Making Africa work – The Economist Apr 16th 2016

The continent’s future depends on people, not commodities

“IS ANYONE here actually hoping to make any money, or are you all just trying to minimise your losses?” The question, asked at a dinner in London for investors who specialise in Africa, showed how the mood has changed in the past year. The financiers around the table—mostly holders of African bonds—all said they were simply trying not to lose money.

Only a few years ago people were queuing up to invest in Africa. As recently as 2012 Zambia paid less than Spain to borrow dollars. Private-equity funds dedicated to Africa raised record sums to invest in shopping malls and firms making everything from nappies to fruit juice. Businessfolk salivated at the prospect of selling to the fast-growing African middle class, which by one measure numbered 350m people. Miners sank billions into African soil to feed China’s appetite for minerals.

Now investors are glum. In the short run, they are right to worry. In the long run, as our special report on African business shows this week (see article), the potential rewards from a market of 1.2 billion people are too juicy to ignore, despite the risks.

From oil in the gears to sand in the wheels

For decades, sentiment about Africa has followed commodity prices, rising and falling like a bungee-jumper at Victoria Falls. The recent plunge has caused a 16% drop in sub-Saharan Africa’s terms of trade (the ratio of the price of its exports to that of its imports). Growth across the region will slow to about 3% this year, predicts the World Bank, down from 7-8% a decade ago. That is barely ahead of population growth of 2.7%. Nigeria and Angola, two big oil exporters, will probably need bail-outs from the IMF within a year.

Yet Afro-pessimists should remember two things about commodity busts. They don’t last for ever. And they don’t hurt everyone: 17 African countries with a quarter of the region’s population will show a net benefit from the current one, thanks to cheaper energy. More important, by focusing on the minerals markets it is easy to miss some big trends that are happening above ground—and these are mostly positive.

The first is that Africa is far more peaceful than it was even a decade ago. The wars that ripped apart the Democratic Republic of Congo and sucked in its neighbours, causing millions of deaths, have largely been quelled. A few states, such as Somalia, South Sudan and the Central African Republic, are in chaos. But overall the risk of dying violently in Africa has tumbled. The latest ranking of the world’s most violent countries by the Geneva Declaration includes just two African states (tiny Lesotho and Swaziland) among its top ten.

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Global warming could udercut efforts to eradicate poverty – November 24, 2014 12:54AM ET

World Bank report finds climate change would cut into crop yields, possibly set back anti-poverty efforts in many areas

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Climate change could undermine efforts to defeat extreme poverty around the globe, the World Bank warned Sunday.

In a new report on the impact of global warming, the bank said sharp temperature rises would cut deeply into crop yields and water supplies in many areas and possibly set back efforts to bring populations out of poverty.

“Climate change poses a substantial and escalating risk to development progress that could undermine global efforts to eliminate extreme poverty and promote shared prosperity,” the report said.

“Without strong, early action, warming could exceed 1.5-2 degrees Celsius and the resulting impacts could significantly worsen intra- and intergenerational poverty in multiple regions across the globe.”

An increase of 2 degrees Celsius is an increase of 3.6 degrees Fahrenheit.

Past and predicted emissions from power plants, factories and cars have locked the globe on a path towards an average temperature rise of almost 2.7 Fahrenheit above pre-industrial times by 2050, it said.

That means that extreme heat events, rising sea levels and more frequent tropical cyclones may now be unavoidable.

World Bank President Jim Yong Kim, in a telephone news conference on the report, titled “Turn down the Heat, Confronting the New Climate Normal”, called the findings “alarming.”

“Dramatic climate changes and weather extremes are already affecting millions of people around the world, damaging crops and coastlines and putting water security at risk,” Kim wrote in the report.

As examples of extremes, he pointed to the hottest November day in Australia during a recent Group of 20 summit “or the five to six feet of snow that just fell on Buffalo” in the United States.

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