Tag: future

When young talents lead innovation and development in Africa

“Solving Africa’s complex challenges will require innovative solutions including those developed by young inventors from the African continent. It is important that we create the necessary environment to discover them.”

Sixteen young African investors weree recently shortlisted as finalists of the Africa Prize for Engineering Innovation awarded by the Royal Academy of Engineering.  While the overall winner and three runners up will receive cash funding, all the finalists will receive training and the mentoring they need to scale up their inventions and ultimately translate them into commercial products. The inventions that range from a vertical farm to an online vaccination platform to a device that can convert air into drinking water using solar technology, are bound to deliver practical solutions to Africa’s challenges, including food insecurity.

Indeed, Africa’s recurrent challenges can benefit from many inventions coming off the African continent. Moreover, Africa stands to make more headways when its young people, who represent 60 per cent of its current population, take the lead.

But to pave way for many more inventions from Africa’s young minds, the continent must invest in creating an environment that makes it easy to discoverer these inventors. So how can the African continent pave the way so that many more young inventors are discovered?

Beginning at a young age, when students are attending elementary and high schools, the African education system should make room for young students to be creative, problem solvers and critical thinkers. Currently, the education system, in many countries, including my native country Kenya, and South Africa, is poor quality and mostly focuses on content mastery. I know. The primary and high school I attended in Kenya, for example, focused on teaching theories and materials we needed to pass our national examinations. None of the teachers ever challenged my peers and me to think and create. It was all about mastering the contents and regurgitating them back in the exams. Further, we also lacked other resources including textbooks, libraries, science labs and other resources to help create a conducive environment.

Across Africa, stakeholders investing in education operate under the assumption that passing national examinations gauged by the grades students get is clear evidence that investments in education have paid off. The caveat to this approach is that it does not necessarily prepare students to be inventors or problem solvers and to meaningfully participate in developing our global world.

Moving forward, if Africa wants to reap the dividends of inventions by African students and its young minds, African schools should adopt action-oriented teaching approaches that hone critical thinking skills, creativity and innovation. Africa’s young minds should consistently be challenged to identify local problems, seek out relevant information and resources, and to design authentic plans and solutions to solve the challenges they have identified.

Once discovered, future inventors must be supported through training and mentoring. They must also be funded. Doing so will allow them to fully develop their inventions and translate them into products that offer solutions to the challenges many African citizens face.

The Royal Academy of Engineering prize of mentoring and training support and funding will definitely allow these innovators to translate their inventions into products and to scale up and widely disseminate them. The good news is that, presently, across Africa, there are several programs including The Anzisha Prize, Made in Tony Elumelu Entrepreneurship Programme and the Innovation Prize for Africa that are actively supporting, mentoring and funding  young African inventors.  This needs to continue.

Moreover, as we aim to pave the way for many African inventors to rise up, while strengthening the overall African innovation ecosystem, we must protect these ideas and ensure that people adhere to intellectual property rights. Before the young inventors’ ideas are shared, they should have the opportunity to trademark and protect them. At the moment, many African countries, research institutions, and universities and other institutions where inventions are born do not understand quite well how to manage intellectual property assets including knowing the available options when they want to protect and translate their inventions into commercial products for national, regional and international markets.

Eventually, when these inventions are translated into products, governments should create market opportunities for their products to ensure that they thrive. For example, government hospitals can buy and install the vertical gardens in hospitals, and these could be used to grow the food to feed patients. The Kenyan Government could use the Chanjo Plus online vaccination platform and roll it out across the country. Further, these inventors must be funded so that they can build industries that further support the production of the products they have created. Such support would further lead to economic empowerment and job creation by the youth and for the youth.

Solving Africa’s complex challenges will require innovative solutions including those developed by young inventors from the African continent. It is important that we create the necessary environment to discover them. Once discovered, we must nurture the inventors, celebrate them, support, and fund their ideas all the way, until they have products and companies to manufacture these products. It is the right thing to do.

Written by Dr Esther Ngumbi,  a distinguished post doctoral researcher at the Entomology Department, University of Illinois at Urbana Champaign. She is also a food security fellow with the Aspen Institute New Voices.

“Speed up, scale up and synergise”, says Trade and Development Bank chief – Admassu Tadesse

Admassu Tadesse, President, and CEO of the Trade and Development Bank (TDB) – shares his thoughts on the bank’s growth strategy and the prospects for drawing more investment into Africa.

Admassu Tadesse is believed by some to be one of the outstanding bankers of his generation. He has an enviable CV, having attended LSE, Wits and Harvard and having gained experience in banking in the US and South Africa. Like many Ethiopians, he is self-assured and determined. Colleagues say he has a very clear reading of situations. He was catapulted to the head of the Trade and Development Bank (formerly PTA Bank) at 41 and has since assembled a strong team of youth and experience, giving them, as he puts it, the reins to grow the bank.

“Systems are developed by people, systems are managed by people and in the end it’s all about talent and the ability to have an eye for what will work and what will not work,” he says.

Since he joined the bank in 2012, its balance sheet has grown from $1bn to nearly $6bn. To put this into context, the AfDB’s loan book stands at approximately $18bn and that of Afreximbank at $12bn. Over that time, he has managed to bring in a number of institutional partners as shareholders to support its growth, including African pension funds and insurance companies. In 2017 the bank grew 20%, despite a challenging environment. We caught up with Tadesse on the sidelines of the Africa Investment Forum in Johannesburg, where he called for partners to speed up, scale up and synergise to ensure greater investments into the continent. Here are excerpts:

How do you see the current economic outlook on the continent?

The year 2018 has been quite a watershed in many respects. We have seen Zimbabwe reset, we’ve seen Ethiopia reset, we’ve seen Angola reset and we’ve also seen South Africa reset. So these are four very significant countries where the political risk perspective is somewhat improved. We’ve also seen South Sudan sign a peace agreement. We’ve seen Egypt advance its reforms and improve its economic performance and prospects. We’ve to see Sudan come out of sanctions.

That’s seven countries where there have been very significant positive developments. We are not operating in any way in Somalia but Somalia also has a government that’s looking much more robust than in the past. So just generally in Eastern and Southern Africa, there has been a positive development. We are seeing sanctions being removed from Eritrea on the back of the wind of peace that is coming out of the Horn of Africa. So that’s eight very interesting developments. It means that there are more prospects for co-financing projects and opportunities with partners.

And the investment picture in your East African base?

We come from East Africa, which is continuing to grow very strongly. We have Tanzania, Kenya, Uganda, Ethiopia, Rwanda. These five countries are all growing in the range of 5 to 9%, so the average growth rate would be the highest in Africa. Mozambique is beginning to recover and they’ve also now closed one or two big deals on the gas front. All of this adds up and translates into a more interesting set of transactions to come on many different fronts.

Will you continue growing at 20% in the foreseeable future?

We have an asset growth strategy that is scenario based, where growth can range from 5-20% per annum. Our base case, our working plan, is to grow assets, mainly loan and investment assets, at between 10-15% per annum. The low case is 5-10% and the high case is 15-20%. If the business environment is enabling, and we are able to originate healthy assets on a diversified basis we can still do 20% per annum.

Historically, the majority of our loan book has been trading finance, roughly two thirds, and our long-term loan book would range between 30% to 40%. Our strategy is to keep trade finance as being a majority [of our loan book]. You don’t just grow for the sake of it, we are always trying to shape our portfolio that meets certain requirements. The success of any portfolio depends on the geographic base on which it sits.

Which sectors are giving you case for excitement?

We are seeing quite a bit of demand coming through on the resources side, gas and mining. Agri-business is also a continuous area of growth. Trade is back as well, dominated by commodities. And with higher valuations, the volumes of trade have gone up again. So that’s also going to give us some good opportunities for further growth in some of those sectors. The power sector is well poised to attract considerable investment. It is attractive as an investment sector now because the cost reflective tariffs today have moved us beyond where we used to be in the past, where power was so deeply subsidized.

Transport is also a sector where we will see more activity. There are a lot of opportunities for spinning off transport projects, such as toll road based projects.

The speed of execution has been a common complaint from private sector operators with regards to DFIs. How is the organisation adapting to respond to their needs?

We’ve introduced innovations in our organizational structures. We’ve established offices closer to the subregions in order to speed up access to the bank and to have people residing in the different sub-regions able to receive applications and process them quicker. At the same time, we’ve strengthened our capacity at the centre to actually process the deals, to do the due diligence, prepare the papers, get the approval systems in place. The committees meet much more regularly. So we’ve been investing in a more efficient and quicker business process.

You mentioned that investment rates need to grow. Can you elaborate on what you meant?

We are actually at record levels of FDI and fixed capital formation has improved. At the turn of the millennium, we were all very critical of the levels of investment in Africa.

We were looking at very low numbers and today, there are many countries that are getting very close to 25% and quite a handful that are well above 25 and several above 30. Twenty-five percent fixed capital formation is considered to be an adequate level of investment to help generate 6% growth. But with African population growth at about 3%, we need to be aiming higher. We’ve seen the Asians invest for sustained periods, 35%, 40%, 45% of GDP.

It’s very important that we keep stimulating the discussions around how to regenerate surplus savings so that we can finance more of our own investment, but that is not going to be very easy to do because savings are very low in Africa. The private sector has a domestic, regional and global character and we need much more of that to come in and boost the numbers.

We’ve scaled up already, we are doing much better than we were 10 years ago, but it’s still nowhere near where we need to be. We have to be much more aggressive, much more proactive and innovative in how we do things. We really have to boost confidence internationally to make Africa a very serious investment destination.

Source: African Business Magazine

FinTech to contribute $150 billion to Africa’s GDP by 2022

The contribution of the financial-technology industry to sub-Saharan Africa’s economic output will increase by at least $40 billion to $150 billion by 2022, according to Financial Sector Deepening Africa, a development-finance organization.

The industry currently employs about 3 million people directly and indirectly in the region, FSD Africa Financial Markets Director Evans Osano said in an interview last month.

Sub-Saharan Africa’s gross domestic product is about $1.6 trillion, according to data compiled by the International Monetary Fund.

“If you look at the value chain, most of that money is coming out of mobile-phone companies,” Osano said. “So from the other support services the contribution is not much, but is expected to increase as fintech develops to address the financial needs of people or making services more accessible.”

Safaricom Plc, East Africa’s biggest mobile-network operator, developed one of the world’s first mobile phone-based money transfer services, and says 88 percent of its almost 30 million customers now use it. About 21 percent of adults in sub-Saharan Africa have a mobile-money account, nearly twice the share in 2014 and the highest of any region in the world, according to the World Bank’s Global Findex Data.