News — africas growth

A young 21-year-old Albany native is on a mission to creating the perfect “Man-Making Machine.” King Randall is elevating The “X” for Boys program into a school to give troubled teenage boys a chance at finding their purpose and excelling in life.

In 2019, Randall started The “X” for Boys program at the age of 19 in Albany, Georgia with 20 boys in his home during a summer camp. Through the self-funded program, he taught these boys essential life skills like repairing and maintaining cars, cooking, and how to handle firearms. “Doing different workshops teaching young men how to do different skill trades, we’re also doing a book club and teaching them how to read because 93 percent of the children I come into contact with can’t read,” explained Randall.

The success rate of his book club showed an 86% improvement rate in comprehension skills of the boys aged 1 to 17. Hence, Randall felt it was time to expand his facilities by opening a school that can handle large group intake and change lives.

He is set to transform the former Isabella School into the New Life Preparatory School for Boys, according to WALB News 10. In the school, Randal and his team will provide trade skills such as auto-repair and welding.

Troubled teens have reached out to Randall wanting to take the high road in life. The 21-year-old has helped delinquents stay out of trouble, especially those who need to “escape from undesirable living conditions” and adult life of criminality.

“Giving them space where they’re around a lot of other young men and around other men trying to mold you and train you. I’ve had kids come find me at my house and come knock and ask to join The “X” for Boys. I’ve had kids message me on Instagram, gang members, you name it,” said Randall.

The motto of the school is “Let Us make a man” because Randall believes that it takes a village to groom these young men into responsible men. So for The Life Preparatory School for Boys, he is raising funds from his community and beyond to give these young boys a chance at a better future. “This is what the City of Albany needs! Let’s do this for our boys!
We will Make Men Great Again!” he said on his Facebook page.

A startup in East Africa has created a digital service that appeals to thousands of small shopkeepers across the region while finding innovative ways to lend to the traditionally risky sector. Tom Collins reports. 

While most of Africa’s well-known ventures into e-commerce have been designed to appeal to the continent’s burgeoning middle class, Sokowatch is aiming to bring goods and services to the millions of informal shop owners across the East African region. 

Much of the population live on less than two dollars per day, meaning that many are unable to benefit from the ever-expanding range of online delivery and shopping platforms that market higher-end goods and charge fees.

Raising $14m in Series A funding in February, the fast-growing tech company delivers essential goods like oil, rice, and soap to over 16,000 informal shops across Kenya, Tanzania, Uganda, and Rwanda. 

Making the bulk of its money on the margins between the wholesale purchase of items and the sale of those goods to each individual business, the delivery service is free and functions through an app or SMS. 

Running a fleet of over 200 delivery tuktuks, the service also reduces costs for small business owners who typically spend money when sourcing goods. 

“Shopkeepers no longer have to physically go themselves to wholesale markets, paying for transport to go there and back,” says Daniel Yu, Global CEO. 

“In addition to being costly, wholesale shopping in crowded markets is not safe with the ongoing Covid-19 pandemic.” 

Throughout the health crisis, most of the region’s lower-income families continue to rely on local shops to buy basic necessities – something those with higher wages can prevent through the use of home delivery services. 

Offering an e-commerce service to this segment of local shops, Sokowatch – along with many other online services – has seen “a significant uptake in new customers” over the Covid-19 period, according to Yu. 

Finding another use for its platform during the pandemic, the startup has partnered with KCB Bank and several foundations to distribute digital food vouchers worth between $7 and $15 via SMS to thousands of families in need of assistance. 

The vouchers can be redeemed at Sokowatch-affiliated outlets, helping support local stores while reducing food insecurity for over 10,000 people.  

Building on another aspect of its business, the East African firm has continued extending credit lines to its small business customers where most other lenders in the marketplace have dramatically reduced lending as a result of Covid-19. 

Having lent more than $1m over the last year, Sokowatch’s CEO believes their unique model allows them to capably de-risk lending without resorting to charging interest rates or requiring collateral. 

Shopkeepers have the option to pay when goods are delivered or up to a week later for a small fee. 

“We realized that embedding these financial services on top of the existing e-commerce relationship we have with our customers is actually something fundamentally different from a digital lending type of model,” says Yu. 

“We are a significant counterexample to what is going on with lending in the market. By continuing to supply stores with essential goods we provide a solid foundation for providing credit services.” 

Around 15% of Sokowatch’s order book is supported by credit, and although it began as a value-added service alongside its core business the startup is beginning to focus more of its attention on creating various financial products for its customers, Yu says. 

Most of the money raised at the beginning of the year will be used to increase the profitability of its core business and to invest in financial services. 

Though its presence in multiple countries allowed Sokowatch to offset the loss of revenue in some areas due to quickly changing lockdown regulations, Yu cautions against using the funds to expand into different markets during a pandemic. 

That said, securing a relatively large ticket size in only several years the next round of post-COVID funding will probably see the firm looking to scale across the wider region and to even greater potential beyond.  

In East Africa alone, the size of the essential goods market in the informal sector is around $180bn increasing to $600bn throughout the rest of Africa, Yu estimates. 

By Arkebe Oqubay

Ethiopia’s remarkable record of economic growth and home-grown development path has inspired the whole continent of Africa.

In reviewing the decade, a recent Financial Times article, Ethiopia seizes crown as the fastest-growing country in the 2010s acknowledges this fact. The country’s focus on productive investment, industrialisation, and education continues to generate jobs and economic growth. Here I look at the growing impact of foreign investment across Africa and consider the opportunities and challenges that lie ahead for the continent.

Africa’s bright spot

As the last decade drew to a close, Ethiopia, with its population of 112 million, is one of many countries to top the list for economic growth. The country’s gross domestic product has jumped by 146.7% since 2009, and its per-capita purchasing power parity has risen by 149%. According to the World Development Indicators, Ethiopia’s economic growth has averaged 10.5% since 2004, twice the African average, while life expectancy in the country rose from 44 to 66 years between 1990 and 2016, also twice the average for the continent.

Unlike other countries, Ethiopia’s development path has been home-driven, without the advantages of endowment in natural resources such as oil and minerals. It has therefore focussed on developing productive capacity and attracting productive investment by building physical infrastructure and developing human capital, especially in vocational education and transforming the university system.

Towards investment in the manufacturing sector

In 2010, Ethiopia shifted its attention towards attracting foreign direct investment (FDI) into the productive sector, particularly manufacturing, promoting targeted sectors and firms, and working closely with investors. Four-fifths of FDI inflow into Ethiopia in the last few years has been destined for manufacturing, indicating that the government’s strategy of shifting investment into productive sectors is bearing fruit.

Manufacturing FDI also needs to be channelled towards expanding the export sector to tackle the balance-of-payments constraint. A major challenge for policy-makers is how to sustain double-digit growth while at the same time:

• generating enough decent jobs;
• expanding the export sector;
• resolving the balance-of-payments constraint;
• building a solid manufacturing base; and
• transforming the agriculture sector.

[clickandtweet handle=”” hashtag=”” related=”” layout=”” position=””]Ethiopia has built world-class industrial parks to attract investment, facilitate skill and know-how transfer, and promote linkages and environmental sustainability.[/clickandtweet] This enabled it to increase FDI four-fold between 2012 and 2017. The country’s share of East Africa’s FDI inflows rose from 10% to about 50% and inflows into the rest of the continent from 1% to 10%.

For many foreign investors, the main reason for investing in landlocked Ethiopia has been the government’s commitment to support investors and engage in dialogue.

Attracting targeted and productive FDI is essential for creating jobs, broadening the skills base of the local industrial workforce, motivating domestic firms, and sharing management know-how.

Three ways to attract productive FDI

Africa’s economic performance since 2000 has significantly improved following the sluggish growth of the 1980s and 1990s, a period associated with Washington Consensus prescriptions for economic liberalisation. Although not comparable with that of Asia, Africa’s average annual GDP growth rate for the last 20 years has been 4.6%, but growth has been uneven across African countries (see my forthcoming book on African Economic Development: Evidence, Theory, and Policy with Cramer and Sender).

Ethiopia’s rapid and inspirational growth symbolises the continent’s bright future. At a time of slow global economic growth, African policy-makers should single-mindedly focus on building the continent’s production capacity and attracting productive FDI in three ways.

1. Create the necessary conditions for productive investment

While improving the business climate is essential, it is not enough. Productive investment requires educated personnel, energy infrastructure, and investment in efficient connectivity.

2. Avoid focussing solely on generic foreign investors

Evidence shows that the growth outcomes of FDI for host countries are mixed, with some of it simply ‘phantom’ rather than real capital and bricks-and-mortar investment. African governments should identify their priority sectors and the most promising sources for better quality FDI, and should also target selected firms. An institution fit for purpose should be developed to act as a single investment window, provide better coordination mechanisms, and build the diverse expertise required to attract, facilitate, and retain targeted FDI. Without these essential reforms, there can be no improvement in investment promotion outcomes.

3. Build pockets of excellence and create an industrial ecosystem

There is a need to build and expand industrial parks. Unfortunately, even policymakers often misunderstand the role of industrial parks and that they require a strategic approach linked to creating a wider productive ecosystem. Ethiopia’s approach to building an industrial ecosystem has been driven by learning from others and finding unique solutions to the various challenges and binding constraints.

The mission and challenges ahead

Many countries have encouraged their firms to invest in Africa, but have failed to have a major impact.

The conventional paradigm in advanced economies (such as European countries) must change from the dominant ‘donor‒recipient’ to ‘new growth generation’ that positively feeds Africa’s economic transformation.

The focus must shift to expanding trade, productive investment, financing infrastructure, and collaboration to build human capital.

For instance, in the last few years, the UK’s Official Development Assistance has increasingly focussed on supporting Ethiopia’s industrialisation path. The UK government is also organising the UK‒Africa Investment Summit to give more impetus to the flow of productive investment. However, it is important to note that these efforts are not enough and can only succeed where a government committed to rapid economic growth and economic transformation is playing a key developmental role (see the forthcoming book The Oxford Handbook of Industrial Policy). More needs to be done if the growth initiative and dynamics of many African countries are to be infused.

What Africa needs is not predatory states, but governments that have a strong commitment to economic progress, are capable of setting out policies that benefit Africans, and that support initiatives from the private sector and other social groups. Governments that champion economic development provide stronger support to the private sector, generate new investment opportunities, and improve the livelihoods of their people. It is a pity that the most fashionable prescription of our time has focussed on preaching for a dysfunctional or inactive government, rather than a proactive government that champions economic transformation.

[clickandtweet handle=”” hashtag=”” related=”” layout=”” position=””]Another critical issue is that Africa should continue to engage with its traditional partners (the ‘west’ and the ‘north’), but it also needs new partners from the east and the south.[/clickandtweet] The economic ties between Africa and China are a good example of how African countries can generate win-win benefits, especially when it comes to attracting productive investment, trade, financing infrastructure, and human capital. This should induce other countries to develop ties with Africa’s interest at their heart, not governed by ‘pre-conditionality,’ but based on values of mutual respect and non-interference in others’ internal affairs.

This will help to build a more prosperous Africa and turn the coming ten years into the decade of Africa’s economic transformation.

Arkebe Oqubay is a Senior Minister and Special Adviser to the Prime Minister of Ethiopia and also serves on the ACET Board.