reflected these gains. After graduating in 2017, Christopher Legilisho was closely involved in helping the Nairobi Securities Exchange get approvals from the central bank to establish a derivatives market—which strengthens investors’ participation through a more efficient distribution of risk and allows domestic companies to access long-term financing.



Leah Simasiku joined a green-finance working group at Zambia’s Securities and Exchange Commission that helped design the country’s first green bond—a $200 million issuance for renewable energy. “When I have a new project, I search the network and find out which jurisdictions have done something similar,” said Simasiku, so her team can work on innovative capital markets products “without having to reinvent the wheel.”



“You always have someone to ring,” says Kenya’s Kefa Michael Ngoiri. “You can discuss something over the phone and before you know it, you’ve come up with a solution.”



The program has helped officials gauge the power of capital markets to strengthen their economies. “We have an economy that is so vast, so rich in every aspect. But we have a capital market that is yet to grow to its potential. In a country of over 200 million people, you have a listing of just 150 to 200 public companies,” said Dr. Timi Agama, a 2017 graduate who, in 2024, became Director General of <a>Nigeria’s Securities and Exchange Commission.</a>



Through the Capital Markets Postgraduate Program, education is proving to be a foundation for advancing local capital markets—one of development’s most critical and promising areas.



Click <a href="http://wrld.bg/yTIf50TokT3">here</a> to download IFC’s Capital Markets Postgraduate Program report.

CMEP-socials-02_03

Teaching Capital Markets

The World Bank and other IFIs should get serious about climate adaptation in low-income countries

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="234" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/blog-2099x600-fad-property-tax-istock-2152079686-c-vuk8691-820x234.jpg" alt="" class="wp-image-553242" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/blog-2099x600-fad-property-tax-istock-2152079686-c-vuk8691-820x234.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/blog-2099x600-fad-property-tax-istock-2152079686-c-vuk8691-300x86.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/blog-2099x600-fad-property-tax-istock-2152079686-c-vuk8691-160x46.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/blog-2099x600-fad-property-tax-istock-2152079686-c-vuk8691-768x220.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/blog-2099x600-fad-property-tax-istock-2152079686-c-vuk8691-1536x439.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/blog-2099x600-fad-property-tax-istock-2152079686-c-vuk8691-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Credit: vuk8691/iStock by Getty Images</figcaption></figure>



The world’s governments must raise an additional&nbsp;<a href="https://www.elibrary.imf.org/view/journals/061/2023/005/061.2023.issue-005-en.xml?cid=541463-com-dsp-crossref&amp;utm_medium=email&amp;utm_source=govdelivery">$3 trillion</a>&nbsp;to achieve sustainable and inclusive economic growth goals this decade. The cost in emerging markets equals 4 percent of gross domestic product—and 16 percent for low-income countries.



How can countries finance such staggering price tags? Large cities such as Delhi and Lagos show a way forward: Taxing property more efficiently can play a meaningful role in raising revenue at the local level, allowing countries to invest more in their people,&nbsp;<a href="https://www.imf.org/en/Publications/imf-how-to-notes/Issues/2024/09/19/How-to-Design-and-Implement-Property-Tax-Reforms-555103?utm_medium=email&amp;utm_source=govdelivery">new IMF analysis</a>&nbsp;shows. Previous&nbsp;<a href="https://www.elibrary.imf.org/view/journals/006/2023/006/006.2023.issue-006-en.xml?cid=535449-com-dsp-crossref&amp;utm_medium=email&amp;utm_source=govdelivery">IMF research</a>&nbsp;has shown that countries have ample potential to raise more domestic tax revenue if they need it—up to 5 percentage points of GDP over two decades.



Of course, the&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2024/09/16/political-parties-of-all-stripes-are-pushing-for-higher-government-spending?utm_medium=email&amp;utm_source=govdelivery">political challenges</a>&nbsp;of such reforms are far from trivial, as recent events in several countries suggest that raising taxes can create social unrest. More efficient real estate taxes have an advantage in this regard: by being locally collected and spent, they may be politically less challenging than increases in broad-base national taxes.



Recurrent taxes on immovable property could help local governments capture the wealth generated through construction-intensive urbanization. Generating such revenue fairly is especially important given the difficulty in developing countries of taxing income and wealth, which can be highly mobile.



The appeal of property taxes is clear when we look at revenue raised in advanced economies: more than 1 percent of GDP on average in OECD countries, and nearly 3 percent in some advanced economies. By contrast, they raise only around 0.1 percent of GDP in emerging Asia and Africa.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/11/11/how-property-taxes-can-help-low-income-countries-to-develop?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/11/10506443/fad-property-tax-chart-newsletter_original.png" alt="column chart showing revenues from property taxes as a percent of GDP in various groups of economies"/></a></figure>



Achieving such a large growth requires improving property-tax coverage and addressing the capacity challenges in valuing real estate as ways to reverse the current revenue underperformance. New property identification technologies and simplified valuation methods have become widely available. With policy reforms and better technology, recurrent property tax revenues in developing countries should be at least 10 times higher than current levels.



<h2 class="wp-block-heading" id="h-local-revenue-and-spending">Local revenue and spending</h2>



When well designed, property taxes become a reliable and progressive form of municipal financing. They enhance the accountability of local governments, since proceeds can be used to fund better local public services, and taxes the increase in wealth of those who own real estate that has appreciated due to urbanization and associated public-infrastructure development. The tight link at the local level between revenue and spending shields property taxes from national politics and imposes higher accountability standards on local councils for the effective use of the resources.&nbsp;



National legislation should regulate how much property taxes can differ across a country, limiting divergences in the level of local public services funded by this source. Municipalities should limit exemptions to a narrow range of public organizations, and forgone revenues should be regularly reported.



The impact on “asset-rich but cash-poor” households such as pensioners can be softened by deferring taxes until the property is sold, at which point full payment is due.



<h2 class="wp-block-heading" id="h-satellites-and-drones">Satellites and drones</h2>



It’s best to take a gradual approach to property-tax reform, using modern technology to broaden the coverage of area-based taxes (expressed as a fixed rate per square meter). The goal should be to transition to full value-based property taxes in coming years as countries gain experience in implementation and market price information is meticulously recorded for periodic property valuation.



Modern mapping technology, such as satellite imagery and aerial photography by drones, can be used to fast-track the expansion and coverage of property taxes to all parcels that ought to be included in the fiscal register.



Indian officials in Delhi and the greater Bangalore metropolitan area have started using satellite imagery to map properties in a geographic information system. In Africa, several municipalities have made impressive strides. Lagos&nbsp;<a href="https://www.theafricareport.com/3393/lagos-proves-africas-property-tax-potential/?utm_medium=email&amp;utm_source=govdelivery">increased</a>&nbsp;tax collection fivefold to more than $1 billion in 2011 by broadening the base of its property tax, coupled with better enforcement.



The increased precision of satellite images enables the accurate measuring of surface areas and the development of fiscal-register maps that depict buildings and their alterations. This allows the fast roll-out of an area-based property tax until valuation capacity has advanced to migrate toward a market value-based property-tax system that can raise more revenue.



Demand for capacity development from the IMF in this area indicates that many countries are seeing the benefits from this combination of the right policies and technology enablers. It makes property-tax reform effective and politically appealing, especially when its objectives are communicated properly to the public.

blog-2099×600-fad-property-tax-istock-2152079686-c-vuk8691

How Property Taxes Can Help Low-Income Countries to Develop

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/GettyImages-2183020112-820x547.jpg" alt="" class="wp-image-551750" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/GettyImages-2183020112-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/GettyImages-2183020112-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/GettyImages-2183020112-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/GettyImages-2183020112-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/GettyImages-2183020112-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/GettyImages-2183020112-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">BAKU, AZERBAIJAN &#8211; NOVEMBER 05: People walk past a COP29 sign in front of the COP29 headquarters on November 5, 2024 in Baku, Azerbaijan. The 2024 UN Climate Change Conference (UNFCCC COP29) will be held from November 11-22 in Baku. (Photo by Aziz Karimov/Getty Images)</figcaption></figure>



A gathering of 198 leaders, representing the contracting parties of almost all the world’s nations, would be significant whatever the context and the epoch.



At this particular juncture in humankind’s history, the Conference of the Parties (COP), convening in Baku, Azerbaijan between 11-22 November for the 29th year (COP29), is encumbered with an enormous burden of responsibility. As the decision-making body of the United Nations Framework Convention on Climate Change, COP29 needs to focus the entire world’s attention on Earth’s climate crisis, and adopt urgent measures to alter course.



Last year’s <a href="https://unfccc.int/sites/default/files/resource/cma2023_L17_adv.pdf">COP28 summit struck a historic accord</a>. Nations reaffirmed the goal of capping, by the end of the century, global warming at 1.5°C compared to pre-industrial levels. They went further, agreeing to escalate their climate programs to transition away from fossil fuels, starting with tripling the capacity of renewable energies by 2030.



But not enough has changed, and a year later the situation facing COP29 has worsened. Climate scientists concur that global warming is happening much faster than previously predicted. The United Nations’ expert advisory body, the Intergovernmental Panel on Climate Change (IPCC), projects that the <a>1.5°C threshold </a>will be exceeded by 2028 unless the world adopts far more decisive countermeasures. “With every increment of global warming, regional changes in mean climate and extremes become more widespread and pronounced,” <a href="https://www.ipcc.ch/report/ar6/syr/downloads/report/IPCC_AR6_SYR_SPM.pdf">it reports</a>. <a></a>



Many other science-based reports paint a similar picture. The <a href="https://www.unep.org/resources/emissions-gap-report-2024">Emissions Gap Report 2024</a> published last month by the United Nations Environment Programme (UNEP), for instance, notes that holistic industrial and production policies must drive a 7.5 percent annual reduction in greenhouse gas (GHG) emissions, effective immediately, to avoid breaching the 1.5°C threshold by 2030. The fact that GHG emissions are instead rising at an annual pace of 1.3 percent is further, compounding evidence that the status quo is actually accelerating us all towards an impending dystopia.



At a time when there are wars, unfolding human tragedies and deepening crises in all corners of the globe, it seems misdirected to use words such as “dystopia”, “precipice”, and “catastrophe” to describe climate impacts.



But they are apt to the describe Earth’s dire situation. Whether we are edging dangerously close to a tipping point is moot. We are experiencing and witnessing the impacts consistently, even continuously, in regions throughout the world. South-eastern America has just been devastated by not one, but two of the most intense hurricanes ever recorded. Hurricanes Helene and Milton wrought havoc; apart from the loss of hundreds of lives, the extreme storm surges and near-unprecedented rainfall and flash-flooding caused immense damage to property, infrastructure, industries and livelihoods.



Simultaneously, large parts of southern Africa are suffering from the effects of a severe drought. In respect of its exposure to the damaging consequences of climate change, sub-Saharan Africa is one of the world’s most vulnerable regions. Tens of millions of African people are disproportionately dependent on agriculture. But the ocean warming climate phenomenon has drastically shifted <a href="https://earthobservatory.nasa.gov/images/152005/el-nino-forecast-to-contribute-to-food-insecurity">rainfall patterns</a>, causing a prolonged dry spell which compromised the growing season earlier this year. This has extended into an ongoing hotter and drier period, one which is now the worst drought in a century. Five countries – Lesotho, Malawi, Namibia, Zambia and Zimbabwe – have declared a state of drought disaster. The UN’s <a href="https://www.wfp.org/emergencies/southern-africa-drought">World Food Programme</a> reports that 27 million people in the region now face food insecurity, and 21 million children are suffering malnutrition.



The juxtaposition of deluge and drought is tragic in its manifestations and impacts in both North America and southern Africa. But structural inequities – let us call them what they are, injustices – are at play. The majority of developed nations – those that hold most of the levers of power, influence and finance – are in the Global North. Their industrialized economies have largely created the climate crisis; together, the world’s three giant economic blocs continue to generate close to 60 percent of global GHG emissions. However, it is the Global South – the term for the world’s developing countries – that experiences the severest impacts and can least afford the necessary resilience and mitigation measures.



This is why COP29’s agenda includes matters related to finance. Trillions of dollars will be required to assist developing countries’ mitigation and resilience programs, and to fund the complex mesh of climate solutions and green energy and industry transitions across the entire, interconnected world.  



And interwoven within the climate emergency is a broader point, one which extends into how – indeed, whether – the world can build upon the arc of progress made since the Enlightenment, then the Industrial Revolution, and in our own Digital Age.&nbsp;&nbsp;&nbsp;



In 2015, UN member states formulated and agreed upon 17 Sustainable Development Goals (SDGs) to uplift the lives of all the world’s citizens, with a targeted timeframe of 2030 to achieve these goals. With the deadline just five years away, there is a worrying underachievement: only a minority of the 17 SDGs reflect either on-track or moderate progress, and for more than a third of the goals there has been stagnation or regression.



The SDGs are not a specific COP29 agenda issue. But the links to our climate emergency are clear. Without urgently needed solutions, climate impacts jeopardize our water supplies and food production, they compromise lives and livelihoods, and threaten natural systems and biodiversity. The climate crisis propels involuntary migration, impinges upon the productivity of people and the sustainability of cities, and forces a reprioritization of governments’ spending away from critical initiatives involving gender equality, education and the creation of employment opportunities. These interrelated problems are spiraling precisely because of our continuing underinvestment in climate adaptation and resilience measures, and in real, lasting solutions. <a></a>



In its very latest, October 2024 report A Green and Just Planet, the G20 countries’ expert group estimates that $4.2 trillion is required, annually, to effectively combat climate change and achieve the SDGs by 2030.



The number seems unfathomable and unachievable. But governments can find these allocations. Global weapons spending is almost $2.5 trillion, fossil fuels subsidies total $7 trillion, and in 2000 leaders rapidly mobilized $11.7 trillion in emergency funds to combat and mitigate the Covid-19 pandemic.&nbsp; &nbsp;



A difficult truth for all of us as global citizens is that climate data and science, in its cold clarity, is often of little interest, or even unwelcome, to those who neither revel in its critical thinking nor embrace the realities – the facts – it unlocks.



COP29’s challenge lies in facing up to these hard facts. Unless the world’s leaders agree to implement urgent policy changes, and negotiate financing to systemize the trillions of dollars needed to fund holistic climate mitigation and transition initiatives, the 1.5°C limit will very soon be exceeded. This will push our planet to the very edge of habitability.



All 8.2 billion of us are imperilled.



If this isn’t reason enough, we should pause to think about all the people yet to be born. If humankind lasts as long as the typical mammalian species, <a href="https://globalprioritiesinstitute.org/wp-content/uploads/Toby-Newberry_How-many-lives-does-the-future-hold.pdf">100 trillion</a> people will follow us over the next 700,000 years before, possibly, we face extinction.



Our descendants would surely ask us to be careful with Mother Earth at this critical moment in time.



The author is co-facilitator of the Outcome Document of the Fourth International Conference on Financing for Development.

Upcoming COP29 In Baku Prompts Changes In City’s Transit Infrastructure

Why Should We Care About COP29? One Reason is Enough, But There Are 100 Trillion

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China as a Model Development Partner

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="563" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/Rajesh-1-820x563.jpg" alt="" class="wp-image-550475" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/Rajesh-1-820x563.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/Rajesh-1-300x206.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/Rajesh-1-131x90.jpg 131w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/Rajesh-1-768x527.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/Rajesh-1-1536x1054.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/Rajesh-1-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Rajesh Ramsundhar, Group Head: Investor Services, Transaction Banking, Corporate and Investment Banking Standard Bank</figcaption></figure>



05 November 2024: Africa’s economic potential is undeniable, but to fully realise it, the continent faces a massive need for capital. With an annual financing gap of approximately US$100 billion for infrastructure and a climate finance shortfall of US$213.4 billion through 2030, this demand is vast and urgent. On top of this, achieving the UN Sustainable Development Goals by 2030 is estimated to cost Africa US$1.3 trillion annually equivalent to 42% of the continent’s GDP. What these figures make clear is that Africa needs capital to drive transformation, development, and ultimately, economic growth.



Yet, despite these challenges, Africa&#8217;s resilience stands out. Economic projections show that real GDP growth will rise to 3.7% in 2024 and 4.3% in 2025, continuing to outperform global averages. This resilience opens new opportunities for investors and highlights the region&#8217;s potential as a source of yield, especially as global investors seek assets in emerging markets.



While growth in Africa&#8217;s insurance markets—currently valued at US$87.4 billion in 2023 and expected to grow to US$153.9 billion by 2032, according to the&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://www.imarcgroup.com/africa-insurance-market#:~:text=Africa%20Insurance%20Market%20Size%3A,6.3%25%20during%202024%2D2032.">IMARC Group</a>&nbsp;— it creates pools of capital, these funds must be directed toward tangible investments. But how do we match the growing demand for capital with the need for assets that can absorb this investment?



The answer lies in the creation and availability of investable assets. Africa’s listed markets are relatively small, but as the continent develops, we expect to see more issuances from both corporates and governments, particularly in the debt markets. Additionally, as African governments look to privatise state-owned entities, the equities market will likely see large listings and corresponding growth. The growth in the listed market will not be sufficient to absorb both local and foreign capital. Africa has a significant portion of assets in the private/non-traditional markets, and there is significant scope and opportunity for both investor and owners of assets to unlock access to these markets.



<h2 class="wp-block-heading" id="h-unlocking-assets-through-tokenisation">Unlocking Assets Through Tokenisation </h2>



A key opportunity to bridge this gap lies in the adoption of Distributed Ledger Technology (DLT) and tokenisation. Tokenisation refers to the creation of digital tokens on a blockchain platform representing assets—whether financial (bonds, equities), tangible (real estate, commodities), or intangible (digital art, intellectual property). By digitising these assets, we can bring them to market, enabling liquidity and broadening access for both local and global investors.



Imagine the transformative potential of tokenised infrastructure investments in Africa—tradable, liquid assets that can drive development. Whether it’s property, infrastructure, or commodities, tokenisation allows these assets to be traded and settled more efficiently. Analysts predict that by 2030, between $4 trillion and $5 trillion worth of tokenised digital securities could be issued globally, underscoring the vast potential of this market.



<h2 class="wp-block-heading" id="h-the-need-for-market-harmonisation">The Need for Market Harmonisation</h2>



But it’s important to remember asset creation is only one side of the equation. For Africa’s capital markets to thrive, they need to be simple and efficient. Currently, many African markets, particularly outside of South Africa, are fragmented. They operate with disparate technologies, regulations, and frameworks, which make investing complex and costly. If we are to compete on the global stage, we need to harmonise our markets, aligning regulations and infrastructure to create a cohesive, unified system.



The question we must ask ourselves is: why do we each need to invest in separate technologies and infrastructures when we could share them? By consolidating infrastructure and adopting world-class systems, we can spread costs, create consistency, and ensure that African markets are globally competitive.



As Africa’s largest bank, Standard Bank is committed to driving this change. Whether it’s leveraging DLT to unlock private market assets or working towards common infrastructure that connects African markets, we have the expertise to support this transformation. The future of Africa’s capital markets lies in collaboration, harmonisation, and embracing new technologies that will enable us to realise our continent&#8217;s full potential.



The time is now for Africa to reimagine how we build our markets. We must work together, leverage our collective strengths, and seize the opportunities that lie ahead. Africa’s growth story is just beginning, and with the right strategies in place, we can ensure it reaches its full potential.

Rajesh 1

Transforming Africa’s Capital Markets through innovation and unity

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="550" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ceb0ac7e-4319-b4d5-fc10-f6e2fa5b8b75-820x550.jpg" alt="" class="wp-image-550093" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ceb0ac7e-4319-b4d5-fc10-f6e2fa5b8b75-820x550.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ceb0ac7e-4319-b4d5-fc10-f6e2fa5b8b75-300x201.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ceb0ac7e-4319-b4d5-fc10-f6e2fa5b8b75-134x90.jpg 134w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ceb0ac7e-4319-b4d5-fc10-f6e2fa5b8b75-768x515.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ceb0ac7e-4319-b4d5-fc10-f6e2fa5b8b75.jpg 1500w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



South Africa’s competition landscape is under intense scrutiny following the Competition Tribunal’s recent decision to block Vodacom’s R14 billion acquisition of a co-controlling stake in Vumatel parent Maziv — even after the merging parties agreed to a range of additional conditions sought by the competition authorities. The decision has shocked the telecommunications sector, threatens a R10 billion investment into fibre networks in underserviced parts of South Africa, and risks halting broader industry consolidation.



South Africa&#8217;s competition policy is a necessary focal point of economic and political discourse, particularly in the context of its ability to foster fair competition while also promoting social equity. It is worth examining a few of this policy’s good, bad and the ugly elements, and considering areas where it could be more effective.



First the good: Our competition policy’s commitment to inclusive growth is commendable. The integration of public interest considerations into merger assessments marked a shift from traditional competition law focused solely on economic efficiency. For instance, high-profile mergers such as Walmart&#8217;s acquisition of Massmart and AB InBev&#8217;s takeover of SABMiller included conditions that mandated support for local businesses and job protection. While imperfect, these demonstrated the policy&#8217;s potential to drive economic transformation by ensuring large corporations positively contribute to the communities in which they operate.



South Africa also benefits from an established and still-strong regulatory framework through independent bodies, notably the Competition Tribunal’s oversight of the Competition Commission. There has also been prosecutorial success against anti-competitive practices in sectors such as construction and food. The penalties imposed for price-fixing practices during the Covid-19 pandemic indicated a willingness to maintain market integrity.



Moving to the bad: The effectiveness of our competition policy is, however, undermined by several factors. By integrating public interest considerations into competition assessments of mergers and acquisitions, the policy creates an unduly complex regulatory environment.



This deters foreign investment. Merger and acquisition evaluations, based on their social impact, can result in investors viewing the regulatory risks as too high, while adding public interest elements increases costs, which erodes South Africa’s ability to attract investment. In the Walmart-Massmart case, for example, among the conditions the Competition Commission attached to Walmart’s acquisition of Massmart, was a commitment not to retrench for a several years — this added a layer of uncertainty, risk and cost for the merging parties that was difficult to predict in a dynamic retail market.



There is also growing criticism about the efficacy of the competition policy’s enforcement mechanisms in the face of anti-competitive practices. While there have been some prosecutorial successes, the current framework may not be sufficient to address emerging challenges.



Finally, the ugly: The historic instances where public interest criteria were misapplied is undoubtedly one of the least attractive aspects of our country’s competition policy. The public interest grounds outlined in Section 12A(3) require consideration of, in summary: the effect the merger will have on an industrial sector or region; employment; the ability of SMEs or businesses owned by historically disadvantaged individuals (HDIs) to enter, participate in or expand within the market; the ability of national industries to compete in international markets; and the promotion of a greater spread of ownership.



However, our research shows that “the ability of national industries to compete in international markets” has hardly featured in merger decisions. This element is vital to ensuring South Africa’s export competitiveness.



Further, the reliance on “the promotion of a greater spread of ownership, in particular to increase the levels of ownership by historically disadvantaged persons and workers within that market” — can be seen as misguided. While it is understandable that the interests of HDIs be considered, direct legislation such as the Broad-based Black Economic Empowerment Act should drive transformation. Using competition regulation in this way even risks flying against the objectives of other direct legislation.



One of the most egregious examples of the Competition Commission failing to balance public interest considerations was in its initial blocking of the Burger King transaction. Burger King was to be sold by Grand Parade Investments (GPI) — a majority black-owned company — to a foreign private equity firm. In its public statements on the matter, the Commission made no reference to public interest considerations related to employment, or the ability of SMEs or HDI-owned firms to effectively enter, participate in or expand within the market. However, if HDI-owned firms are prevented from exiting their investments, they cannot free up capital for other investment opportunities — effectively preventing them from competing or creating value for their investors.



Black investors in GPI, almost 100% of whom supported the transaction, were directly and negatively affected by the decision. GPI had its competitiveness damaged as a black-owned company and the precedent damaged the competitiveness of HDI-owned investment firms in general. The Commission lost sight the fact that HDIs must be allowed to realise value by exiting investments when they see fit, as well as invest in alternative assets, thereby increasing black ownership elsewhere. Ultimately, the then Minster of the Department of Trade and Industry, Ebrahim Patel, and the parties came to an out-of-court arrangement, which included imposing an employee share ownership trust. But the damage was done – the arbitrariness of how public interest considerations were applied was clear for all to see.



In the Vodacom-Maziv case, the Competition Tribunal has yet to release its reasons for blocking the deal. However, they are largely expected to relate to concerns about market concentration. But not all market concentration is created equally. In certain sectors, notably renewable energy and telecommunications, concentrated players are better positioned to invest in the infrastructure necessary for growth and inclusion. They can achieve the economies of scale needed for lower prices and more efficient operations. In this case, having larger players is not anti-competitive — it stimulates a more competitive economy overall.



The arbitrariness of how public interest considerations are applied appears to be particularly glaring in the Vodacom-Maziv case. The merging parties had committed to investing at least R10 billion and passing at least one million homes in lower-income areas over five years, providing high-speed internet to over 600 adjacent schools and police stations at no cost, creating up to 10 000 new jobs, and establishing a R300 million enterprise and supplier development fund to prioritise SME development. These proposals die with the deal the Tribunal blocked. The cost of this regulatory overreach will be paid disproportionally by South Africa’s poor.



It is worth noting how South Africa’s competition policy differs from other developing markets. The focus on integrating public interest factors and black economic empowerment (BEE) into competition regulation contrasts with many developing countries’ priority to attract foreign direct investment — with less stringent regulatory oversight on foreign acquisitions — and stimulate efficient, competitive markets.



Competition regulation needs to go back to its core objective: fostering competition. Ensuring that consumers have access to choice and are free to exercise their choice leads to clear public benefits. The economy becomes more competitive, every point of supply chains becomes cheaper, consumers are better off and South African final products are more competitive in international markets.



There needs to be a rational and transparent approach to applying competition policy to create a predictable environment and reduce risk for those businesses operating in South Africa in those considering transactions. This would maximise public interest.



Competition policy and our competition authorities play a vital role in South Africa’s economy. These should not be repurposed for other objectives, no matter the merit of those objectives themselves. There should be coherence across government, with different ministries directly regulating the issues within their competencies, rather than using competition law to regulate indirectly.



It is essential that our regulators maintain their focus on fostering genuine competition and stimulating meaningful economic growth. This will provide a bedrock for a more equitable South Africa.

ceb0ac7e-4319-b4d5-fc10-f6e2fa5b8b75

The good, the bad and the ugly: South Africa’s competition policy

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="234" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/blog2099x600res-1as-inflation-recedes-global-economy-needs-policy-triple-pivotcimf-photomonacoshots-820x234.jpg" alt="" class="wp-image-545499" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/blog2099x600res-1as-inflation-recedes-global-economy-needs-policy-triple-pivotcimf-photomonacoshots-820x234.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/blog2099x600res-1as-inflation-recedes-global-economy-needs-policy-triple-pivotcimf-photomonacoshots-300x86.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/blog2099x600res-1as-inflation-recedes-global-economy-needs-policy-triple-pivotcimf-photomonacoshots-160x46.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/blog2099x600res-1as-inflation-recedes-global-economy-needs-policy-triple-pivotcimf-photomonacoshots-768x220.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/blog2099x600res-1as-inflation-recedes-global-economy-needs-policy-triple-pivotcimf-photomonacoshots-1536x439.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/blog2099x600res-1as-inflation-recedes-global-economy-needs-policy-triple-pivotcimf-photomonacoshots-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Credit: IMF Photo/Monacoshots</figcaption></figure>



Let’s start with the good news: it looks like the global battle against inflation has largely been won, even if price pressures persist in some countries. After peaking at 9.4 percent year-on-year in the third quarter of 2022, we now project headline inflation will fall to 3.5 percent by the end of next year, slightly below the average during the two decades before the pandemic. In most countries, inflation is now hovering close to central bank targets, paving the way for monetary easing across major central banks.



The global economy remained unusually resilient throughout the disinflationary process. Growth is projected to hold steady at 3.2 percent in 2024 and 2025, but some low-income and developing economies have seen sizable downside growth revisions, often tied to intensifying conflicts.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/10/22/as-inflation-recedes-global-economy-needs-policy-triple-pivot?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/10/10386072/weo-chart-1_original.png" alt="chart showing deviations of year-over-year inflation from their targets for 61 economies"/></a></figure>



In advanced economies, growth in the United States is strong, at 2.8 percent this year, but will revert toward its potential in 2025. For advanced European economies, a modest growth rebound is expected next year, with output approaching potential. The growth outlook is very stable in emerging markets and developing economies, around 4.2 percent this year and next, with continued robust performance from emerging Asia.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/10/22/as-inflation-recedes-global-economy-needs-policy-triple-pivot?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/10/10386067/weo-chart-2_original.png" alt="chart showing real GDP growth in 2024 for US, China, LIDCs, and other advanced and emerging economies"/></a></figure>



The decline in inflation without a global recession is a major achievement. As&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2024/10/16/global-inflationary-episode-offers-lessons-for-monetary-policy?utm_medium=email&amp;utm_source=govdelivery">Chapter 2</a>&nbsp;of our report argues, the surge and subsequent decline in inflation reflects a unique combination of shocks: broad supply disruptions coupled with strong demand pressures in the wake of the pandemic, followed by sharp spikes in commodity prices caused by the war in Ukraine.



These shocks led to an upward shift and a steepening of the relationship between activity and inflation, the Phillips curve. As supply disruptions eased and tight monetary policy started to constrain demand, normalization in labor markets allowed inflation to decline rapidly without a major slowdown in activity.



Clearly, much of the disinflation can be attributed to the unwinding of the shocks themselves, together with improvements in labor supply, often linked to increased immigration. But monetary policy played a decisive role by keeping inflation expectations anchored, avoiding deleterious wage-price spirals, and a repeat of the disastrous inflation experience of the 1970s.



Despite the good news on inflation, downside risks are increasing and now dominate the outlook. An escalation in regional conflicts, especially in the Middle East, could pose serious risks for commodity markets. Shifts toward undesirable trade and industrial policies can significantly lower output relative to our baseline forecast. Monetary policy could remain too tight for too long, and global financial conditions could tighten abruptly.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/10/22/as-inflation-recedes-global-economy-needs-policy-triple-pivot?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/10/10386078/weo-chart-3_original.png" alt="chart showing downside risks to world GDP as a deviation from baseline"/></a></figure>



The return of inflation near central bank targets paves the way for a policy triple pivot. This would provide much-needed macroeconomic breathing room, at a time where risks and challenges remain elevated.



The first pivot—on monetary policy—is under way already. Since June, major central banks in advanced economies have started to cut policy rates, moving toward a neutral stance. This will support activity at a time when many advanced economies’ labor markets are showing signs of cooling, with rising unemployment rates. So far, however, the rise in unemployment has been gradual and does not point to an imminent slowdown.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/10/22/as-inflation-recedes-global-economy-needs-policy-triple-pivot?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/10/10386076/weo-chart-4_original.png" alt="chart showing percent point deviation of unemployment rate from trough with marked recessions"/></a></figure>



Lower interest rates in major economies will ease the pressure on emerging market economies, with their currencies strengthening against the US dollar and financial conditions improving. This will help reduce imported inflation, allowing these countries to pursue their own disinflation path more easily.



However, vigilance remains key. Inflation in services remains too elevated, almost double pre-pandemic levels. A few emerging market economies are facing a resurgence of inflationary pressures and have started to raise policy rates again.



Furthermore, we have now entered a world dominated by supply disruptions—from climate, health, and geopolitical tensions. It is always harder for monetary policy to contain inflation when faced with such shocks, which simultaneously increase prices and reduce output.



Finally, while inflation expectations remained well-anchored this time, it may be harder next time, as workers and firms will be more vigilant about protecting pay and profits.



The second pivot is on fiscal policy. Fiscal space is a cornerstone of macroeconomic and financial stability. After years of loose fiscal policy in many countries, it is now time to stabilize debt dynamics and rebuild much-needed fiscal buffers.



While the decline in policy rates provides some fiscal relief by lowering funding costs, this will not be sufficient, especially as long-term real interest rates remain far above pre-pandemic levels. In many countries, primary balances (the difference between fiscal revenues and public spending net of debt service) need to improve.



For some, including the United States and China, current fiscal plans do not stabilize&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2024/10/15/global-public-debt-is-probably-worse-than-it-looks?utm_medium=email&amp;utm_source=govdelivery">debt dynamics</a>. In many others, while early fiscal plans showed promise after the pandemic and cost-of-living crises, there are increasing signs of slippage.



The path is narrow: delaying consolidation increases the risk of disorderly market-imposed adjustments, while an excessively abrupt turn toward fiscal tightening could be self-defeating and hurt economic activity.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/10/22/as-inflation-recedes-global-economy-needs-policy-triple-pivot?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/10/10386052/weo-chart-5_original.png" alt="chart showing annual output loss of squeezing five-year consolidation into two years in advanced vs emerging economies"/></a></figure>



Success requires implementing a sustained and credible multi-year adjustments without delay, where consolidation is necessary. The more credible and disciplined the fiscal adjustment, the more monetary policy can play a supporting role by easing policy rates while keeping inflation in check. But the willingness or ability to deliver disciplined and credible fiscal adjustments have been lacking.



The third pivot—and the hardest—is toward growth-enhancing reforms. Much more needs to be done to improve growth prospects and lift productivity, as this is the only way we can address the many challenges we face: rebuilding fiscal buffers; coping with aging and shrinking populations in many parts of the world; tackling the climate transition; increasing resilience, and improving the lives of the most vulnerable, within and across countries.



Unfortunately, growth prospects for five years from now remain lackluster, at 3.1 percent, the lowest in decades. While much of this reflects China’s weaker outlook, medium-term prospects in other regions, including Latin America and the European Union, have also deteriorated.



Faced with increased external competition and structural weaknesses in manufacturing and productivity, many countries are implementing industrial and trade policy measures to protect domestic workers and industries. But external imbalances often reflect macroeconomic forces: a weakening domestic demand in China, or excessive demand in the United States. Addressing these will require&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2024/09/12/trade-balances-in-china-and-the-us-are-largely-driven-by-domestic-macro-forces?utm_medium=email&amp;utm_source=govdelivery">setting the macro dials appropriately</a>.



Moreover, while industrial and trade policy measures can sometimes boost investment and activity in the short run—especially when relying on debt-financed subsidies—they often lead to retaliation and fail to deliver sustained improvements in standards of living. They should be avoided when not carefully addressing well-identified market failures or narrowly defined national security concerns.



Economic growth must come instead from ambitious domestic reforms that boost technology and innovation, improve competition and resource allocation, further economic integration and stimulate productive private investment.



Yet while reforms are as urgent as ever, they often face significant social resistance. How can policymakers win the support they need for reforms to succeed?



As&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2024/10/16/support-for-economic-reforms-hinges-on-communication-engagement-and-trust?utm_medium=email&amp;utm_source=govdelivery">Chapter 3</a>&nbsp;of our report shows, information strategies can help but can only go so far. Building trust between government and citizens—a two-way process throughout the policy design—and the inclusion of proper compensation to offset potential harms, are essential features.



Building trust is an important lesson that should also resonate when thinking about ways to further improve international cooperation and bolster our multilateral efforts to address common challenges, in the year that we celebrate the 80th anniversary of the Bretton Woods institutions.



—This blog is based on the October 2024&nbsp;<a href="https://www.imf.org/en/Publications/WEO/Issues/2024/10/22/world-economic-outlook-october-2024?cid=bl-com-AM2024-WEOEA2024002&amp;utm_medium=email&amp;utm_source=govdelivery">World Economic Outlook</a>. For more, see blog posts on the report’s analytical chapters:&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2024/10/16/global-inflationary-episode-offers-lessons-for-monetary-policy?utm_medium=email&amp;utm_source=govdelivery">Global Inflationary Episode Offers Lessons for Monetary Policy</a>&nbsp;and&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2024/10/16/support-for-economic-reforms-hinges-on-communication-engagement-and-trust?utm_medium=email&amp;utm_source=govdelivery">Support for Economic Reforms Hinges on Communication, Engagement, and Trust</a>.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/10/22/as-inflation-recedes-global-economy-needs-policy-triple-pivot?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/10/10386044/5777709/weo-chart-oct-2024-all_crop.png" alt="World Economic Outlook Projections table"/></a></figure>

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As Inflation Recedes, Global Economy Needs Policy Triple Pivot

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="234" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/blog2099x600mcm-gfsr-3artificial-intelligence-can-make-markets-more-efficientclewistsepuilungistock-820x234.jpg" alt="" class="wp-image-542926" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/blog2099x600mcm-gfsr-3artificial-intelligence-can-make-markets-more-efficientclewistsepuilungistock-820x234.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/blog2099x600mcm-gfsr-3artificial-intelligence-can-make-markets-more-efficientclewistsepuilungistock-300x86.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/blog2099x600mcm-gfsr-3artificial-intelligence-can-make-markets-more-efficientclewistsepuilungistock-160x46.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/blog2099x600mcm-gfsr-3artificial-intelligence-can-make-markets-more-efficientclewistsepuilungistock-768x220.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/blog2099x600mcm-gfsr-3artificial-intelligence-can-make-markets-more-efficientclewistsepuilungistock-1536x439.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/blog2099x600mcm-gfsr-3artificial-intelligence-can-make-markets-more-efficientclewistsepuilungistock-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Credit: Lewis Tse Pui Lung/iStock by Getty Images</figcaption></figure>



More efficient or more volatile? The adoption of the latest iterations of artificial intelligence by financial markets can improve risk management and deepen liquidity; but it could also make markets opaque, harder to monitor, and more vulnerable to cyber-attacks and manipulation risks.



The new&nbsp;<a href="https://www.imf.org/en/Publications/GFSR/Issues/2024/10/22/global-financial-stability-report-october-2024?cid=bl-com-AM2024-GFSREA2024002&amp;utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener">Global Financial Stability Report</a>&nbsp;looks at new market data to understand where this technology might be taking us. IMF staff conducted extensive outreach across various stakeholders—from investors to technology providers to market regulators—to show how financial institutions are harnessing advances in AI for capital market activities, and the potential impact of its adoption.



Hedge funds, investment banks, and others have been using quantitative trading strategies for decades. Automated trading algorithms have helped markets move faster and digest large trades more efficiently in major asset classes such as US equities. But they have also contributed to “flash crash” events when market prices have swung wildly in very short periods of time—such as in May 2010 when US stock prices collapsed only to rebound minutes later—and there are fears they could destabilize markets in times of severe stress and uncertainty.



Artificial intelligence, through its ability to almost instantly process large amounts of data and even text for use by traders, is poised to take these kinds of changes to another level. However, while generative AI and other recent breakthroughs are attracting attention in both the popular press and in financial markets, today they are used in only limited ways by actual investors. So, if we are only at the beginning of an AI-led transformation, where might we be headed?



Patent filings are a good way to understand this, given what is often a long lead time between filings and actual production-ready technology. Since large language models, or LLMs, started to appear in 2017, the share of AI content in patent applications related to algorithmic trading has risen from 19 percent in 2017 to over 50 percent each year since 2020, suggesting a wave of innovation is coming in this area.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/10/15/artificial-intelligence-can-make-markets-more-efficient-and-more-volatile?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/10/10339712/gfsr-chart-1_original.png" alt="chart showing exchange-traded funds annual portfolio turnover ratio"/></a></figure>



These new innovations will likely further AI&#8217;s ability to quickly rebalance investment portfolios,&nbsp;<a>which will in turn lead to higher trading volumes.&nbsp;</a>Market participants we surveyed concur that high-frequency, AI-driven trading is expected to become more prevalent, particularly in liquid asset classes like equities, government bonds, and listed derivatives. They foresee greater integration of sophisticated AI in investment and trading decisions within three to five years, although a “human in the loop” approach is expected to persist, especially for large capital allocation decisions.



Evidence of these changes is already being seen in the exchange-traded fund market. Although currently small, AI-driven ETFs show a significantly higher turnover compared to other ETFs. While a typical actively managed equity ETF turns over its holdings much less than once a year, AI-driven ETFs do so about once a month. If widespread, such strategies may in the future mean deeper, more liquid markets which are good for investors. But they could also contribute to market instability: several AI-driven ETFs saw increased turnover during the March 2020 market turmoil, suggesting the potential for increased herd-like selling during times of stress.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/10/15/artificial-intelligence-can-make-markets-more-efficient-and-more-volatile?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/10/10339699/gfsr-chart-2_original.png" alt="chart showing exchange-traded funds annual portfolio turnover ratio, with AI-driven ETFs driving higher volumes"/></a></figure>



Prices may react much more quickly in an AI-driven market. Investors mentioned the release of the complex and lengthy minutes of Federal Reserve meetings as an example where AI could provide a trading signal faster than any human trader could, and this may already be happening. Since 2017 and the introduction of LLMs, the movement of US equity prices 15 seconds after the release of the Fed minutes seem to be more consistently in the direction of the longer-lasting movement seen after 15 minutes, in contrast to the apparently uncorrelated movements in the pre-LLM period.



Who will be able to take advantage of these new technologies? AI might lead to a further migration of investment to hedge funds, proprietary trading firms, and other nonbank financial intermediaries, which would make markets less transparent and harder to monitor. Nonbanks have a structural advantage in the adoption of AI. They are generally more agile and subject to fewer regulatory constraints than large commercial and investment banks, which often must deal with legacy infrastructure and may be subject to more stringent requirements, including ensuring the explainability of complex AI models.



Policy recommendations



How should regulators and supervisors prepare for this new world? In a faster reacting market where nonbanks may continue to rise in importance, various aspects of regulation and supervision in AI-related areas should be enhanced.



Financial sector authorities and trading venues should determine if they need to design new volatility response mechanisms—or modify the existing ones appropriately—to respond to “flash crash” events potentially originated in AI-driven-trading. These include margin requirements, circuit breakers, and the resilience of central counterparties.



Similarly, financial sector authorities should continue to strengthen oversight and regulation of nonbank financial intermediaries by requiring them to identify themselves and disclose AI-relevant information; as well as require financial institutions to regularly map interdependencies between data, models, and technological infrastructure supporting AI models.



A close monitoring and oversight of this rapidly changing market lays the foundation for an opportune and balanced regulatory response that may allow financial sector participants to benefit from AI while mitigating its risks.

blog2099x600mcm-gfsr-3artificial-intelligence-can-make-markets-more-efficientclewistsepuilungistock

Artificial Intelligence Can Make Markets More Efficient—and More Volatile

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="640" height="427" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/Employee-working-in-warehouse.jpg" alt="" class="wp-image-542854" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/Employee-working-in-warehouse.jpg 640w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/Employee-working-in-warehouse-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/Employee-working-in-warehouse-135x90.jpg 135w" sizes="auto, (max-width: 640px) 100vw, 640px" /></figure>



The answer is a place which, I believe, will prove vital to world trade and global economic growth in the next 25 years – Africa.



At the United Nations General Assembly this month I met African leaders including the President of Mozambique, Filipe Nyusi, and Nigerian Vice President Kashim Shettima, to discuss how DP World, a long-time friend of the continent with 28,000 employees, can help realize its potential.



The numbers are striking. By 2050 Nigeria will be home to 400m, according to the UN, and is projected one day to eclipse China as the world’s second most populous nation.



The Democratic Republic of Congo – where we have made a $1.2bn investment in the Port of Banana – will experience a remarkable 122% population increase to become home to 218m.



Together with its natural resources and strategic location, Africa has the potential to be one of the engines of the global economy in just a few decades’ time.



A compelling commercial case, as well as a profound moral one, can therefore be made for businesses in the rest of the world to help Africa develop its supply chains now.



That’s why, on top of the $3bn we have already invested, we are committing another $3 billion over the next five years to build new port and logistics infrastructure across the continent. The ambition behind our growing end-to-end logistics capability is nothing less than to connect Africa umbilically to world trade.



The urgency is all the greater because of the current impact of geopolitical shocks. The situation in the Red Sea, where commercial shipping is at risk, is serious and may not improve soon. Conflicts in the Middle East and Europe, too, are a personal tragedy for those affected and another grave risk.



It is therefore no surprise that the Economist Impact’s Trade in Transition 2024 report, supported by DP World, revealed that 36% of respondents had prioritized ‘friendshoring&#8217;. While such strategies can boost resilience, the World Bank notes they may also mean shipping, logistics, and regulatory costs double the prices of internationally traded goods.



Africa can be a key part of the solution.



Firstly, its population is not only rising but also young, with nearly two thirds under the age of 30. That means a growing consumer market and a steady supply of youthful workers.



Secondly, Africa’s natural wealth is well known, from an abundance of precious metals to 20% of the world’s oil and gas reserves, all of which can help to drive trade partnerships in the coming years.



Thirdly, the continent is surrounded by the sea, with 38 of its 54 countries having direct access to open waters. It is also home to key maritime trade routes, giving it the most strategic location of any continent.



But this potential will not be realized until we address Africa’s challenges in connecting with global markets. Poor roads, ports, and rail networks add an alarming 30-40% to intra-continent trade costs.



We expanded our presence last year by adding Tanzania’s Dar es Salaam port to our network. This year we secured an extension to run Mozambique’s Port of Maputo until 2058, where container capacity is projected to quadruple to 1m units a year. And we launched the Berbera Economic Zone in Somaliland, creating a world-class logistics hub to serve the broader Horn of Africa.



To maximise the transformative Africa Continental Free Trade Area (AfCFTA) agreement, public and private stakeholders from across the continent and beyond must work together.



Partnerships like DP World’s with CDC Group, the UK’s development finance institution, are blueprints for the future. Together, we have focused on modernizing, expanding and decarbonizing ports and inland logistics across Africa including in Senegal, Egypt and Somaliland.



Further investment is key. Initiatives are underway to nurture trade corridors, with projects like the Trans-Saharan Highway, Trans-African Railway and the African Integrated High-Speed Railway Network designed to improve connectivity and ultimately expand Africa’s role in global commerce.



By unlocking its economic potential, Africa will not only address its own developmental needs but also drive economic growth for people everywhere. I am optimistic that the role it can play in world trade in the decades ahead can be a hugely consequential one.

Employee working in warehouse

Which is the only region in the world which will add more than 1bn people to its population by the middle of the century?

According to the African Youth Survey 2024, China and Russia are winning the war for the hearts and minds of Africa’s youth, almost by default.



As the Russia-Ukraine war moves toward its third anniversary with no end in sight, and as Israel and Iran square off, African concerns all too often appear as a mere afterthought in Western strategic planning.



For centuries, Western nations have focused more on extracting Africa’s mineral wealth, often by bribing strongmen, than on forging alliances with the people who inhabit Africa’s 54 nations. As African nations began shaking off the bonds of colonialism after World War II, their people were desperate enough to trust unscrupulous dictators who lined their own pockets while selling off national wealth to the progeny of their former colonial masters.



As all three African Youth Surveys have shown, today’s African youth, who in just six years’ time will constitute a third of the global youth population, are grossly offended by the corruption of their leaders and by those whose money and power fed that corruption. This year’s survey found that nearly 60 percent of the 5,604 Africans aged 18 to 24 interviewed across 16 countries want to leave their countries because of unchecked corruption.



Russia’s influence in Africa has risen since 2020, with 41 percent suggesting Russia is a leading foreign influencer on the continent and 68 percent suggesting that influence is positive. This shift, most notably in Malawi and South Africa, is linked to the Russia-Ukraine war and Russia’s displacement of Ukraine as a major supplier of grain and fertilizer. Two-thirds believe that war could have been avoided, and nearly a third blame NATO, the U.S., and the EU.



A recent Council on Foreign Relations&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://www.cfr.org/backgrounder/russias-growing-footprint-africa">report states</a>&nbsp;that Moscow’s military focus is mostly on weapons trading and new military bases. Diplomatically, Russia works with private military companies and local political allies to tap into lingering anti-colonial sentiment. Russia’s $18 billion in trade with African countries lags far behind that of the U.S. (($64 billion) and China ($254 billion) and is largely focused on gold, diamonds, uranium, and oil.



The CFR report further notesthat longstanding frustration with the failures of Western intervention and a simmering resentment over a lack of African representation in international institutions have fueled Russia’s growing support in Africa. South African philanthropist Ivor Ichikowitz, whose family foundation funds the African Youth Survey, points out that while nearly 30 percent of the votes in the United Nations come from African countries, no African nation holds a permanent seat at the UN Security Council.



China’s growing involvement with African nations poses a much greater threat to the West as well as to unsuspecting African leaders gulled by the red-carpet treatment many receive in China. According to Cobus van Staden, co-founder of the China-Global South Project, Xi Jinping&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://chinaglobalsouth.com/analysis/focac-and-the-africa-plus-one-summit-where-to-next/">signals solidarity</a>&nbsp;with African nations by emphasizing its own status (reaffirmed in the Paris Agreements) as a “developing” nation while avoiding the “dreariness of the U.S. and EU’s ongoing aid forces with its attendant conditionality and preaching.”



The results have been spectacular, as a fifth of Africa’s exports go to China, including metals, mineral products, and fuel. Exports to China have quadrupled since 2001. Meanwhile, China is also the single largest source of imports to African nations of manufactured goods and machinery, according to the International Monetary Fund, with the balance of trade massively favoring the Chinese.



Von Staden says the recent 2024 Forum on China-Africa Cooperation eschewed the traditional focus of aid to operate at a higher level, with successive funding commitments and an expanding scope to respond to African demands. While Western “Africa plus one” summits often fall into the “Africa is a country” trap, the Chinese have been adept at bilateral negotiations. Still, old money is often recycled into “new” projects while the initial projects never came to fruition.



<h2 class="wp-block-heading" id="h-but-how-do-african-youth-view-china">But how do African youth view China?</h2>



According to the 2024 African Youth Survey, 76 percent see China as the most influential global power, and 82 percent call the character of Chinese influence positive. The U.S. comes in second, at 70 percent influential and 79 percent positive. The EU, the United Kingdom, and France have all dropped significantly as African influencers.



In a&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://www.cfr.org/councilofcouncils/global-memos/why-us-presidential-election-matters-africa">just-issued</a>&nbsp;Council on Foreign Relations “global memo” focused on the impact of the 2024 U.S. presidential election on African policy, Michelle Gavin, the CFR’s Ralph Bunche Fellow for Africa Policy Studies, said U.S. Africa policy is hardly a factor in either candidate’s foreign policy platforms or discussions. America’s struggles with election integrity and political violence are undermining faith among Africans that it remains a beacon of light for African democracies.



Gavin suggests that a second Trump Administration would ensure that Africa policy would be largely an afterthought, and that a Harris Administration, while less predictable and more proactive, could still be viewed as “inflexible, ponderous, unresponsive, or just plain absent.”



What U.S. foreign policy in Africa needs, she suggested, is not just the swapping out of personnel but a bigger change in mindset. American policy makers need to wake up to the reality that other major and middle powers have been far more ambitious in their engagements in Africa for years, often to the detriment of U.S. interests.



African nations are moving beyond postcolonialism toward exerting stronger influences in the future of critical supply chains and next-generation international institutions and norms. Gavin urges anyone serious about U.S. foreign policy to seek common ground between the most urgent interests of Africans and those of the United States. &nbsp;



<a rel="noreferrer noopener" target="_blank" href="https://www.cfr.org/councilofcouncils/global-memos/why-us-presidential-election-matters-africa">Likewise</a>, Eghosa E. Osaghae, Director-General, Nigerian Institute of International Affairs, calls for a U.S.-Africa relations reset. While noting the “crucial role” the U.S. plays in the stability and development of the African continent, he adds there is a widespread perception across Africa that its strategic relevance to the U.S. has been waning, leading to neglect and a lack of empathy.



U.S. involvement across Africa, he says, has focused primarily on humanitarian and democratic interventions at the expense of more critical engagements around development goals such as reducing debt problems, mitigating state fragility, and addressing the harms of climate change. This neglect has led to growing discontent and impatience with the U.S. and Europe and is the chief reason that China and Russia have rapidly expanded their influence.



Osaghae warns that a realignment of U.S.-Africa relations is an absolute necessity if the U.S. wants to compete successfully with China and Russia on the African continent, yet no matter the outcome of the U.S. elections he sees the chances of such a fundamental shift as “quite slim.”



Ichikowitz echoes the need that “the world must pay attention to Africa’s emerging force – the youth. As the fastest-growing demographic, they are the heartbeat of the future.” Yet he fears that, unless Western nations take Africa’s youth more seriously, they may be relegated to being “passive spectators” in a world run by the rich and powerful.



Sadly, while Western policymakers continue to demand that Africans conform to Western norms that are often not achievable where there is no electricity, sanitation, or functioning infrastructure, Russia views the continent much as the West did for centuries &#8212; as a source of wealth and an outlet for its power. The Chinese have over five millennia viewed themselves as “culturally superior,” suggesting that equal partnerships between Africans and the Chinese are doomed to failure.



A proper realignment of U.S. Africa policy, therefore, must focus on developing the full potential of Africa’s youth, who, as Ichikowitz points out, are no longer content to be bystanders in global discourse. They are, he says, “ready to rewrite the narrative, and they have every intention of wielding the pen themselves.”



“The West,” he concludes, “can no longer afford to ignore the reality: disengagement and disregard for&nbsp;Africa&#8217;s&nbsp;youth will have far-reaching consequences. This is not a plea for attention; it&#8217;s a demand for action.&#8221;

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Will The West Cede Africa To China & Russia?

<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/09/DSC_7329-820x547.jpg" alt="" class="wp-image-534863" style="width:840px;height:auto" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/09/DSC_7329-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/DSC_7329-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/DSC_7329-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/DSC_7329-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/DSC_7329-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/DSC_7329-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A woman selling veterinary medicines in Ghana, 2022. Copyright GALVmed/Buta Photography</figcaption></figure>



From backyard chicken raising to the grazing cattle of nomadic pastoralists, across much of rural Africa, animal diseases travel faster and wider than veterinary medicine.



An estimated&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://www.ilri.org/knowledge/publications/story-cattle-africa-why-diversity-matters">800 million</a>&nbsp;people keep chickens, goats and cattle across the continent as valuable sources of food, income, fuel and fibre. Yet across Africa, the most prominent livestock diseases cost an estimated&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://www.woah.org/fileadmin/Home/eng/Publications_%26_Documentation/docs/pdf/TT/2015_AFR1_Grace_A.pdf">$9 billion every year</a>&nbsp;– roughly 6% of the total value of the continent’s livestock sector.



Protecting and treating animals across such a vast and disparate population and geographic expanse is complicated and costly. Getting vaccines and medicine to livestock in remote areas of Africa is often limited by a lack of knowledge, manpower, funding and reliable refrigerated transport. Even when resources exist, they are typically spread too thin to systematically protect animal health and, by extension, the incomes of livestock keepers.



With a rapidly growing population and demand for animal-derived protein, enabling the veterinary sector to address the diverse needs and challenges of small-scale producers is not only possible, but also critical to Africa’s sustainable development.



Entrusted with the safeguarding of national herds, government veterinary services have historically focused on the most detrimental diseases affecting large-scale livestock operations, leaving many small-scale farmers behind.



Efforts in the past have successfully dealt with damaging infectious livestock diseases, including eradicating the deadly cattle disease&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://ourworldindata.org/how-rinderpest-was-eradicated">rinderpest</a>&nbsp;in 2011 through an integrated global campaign.&nbsp;Yet existing government-led efforts to manage other contagious livestock diseases are now lagging.



Facing rising economic pressures and a significantly broadened mandate, many African governments can no longer achieve sufficient vaccination coverage and deliver “last mile” services that saw volunteers across the continent contribute to rinderpest’s eradication even in the most remote communities.



Comprehensive livestock health management today requires governments and other livestock health organisations to think holistically and consider the infectious diseases limiting small-scale livestock producers’ potential. This includes foot and mouth disease, lumpy skin disease and contagious bovine pleuropneumonia (CBPP) in cattle, as well as peste des petits ruminants (PPR), sheep and goat pox and contagious caprine pleuropneumonia (CCPP) in sheep and goats.



Meanwhile, the global veterinary medicine industry has traditionally focused on addressing livestock health issues of the Global North, where the profitable markets justify the high cost of investments in research and development of new products.



Small-scale producers of large and small ruminants – cattle, sheep, and other grazing animals – in the Global South have not benefitted from such investment. A commercially viable market for ruminant vaccination does not currently exist. Where it does, it can be regularly undermined by free mass vaccination by governments, non-governmental organisations and development agencies. Simply put, there are not enough private veterinary vaccination efforts supporting small-scale livestock producers.



In recent years, the Global Alliance for Livestock Veterinary Medicines (GALVmed) and several private animal health companies have succeeded in developing and bringing to market a more complete portfolio of affordable animal vaccines and medicines for small-scale livestock producers in the Global South. Further, combined efforts in the poultry sector have demonstrated that governments and businesses sharing responsibility can foster a functioning veterinary service sector and vibrant, locally adapted veterinary medicine infrastructure and industry that caters to the specific needs of small-scale producers.



In practice, this means creating demand through increased awareness about livestock diseases while providing uninterrupted access to affordable veterinary products at the farm level. Adequately addressing the needs of the continent’s tens of millions of small-scale producers requires opening the ruminant vaccines market for private sector development, particularly for vaccine suppliers, local supply chain actors and private veterinary service providers.



Improving product registration and distribution will also help to equip farmers across Africa with the tools needed to preserve their animals’ health and support food security and economic growth on the continent, including their own.



Together with our partners, GALVmed has delivered more than&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://www.galvmed.org/galvmeds-achievements/">1.2 billion vaccines</a>&nbsp;and other animal health products to farmers across Africa and South Asia, preventing the deaths of more than 23 million livestock – and the associated impacts this has on farmers’ incomes and food security.



Currently, GALVmed’s partners are developing a suite of&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://www.galvmed.org/why-combination-vaccines-are-better-for-small-scale-livestock-producers/">combination vaccinations</a>&nbsp;that address multiple infectious livestock diseases with a single intervention. These new vaccines promise to facilitate and improve vaccination access for farmers. Preventing multiple diseases at a lower cost will protect their livestock and livelihoods more completely and for the long term.



The vision of a food-secure, resilient African continent is well worth the efforts of removing the barriers to the functioning of the African small-scale livestock-producing sector. When governments, policymakers, veterinarians and veterinary medicine developers put the needs of small-scale producers first, they can help fill the gaps of the fragmented livestock health sector. Today, most tools are available but stakeholders will have to work together to deliver them to the farmers who need them most, for the benefit of Africa’s small-scale livestock-producing sector and society at large.

DSC_7329

How to bridge the divide across Africa’s fragmented veterinary medicine sector

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/09/PS_Indonesia-Africa-Summit-820x547.jpg" alt="" class="wp-image-532160" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/09/PS_Indonesia-Africa-Summit-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/PS_Indonesia-Africa-Summit-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/PS_Indonesia-Africa-Summit-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/PS_Indonesia-Africa-Summit-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/PS_Indonesia-Africa-Summit-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/PS_Indonesia-Africa-Summit-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



I recently had the honor of attending the Second Indonesia-Africa Forum, a gathering that celebrates the deep and enduring bonds between our regions and allows us to discuss, as friends and partners committed to a future of solidarity and inclusive development, the best ways in which we can chart a new course for our future cooperation.&nbsp;



We know that the potential of our regions is immense. We also know that by working together, we can achieve far more than we can alone.



The partnership between Indonesia and Africa has deep roots &#8211; It goes back to the historic 1955 Asia-Africa Conference in Bandung. That conference brought together leaders from our newly independent nations, united in their resolve to oppose colonialism, assert our sovereignty, and build a fairer world, at a time when we risked being crushed by superpower rivalry.&nbsp;



The Bandung Conference laid the foundation for the Non-Aligned Movement and later the New Asian-African Strategic Partnership (NAASP). And there is a certain symmetry between 1955 and 2024.&nbsp;



Once again, we need to join forces in order to guarantee our interests.&nbsp;



The struggle we face today is one of economic development and global influence. It is about ensuring a better quality of life for our people and being active participants in global decision-making, not merely subjects of decisions made by others. This shared objective—to create a fairer world where the voices of the Global South are respected—is central to our partnership.



The economic relationship between Indonesia and Africa has grown significantly. Trade reached USD 7.66 billion in 2016. However, this figure represents only a fraction of the potential that exists.&nbsp;



By comparison, trade between the US and China exceeds USD 600 billion annually. So clearly, there is much more that we can, and must do.



Africa is home to some of the world’s fastest-growing economies and a young population set to become the largest workforce globally by 2034.&nbsp;



Indonesia, with its strategic location, abundant natural resources, and vibrant economy, is projected to become the fourth-largest economy in the world by 2050.&nbsp;



The question we must ask ourselves is this &#8211; How can we elevate our economic partnership to new heights?



The first and most important part of the answer to this question is that we must invest in our people; they are our greatest resource and by prioritizing vocational training, higher education, and knowledge exchange programs, we can equip our young people with the skills they need to thrive in an increasingly digital and interconnected world.



In Indonesia, we have seen the transformative power of education and skills training in driving economic development &#8211; One of the flagship initiatives I proposed during the electoral campaign for President of Indonesia, which I intend to begin implementing from the moment I assume that position, is the provision of free and nutritious school lunches for Indonesian children.&nbsp;



This is not just a social and moral measure; it is above all else, a long-term investment in our people, because by ensuring that our children are well-nourished and able to focus on their studies, we can significantly improve educational outcomes and create a more skilled generation of Indonesians, those who enjoy better living standards than today.



Second, infrastructure &#8211; Investment in infrastructure, roads, ports, energy, and telecommunications, is essential to facilitate trade, attract investment, and improve the quality of life for our citizens. Indonesia’s experience in infrastructure development offers valuable lessons for all developing countries, and we are eager to share these lessons with our African partners. By working together, we can build the infrastructure needed for sustainable development and economic growth.



Here, blended finance presents a unique opportunity. By combining public and private sector funds, we can mobilize significant capital for these crucial projects.&nbsp;



Indonesia is committed to promoting blended finance initiatives to attract private investment for sustainable development projects, particularly through the G20 Bali Global Blended Finance Alliance. This alliance aims to scale blended finance for developing countries, modernize the development finance system, and foster South-South cooperation to support climate action and the Sustainable Development Goals (SDGs).



Innovation and entrepreneurship are also key drivers of economic growth. We must foster a culture of innovation and support start-ups and small businesses. By fostering innovation and creating a dynamic economic environment, we can generate jobs, boost productivity, and drive sustainable development.



Finally, we must strengthen our trade relations.&nbsp;



It is high time to expand and deepen traditional trade partnerships in areas such as mining, oil and gas, while also exploring new opportunities for cooperation in areas like the digital economy, renewable energy, and sustainable agriculture. By enhancing trade and investment flows between our regions, we can create more jobs, boost economic growth, and improve the livelihoods of our people.



As we work towards these objectives, it is important to recognize the need once again for a fair global economy, one where the concerns and needs of the Global South are respected.&nbsp;



For too long, the Global South has been marginalized in global economic decision-making, and our voices have not been adequately heard. We must advocate for reforms in international financial institutions, promote fair trade practices, and ensure that our voices are heard in global economic forums.



Additionally, we must push for reform in global governance structures, particularly the United Nations Security Council, to better represent the realities of the 21st century.&nbsp;



The current structure often sidelines the voices of the Global South, leaving our concerns underrepresented in global decision-making processes. It is time for the Security Council to include permanent seats for countries from Africa, Asia, and Latin America, ensuring that our perspectives and interests are adequately represented and fostering a more democratic and equitable global order.



Indonesia is committed to advocating for the interests of the Global South and promoting a fairer global economy. By working together, we can ensure that the concerns and necessities of our regions are respected and that we are not mere spectators in a world where decisions are often made by others without considering our interests.



The Second Indonesia-Africa Forum served as a powerful reminder of the enduring bonds that unite our regions and the immense potential for cooperation and growth.&nbsp;



Together, Indonesia and Africa can grow our weight in international relations and ensure that our voices are heard on the global stage.&nbsp;



Let us seize this moment to work together and build a brighter future for all.

PS_Indonesia-Africa Summit

Unlocking the Potential of Indonesia-Africa Relations: A Pathway to Shared Prosperity

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="410" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/09/b7d68332093f816dff7a7250ad43a40d.2-1-super.1-820x410.jpg" alt="" class="wp-image-532065" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/09/b7d68332093f816dff7a7250ad43a40d.2-1-super.1-820x410.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/b7d68332093f816dff7a7250ad43a40d.2-1-super.1-300x150.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/b7d68332093f816dff7a7250ad43a40d.2-1-super.1-160x80.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/b7d68332093f816dff7a7250ad43a40d.2-1-super.1-768x384.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/b7d68332093f816dff7a7250ad43a40d.2-1-super.1.jpg 1360w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Benson Ibeabuchi/AFP via Getty Images</figcaption></figure>



While inflation and price growth have fallen in advanced economies, they remain stubbornly high in Africa, owing to rising food prices, the lack of formal employment opportunities, and austerity measures. The resulting protests in Nigeria and Kenya should encourage governments to rethink constraints on public spending.



WASHINGTON, DC – The rising cost of living in Africa has triggered a <a href="https://www.wsj.com/world/africa/africas-cost-of-living-protests-reach-nigeria-d0b507f1" target="_blank" rel="noreferrer noopener">wave of protests</a> in recent months, underscoring the disproportionately higher economic and social costs of inflation on a continent with persistent widespread poverty and heightened vulnerability to global volatility. The world, it seems, is now living through a tale of two inflations.



Initially, the current inflation cycle – a product of pandemic supply shocks and escalating geopolitical tensions – affected developed and developing countries alike. But inflationary pressures have become less synchronous over time. While price growth has fallen sharply in advanced economies, it remains stubbornly high – and, in some cases, rising – in Africa. And even though inflation in many developed countries is trending down to central banks’ 2% target, it has hit double digits in nearly&nbsp;<a href="https://tradingeconomics.com/country-list/inflation-rate?continent=africa" target="_blank" rel="noreferrer noopener">one-third of African countries</a>&nbsp;(a ratio that is even higher when excluding&nbsp;<a href="https://www.theafricareport.com/345016/is-the-cfa-franc-benefiting-from-the-african-currency-crisis/" target="_blank" rel="noreferrer noopener">CFA franc countries</a>, where the euro peg has contributed to monetary stability).



For example, the annualized inflation rate in Nigeria, one of Africa’s largest economies, hit 34% – a <a href="https://www.bloomberg.com/news/articles/2024-06-15/nigerian-inflation-rate-surges-to-28-year-high-on-food-costs" target="_blank" rel="noreferrer noopener">28-year high</a> – in May, and is forecast to remain elevated in the second half of the year, largely owing to soaring food inflation, which accelerated to 40%. This stands to reduce household purchasing power and raise the risk of food insecurity even more, especially for Nigeria’s growing rank of poverty-stricken and most vulnerable citizens. The country has the world’s largest population <a href="https://www.bloomberg.com/news/articles/2024-06-15/nigerian-inflation-rate-surges-to-28-year-high-on-food-costs?utm_medium=cpc_search&amp;utm_campaign=NB_ENG_DSAXX_DSAXXXXXXXXXX_EVG_XXXX_XXX_COUSA_EN_EN_X_BLOM_GO_SE_XXX_XXXXXXXXXX&amp;gad_source=1&amp;gclid=Cj0KCQjwwuG1BhCnARIsAFWBUC3-T3qj1rurqEeXOic19ru6SxmsWUrCJnrfMNEkcC6ldXfPKJdGuDwaAsjsEALw_wcB&amp;gclsrc=aw.ds" target="_blank" rel="noreferrer noopener">living in poverty</a> after India. Meanwhile, <a href="https://www.ft.com/content/137058b2-d48a-4adf-91f1-e25494350e6e" target="_blank" rel="noreferrer noopener">government reforms</a>, including the <a href="https://financialpost.com/pmn/business-pmn/nigerian-inflation-rate-climbs-to-28-year-high-on-food-costs" target="_blank" rel="noreferrer noopener">sharp devaluation</a> of the naira – which has <a href="https://financialpost.com/pmn/business-pmn/nigerian-inflation-rate-climbs-to-28-year-high-on-food-costs" target="_blank" rel="noreferrer noopener">lost 70% of its value against the dollar</a> since June 2023 – to attract foreign investors, have only made matters worse for a country that relies heavily on imports of food and other essentials.



In August, protests against the resulting economic hardship spread across&nbsp;<a href="https://www.wsj.com/world/africa/africas-cost-of-living-protests-reach-nigeria-d0b507f1" target="_blank" rel="noreferrer noopener">several large Nigerian cities</a>. They followed&nbsp;<a href="https://www.aljazeera.com/opinions/2024/8/6/is-a-sub-saharan-african-spring-in-the" target="_blank" rel="noreferrer noopener">weeks of riots</a>&nbsp;in Kenya against the government’s finance bill, which proposed tax hikes on basic goods such as oil, bread, and sanitary pads, even as millions were already struggling to make ends meet. Dozens of demonstrators in both countries were killed during official attempts to quell the&nbsp;<a href="https://www.wsj.com/world/africa/africas-cost-of-living-protests-reach-nigeria-d0b507f1" target="_blank" rel="noreferrer noopener">uprisings</a>.



Food-price inflation affects low-income households more than their high-income counterparts because they spend a greater portion of their budget on necessities. Consider that food costs account for&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2022/06/07/blog-response-to-high-food-prices" target="_blank" rel="noreferrer noopener">16% of consumer spending</a>&nbsp;in advanced economies, but&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2021/12/06/food-inflation-in-sub-saharan-africa" target="_blank" rel="noreferrer noopener">around 40%</a>&nbsp;in Sub-Saharan Africa (SSA). This difference in the composition of spending explains the more regressive nature of inflation in SSA, which is home to&nbsp;<a href="https://www.ispionline.it/en/publication/is-poverty-growing-again-in-sub-saharan-africa-trends-and-measures-137866" target="_blank" rel="noreferrer noopener">60% of the world’s extreme poor</a>, and why inflation there carries a greater risk of political upheaval.



The lack of formal employment opportunities has also exacerbated Africa’s cost-of-living crisis. To be sure, the wages of low-income workers with formal jobs are not keeping pace with price increases. But informal sector activities – a disguised form of unemployment and constraint on shared prosperity – account for&nbsp;<a href="https://www.ilo.org/resource/news/more-60-cent-worlds-employed-population-are-informal-economy" target="_blank" rel="noreferrer noopener">roughly 85%</a>&nbsp;of total employment on the continent, and these workers must also deal with income volatility and unexpected components of inflation, further tightening the squeeze on households.



Recent research assessing the distributional effects of the inflation cycle on households in the United States found a phenomenon known as “<a href="https://static1.squarespace.com/static/610831a16c95260dbd68934a/t/61154aaa50053703a8898e64/1628785323000/The-Costs-of-Being-Poor-CPSP-Groundwork-Collaborative-2019.pdf" target="_blank" rel="noreferrer noopener">inflation inequality</a>”: prices have risen more quickly for those at the bottom of the income distribution than for those at the top. The spread of protests across Africa suggests that a similar dynamic is at work on the continent, where the disproportionately higher food prices caused by positive&nbsp;<a href="https://thedocs.worldbank.org/en/doc/461221541081214468-0050022018/original/InflationChapter5.pdf" target="_blank" rel="noreferrer noopener">exchange-rate pass-throughs</a>&nbsp;have dramatically increased the welfare costs of this inflation cycle.



Government policies have also heightened the cost-of-living crisis. Instead of supporting vulnerable groups through targeted interventions, African governments have indiscriminately raised taxes and cut spending to meet&nbsp;<a href="https://www.project-syndicate.org/commentary/how-africa-can-escape-debt-doom-loop-by-hippolyte-fofack-2024-04">external liabilities</a>. Interest payments on sovereign debt now consume around one-third of&nbsp;<a href="https://www.ft.com/content/0e1be993-90e1-4477-9c29-41400c0d1c98" target="_blank" rel="noreferrer noopener">Kenya’s revenue</a>&nbsp;and more than two-thirds of&nbsp;<a href="https://www.reuters.com/world/africa/nigerias-president-calls-end-protests-against-economic-hardship-2024-08-04/#:~:text=ABUJA%2C%20Aug%204%20(Reuters),to%20the%20streets%20last%20week." target="_blank" rel="noreferrer noopener">Nigeria’s</a>. In both countries, procyclical fiscal policy and austerity measures have had a knock-on effect on prices, stoking inflation and worsening the cost-of-living crisis.



But in response to the protests, governments are reversing some of their procyclical policies or implementing complementary measures to mitigate their impact. Kenyan President&nbsp;<a href="https://www.project-syndicate.org/columnist/william-ruto">William Ruto</a>&nbsp;dismissed his entire cabinet and withdrew the controversial finance bill, which was expected to raise&nbsp;<a href="https://www.hrw.org/news/2024/07/16/kenya/imf-align-economic-reform-rights" target="_blank" rel="noreferrer noopener">$2.7 billion</a>&nbsp;in additional revenue to meet fiscal targets set by the International Monetary Fund. In Nigeria, the government has announced a 150-day&nbsp;<a href="https://www.reuters.com/world/africa/nigeria-suspend-taxes-certain-food-imports-curb-rising-prices-2024-07-08/" target="_blank" rel="noreferrer noopener">suspension of import duties</a>&nbsp;for certain foods to alleviate the pressure on struggling households.



Nonetheless, more must be done to close the gap between actual and potential growth and expand opportunities for young people. Africa is the world’s most natural-resource-rich continent, yet Africans face bleak futures in countries that lack sufficient engineers and political will to transform these resources, create enough well-paying jobs, and expand prosperity. Africa’s excessive reliance on imports as an alternative to expanding aggregate output has sustained external imbalances and hollowed out the jobs market, causing more people to fall into destitution.



To meet the aspirations of young populations, African governments should rethink constraints on public spending and&nbsp;<a href="https://www.project-syndicate.org/onpoint/imf-world-bank-reforms-must-provide-africa-equal-access-to-capital-by-hippolyte-fofack-2024-03">overcome</a>&nbsp;the recurrent balance-of-payments crises that have long shaped economic policy across the continent. Increased investment in building a workforce that is fluent in emerging technologies is critical to spurring industrialization. This, in turn, would bolster Africa’s&nbsp;<a href="https://link.springer.com/article/10.1007/s12197-019-09504-5" target="_blank" rel="noreferrer noopener">manufacturing sector</a>, which in other parts of the world has long served as a social escalator and growth accelerator, catalyzing convergence with high-income countries. The transformation of African economies will also drive the development of regional value chains, bolster intra-African trade (and thus mitigate the region’s exposure to global volatility), and build large national buffers to wean the region off debilitating aid dependency.



Africa’s policymakers must not only invest in human capital to move their countries up the value ladder in a global economy where technology has become a key driver of growth. They must also strive to equalize access to opportunities and achieve shared prosperity to strengthen the concept of the nation-state and enhance national security. To quote Samora Machel, the first president of Mozambique, “For the nation to live, the tribe must die.” For too long, a tribal approach to governance has undermined national development, perpetuating intergenerational poverty and exacerbating inflation inequality.<a href="https://goo.gl/forms/7Xl5BoAChQ85MMsm2" target="_blank" rel="noreferrer noopener"></a>

b7d68332093f816dff7a7250ad43a40d.2-1-super.1

Confronting Africa’s Cost-of-Living Crisis

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="536" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/09/GettyImages-1240724687-820x536.jpg" alt="" class="wp-image-531305" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/09/GettyImages-1240724687-820x536.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/GettyImages-1240724687-300x196.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/GettyImages-1240724687-138x90.jpg 138w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/GettyImages-1240724687-768x502.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/GettyImages-1240724687-1536x1005.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/GettyImages-1240724687-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Sergio Pimenta, regional vice president for Africa at the International Finance Corporation, a member of the World Bank Group, at the Bloomberg Invest: Focus on Africa summit in London, UK, on Tuesday, May 17, 2022. African nations should resist pressure from &#8220;powerful interests&#8221; to hastily abandon fossil fuels to avoid hurting their economies, Angola&#8217;s President Joao Lourenco said. Photographer: Chris Ratcliffe/Bloomberg via Getty Images</figcaption></figure>



South Africa is one of Africa’s largest economies, with robust manufacturing, mining, and agriculture sectors. It is also an important financial center, a digital innovator, and a hive of artistic creativity.



And yet, the country’s struggling power infrastructure is preventing a bright economy from really dazzling.



During a recent visit to South Africa, I met with public and private sector partners to affirm IFC’s commitment to deepening its support for the country’s private sector development agenda.



Energy transmission was an important focus of our meetings, with discussions centering on how private investment can buttress government efforts to build some of the vital power infrastructure the country needs.



Challenges associated with generating power often grab the headlines, but the transmission challenge is an equally urgent global issue: countries around the world need to add or replace &nbsp;about 50 million miles of transmission lines by 2040&nbsp; to meet their climate goals and to achieve energy security, <a href="https://www.iea.org/reports/electricity-grids-and-secure-energy-transitions">according to a recent report by the International Energy Agency</a>.&nbsp;&nbsp;



In South Africa, the transmission grid needs significant investments to be able to absorb new generation capacity, especially from renewables.



South Africa’s Minister of Energy and Electricity, Kgosientsho Ramokgopa, and I discussed the country’s energy challenges and opportunities, particularly around transmission and distribution infrastructure, which includes the lattice towers, poles, high-voltage cables, and transformers that bring power to homes, schools, businesses, and hospitals.



South Africa’ s government has already opened generation to the private sector, under the Renewable Energy Independent Power Producer Program. This has achieved notable results: since 2011 over 6,000MW of wind, solar photovoltaic and other renewable energy generation capacity has been procured.



However, Eskom, the state utility, remains entirely responsible for building and maintaining the country’s transmission infrastructure.



This might soon change.



In August 2024, South African President Cyril Ramaphosa signed the Electricity Regulation Amendment Bill, which introduced far-reaching reforms of South Africa’s energy sector aimed at establishing a competitive electricity market, including in transmission.



The country’s transmission needs certainly are enormous. The country must build an estimated 1,400 km of new transmission lines annually for the next 10 years to meet its energy needs. This equates to roughly $10 billion in investment for the lines and associated infrastructure to improve and expand the power grid.



The investment and capacity needed to meet the energy gap is huge—and cannot be achieved at the scale and speed needed using the status quo approach.



That is why IFC is providing advisory support to the Government of South Africa to help identify and operationalize private sector participation models in transmission, something that is already happening successfully in Latin America and India, for example.&nbsp;



Specifically, IFC is sharing its regional and global experience with South Africa and supporting a&nbsp; regulatory framework for private participation to enable the government to roll out the first independent power transmission projects and document lessons learned to support a broader program rollout.



Besides that, we have partnered with South Africa’s government to create an Energy One Stop Shop, which will be a single point for energy projects and will expedite approvals.



President Ramaphosa has <a href="https://thepresidency.gov.za/president-ramaphosa-assents-electricity-regulation-amendment-bill">hailed the new electricity bill</a> as one that will “lead to long term energy security, a more competitive energy system, more rapid uptake of renewable energy sources, and ultimately lower energy prices for all South Africans.” IFC is committed to supporting South Africa towards its energy goals. &nbsp;We are working through a joint World Bank Group approach to help create an enabling environment that can unlock the massive investments needed to ensure energy security in the country.

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Will The West Cede Africa To China & Russia?

How to bridge the divide across Africa’s fragmented veterinary medicine sector

Unlocking the Potential of Indonesia-Africa Relations: A Pathway to Shared Prosperity

Confronting Africa’s Cost-of-Living Crisis

Investing in Energy Transmission in South Africa: A Truly Bright Idea

News Tips

Advertise With Us

Opinion

The global multilateral order must be reimagined to address Africa’s development challenges

Intra-African Trade: The Secret Ingredient for Climate-Proofing the Continent’s Agrifood Systems

Teaching Capital Markets

The World Bank and other IFIs should get serious about climate adaptation in low-income countries

How Property Taxes Can Help Low-Income Countries to Develop

Why Should We Care About COP29? One Reason is Enough, But There Are 100 Trillion

China as a Model Development Partner

Transforming Africa’s Capital Markets through innovation and unity

The good, the bad and the ugly: South Africa’s competition policy

As Inflation Recedes, Global Economy Needs Policy Triple Pivot

Artificial Intelligence Can Make Markets More Efficient—and More Volatile

Which is the only region in the world which will add more than 1bn people to its population by the middle of the century?

Will The West Cede Africa To China & Russia?

How to bridge the divide across Africa’s fragmented veterinary medicine sector

Unlocking the Potential of Indonesia-Africa Relations: A Pathway to Shared Prosperity

Confronting Africa’s Cost-of-Living Crisis

Investing in Energy Transmission in South Africa: A Truly Bright Idea

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Advertise With Us

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