Building for Development: Could Infrastructure Draw Unexpected Investors to Africa?

Only one out of every 40 dollars of foreign direct investment (FDI) since the 1990s has gone to Sub-Saharan Africa. This is dwarfed by the one out of every eight dollars that went to Latin America and the Caribbean, or the more impressive one out of every four dollars invested in Asian countries. Yet recent studies point to increasing levels of investor interest in African countries. In the last decade, the continent has experienced a notable expansion in the level of FDI inflows, which in 2012 were almost as high as Net Official Development Assistance levels. International investors seem to be noticing the opportunities offered by a rapidly expanding African market.FDI and Development Assistance to Sub-Saharan Africa

Source: Authors’ calculations based on World Development Indicators

In an effort to boost trade and investment relations between Africa and the United States, President Barack Obama this summer hosted the first-ever US-Africa Summit in Washington, D.C. The meeting resulted in $33 billion of public and private commitments to expand trade and investment in the African continent. Remarkably, US companies accounted for half of these pledges, including commitments by General Electric, Blackstone Group (in a joint deal with the Nigerian firm Dangote Industries) and the Carlyle Group to invest in energy infrastructure and to complement the $300 million per year announced by President Obama for the expansion of his administration’s energy initiative, Power Africa. The World Bank and the government of Sweden announced an additional $6 billion in support for enhanced access to electricity in Africa.

This is good news for Africa. FDI inflows will undoubtedly contribute to the technological development, industrial diversification, and economic growth of host countries. And the specific target of these investments – infrastructure – is particularly heartening. The state of Africa’s infrastructure is an important constraint to the continent’s economic development.

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What can education learn from health public-private partnerships (PPPs)?

While public-private partnerships (PPP) have been a central feature of many governments’ attempts to improve access to health services and improve health outcomes for their citizens, education PPPs are still in their infancy. Given the daunting challenges education is facing globally in terms of increasing access, improving learning outcomes, and making curricula relevant to the needs of society and the marketplace, interest in education PPPs has been mounting recently. Increasing access in early childhood education, improving learning outcomes in K-12, or making TVET more attractive to the youth and more relevant to employers are good examples where education PPPs can be one of the tools in providing a solution.As a result, we are seeing a growing number of governments and donors supporting them. But the prevalence of PPPs in education still pales in comparison to that of health and other sectors. So what are the lessons the education sector can learn from the health sector about PPPs?

  • Policies and regulations within the sector matter, but countries must look across sectors to identify and remove constraints
  • Transaction support and capacity building ensures governments can achieve their goals
  • Investment in the private sector is critical for scalability

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Developing local industries connected to the gas value chain: What can Tanzania learn from Malaysia?

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Joining with our World Bank Group teams in the field in Kenya, Rwanda and Tanzania, I was pleased to recently see first-hand evidence of the strong impact that our Global Practice on Trade and Competitiveness is having on economic development throughout East Africa. Our projects are currently helping our clients improve their business environment, increase the competitiveness of firms in key sectors, and develop trade flows.

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Crowdfunding for Development: Recommendations Vs. Reality

John Hogg / World Bank Group

Crowdfunding – think Kickstarter, Indiegogo or Kiva – is popular and growing. About a year ago, infoDev, a global innovation and entrepreneurship program in the Trade and Competitiveness Global Practice, released a report titled ‘Crowdfunding’s Potential for the Developing World’ in which it explored what crowdfunding, on a larger scale, could mean for high-potential enterprises in developing countries. The study quantified for the first time the value of crowdfunding, estimating a global market of $96 billion by 2025 – 1.8 times today’s global venture capital industry. The study outlined specific recommendations for policymakers and business accelerators that focus on high growth entrepreneurs and innovative ways of access to finance.

Now, almost a year later, infoDev is seeing the first results of the pilots it is putting in place to test the viability of crowdfunding within its network of incubators. With the support of Crowdfund Capital Advisors, infoDev’s Kenya Climate Innovation Center (KCIC) is implementing the Crowdfund Investing Pilot, a project designed to mentor and train six carefully selected Kenyan startups on crowdfunding and online fundraising campaigns.

With the six entrepreneurs already working on their campaigns, it’s time to reflect on a few key recommendations of the report.

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Delivering Solutions for Growth: Promoting Competitiveness and Innovation through Activist Strategies

After all the gloom, there’s a glimmer of hope on the horizon.

Front-loading the impact of its double-barreled motto, “Global Challenges, Global Solutions,” the Annual Meetings season may have finally gotten the grim “challenges” part over and done with. This week – starting at 9 a.m. on Tuesday, livestreaming via “World Bank Live” from the Bank’s Preston Auditorium – we’re about to explore one of the most promising solutions now inspiring the development community: the pro-growth, pro-jobs Competitive Industries and Innovation Program (CIIP).

The competitiveness conference will brighten the mood after last week’s barrage of bad news, which seemed relentless throughout the week as downbeat economic and geopolitical forecasts dominated the debate at the Annual Meetings of the World Bank Group and the International Monetary Fund. From Jim Kim’s exhortation that the world’s inadequate response to the ebola crisis must be strengthened, to Christine Lagarde’s stern warning of an “uneven and brittle” era of “prolonged subpar growth [with] excessive and rising inequality,” there was plenty of disheartening data. Lagarde offered a deflating new coinage: “the New Mediocre.”

The sobering numbers within the IMF’s new World Economic Outlook underscored the sense that the global economy (and especially its wealthier countries) may indeed be stuck in an era of “secular stagnation.” So did the conclusion by Financial Times economic scholar Martin Wolf that the once-buoyant, now-humbled leaders of the global economy are in “an extraordinary state” of not just a gnawing malaise but a ‘managed depression’.”

As if all that weren’t dispiriting enough, the news late in the week that the world’s leading financial regulators were holding an unprecedented “stress test” of their crisis-response system – to analyze whether its newly strengthened safeguards can indeed protect against the risk of another cross-border crash of the financial system – made some skeptics wonder, “What do those guys know that we don’t know?”

Amid all the dreary news about the futile quest for elusive growth and the imbalanced rewards in a class-skewed society, one could be forgiven for feeling downcast. Yet Largarde’s rallying cry – “With the risk of mediocrity, we cannot afford complacency” – should remind optimists that we mustn’t let momentary doubts induce a drift toward the do-nothing paralysis of laissez-faire. An array of nuanced, pro-active strategies can help revive growth and jump-start job creation – and the World Bank Group conference this week will bring together some of the world’s leading economic-policy scholars to explore those strategies.

The “New Growth Strategies” conference – on Tuesday, October 14 and Wednesday, October 15 – will explain and expand upon the pro-growth thinking that undergirds the Competitive Industries approach. Targeting investment at the sector and industry levels to strengthen productivity and unlock new job creation, a wide range of analytical, investment and advisory projects are already under way – in both low-income and middle-income countries – through the Competitive Industries and Innovation Program (CIIP), which is convening the conference.

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Expanding the Mobile Apps Market: Making Mobile Work at the Base of the Pyramid

Arne Hoel/The World Bank

The diagram of a horizontally sliced triangle, with its wide base and pointy tip, has been used to represent socio-economic data for decades. The lowest and largest portion represents the poorest and most populous segment of society – living “at the bottom of the pyramid.” In the context of mobile innovation, we prefer the alternate term, “base of the pyramid,” which is closer to signifying the foundational, fundamental role of this demographic group in the health of an economy.

Regardless of semantics, the phrase has been widely used by researchers to consider the effects of various phenomena on this group of people (see select references related to digital entrepreneurship here). While many of these studies have produced insights for the development community, few have contributed practical knowledge for the entrepreneurs who live among and serve this critical group.

In 2012, infoDev commissioned country case studies on the use of mobile devices (then still mostly simple phones) at the base of the pyramid in Kenya and South Africa, with funding from the Ministry for Foreign Affairs of Finland and DFID (UK). Relying in part on a diary methodology and household surveys, the team was able to collect a rich set of qualitative and quantitative data to describe how mobile technologies were being used by the poor in their daily lives, as well as recording a series of videos with users.

They showed, for instance, that users in Kenya were willing to forego basic necessities such as food, transport or toiletries to pay for mobile credit in the knowledge that this would give them better opportunities to find work. In other words, we found that mobile phones are highly valued by and influential in the lives of people at the “base of the pyramid,” and decided to deepen our knowledge further in a way that would benefit entrepreneurs who create applications that serve this population.

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