Brazil is officially the 2nd biggest black country, after Nigeria

The Guardian reports:

For the first time since records began black and mixed race people form the majority of Brazil’s population, the country’s latest census has confirmed.

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Distribution of Mixed-Race Brazilians

Preliminary results from the 2010 census, released on Wednesday, show that 97 million Brazilians, or 50.7% of the population, now define themselves as black or mixed race, compared with 91 million or 47.7% who label themselves white.

The proportion of Brazilians declaring themselves white was down from 53.7% in 2000, when Brazil’s last census was held.

But the proportion of people declaring themselves black or mixed race has risen from 44.7% to 50.7%, making African-Brazilians the official majority for the first time.

“Among the hypotheses to explain this trend, one could highlight the valorisation of identity among Afro-descendants,” Brazil’s census board, the IBGE, said in its report.

According to the census, 7.6% of Brazilians said they were black, compared with 6.2% in 2000, and 43.1% said they were mixed race, up from 38.5%.

Ethiopia is the third biggest. With about 94 million people.

Fighting Corruption in Nigeria (Your Uncle is a Crook!)


This approach to fighting corruption goes against the lessons in Peter Ekeh’s delineation between “primordial” and “civic” publics in Nigeria. According to Ekeh one’s uncle may be corrupt in the civic public, but as long as he provides benefits and adequately “shares” in the primordial public he can remain in good standing within his community.

That said, the strategy might work if every Nigerian credibly promises to expose their uncle who’s corrupt but pretends to be an international businessman. The Nigerian government could nudge Nigerians in the right direction by actually prosecuting and jailing the country’s corrupt uncles and aunts.

Energy to top the African Development Bank’s agenda

The FT reports:

Akinwumi Adesina, who took over as president of Africa’s lead development lender in September, has said that his flagship project aims to raise $55bn of investment to close the energy deficit in the next decade.

He says the bank will take a leadership role, coordinating with existing multinational initiatives and pushing member states to move faster to privatise and liberalise their energy sectors.

More on this here.

The paper also has a neat report on African economies’ adjustment to China’s slowdown, US pension funds’ move into the PE space in Africa, the grievances that fuel extremism in Africa, among others.

Full report is here (unfortunately, gated).

Africa’s looming debt crises

The 1980s are calling. According to Bloomberg:

Zambia’s kwacha fell the most on record after Moody’s Investors Service cut the credit rating of Africa’s second-biggest copper producer, a move the government rejected and told investors to ignore…..

Zambia’s economy faces “a perfect storm” of plunging prices for the copper it relies on for 70 percent of export earnings at the same time as its worst power shortage, Ronak Gopaldas, a credit risk analyst at Rand Merchant Bank in Johannesburg, said by phone. Growth will slow to 3.4 percent in 2015, missing the government’s revised target of 5 percent, Barclays Plc said in a note last week. That would be the most sluggish pace since 2001.

The looming debt crisis will hit Zambia and other commodity exporters hard. As I noted two years ago, the vast majority of the African countries that have floated dollar-denominated bonds are heavily dependent on commodity exports. Many of them are already experiencing fiscal blues on account of the global commodity slump (see for example Angola, Zambia and Ghana). This will probably get worse. And the double whammy of plummeting currencies and reduced commodity exports will increase the real cost of external debt (on top of fueling domestic inflation). I do not envy African central bankers.

Making sure that the looming debt crises do not result in a disastrous retrenchment of the state in Africa, like happened in the 1980s and 1990s, is perhaps the biggest development challenge of our time. Too bad all the attention within the development community is focused elsewhere.

What roughly $470m of borrowed money gets you in Nigeria vs Ethiopia

Ethiopia and Nigeria both borrowed roughly the same amounts of money from China’s EXIM Bank for massive infrastructure investments. The former sought to transform its capital’s transit system with a light rail ($475m); the latter tried to boost security in its capital by installing security (CCTV) cameras ($470m).

The outcomes of the two projects are an indication of what will be the impact of China’s ongoing infrastructure projects in much of SSA. Some countries because of the specificities in their domestic political economy are using borrowed money to deliver on actual tangibles — dams, power lines, stadia, housing projects, railway lines, roads, et cetera (corruption plays a role, but projects get completed). Yet others are accruing loans (albeit on concessionary terms) simply to treat the cash injections in the same manner that political elites have treated windfalls from mineral resources in decades past.

Ethiopia just opened its new light rail system in Addis. Nigeria’s CCTV project was a major flop. Of course this fact was not lost on a section of Nigerians on twitter:

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How to increase mass employment in Nigeria (and other developing countries)

David Mckenzie of the Bank writes:

The modal firm size in most developing countries is one worker, consisting of only the owner of the firm. Amongst the firms that do hire additional workers, most hire fewer than ten. In Nigeria survey data indicate that 99.6 percent of firms have fewer than 10 workers. This is in sharp contrast to the United States, where the modal manufacturing firm has 45 workers. Are there constrained entrepreneurs in developing countries with the ability to grow a firm beyond this ten worker threshold? If so, this raises the questions of whether such individuals can be identified in advance, and of whether public policy can help them overcome these constraints to firm growth.

In an attempt to figure out if policy can help grow firms in developing countries, Mackenzie evaluated a program in Nigeria that awarded 1,200 winners about $50,000 each (out of an initial application pool of 24,000; the top 6000 applicants were in the study). See a summary here. And the paper is available here.

………. winning this competition has large positive impacts on both applicants looking to start new firms as well as those aiming to expand existing firms. Three years after applying, new firm applicant winners were 37 percentage points more likely than the control group to be operating a business and 23 percentage points more likely to have a firm with 10 or more workers, while existing firm winners were 20 percentage points more likely to have survived, and 21 percentage points more likely to have a firm with 10 or more workers. Together the 1,200 winners are estimated to have generated 7,000 more jobs than the control group, are innovating more, and are earning higher sales and profits.

Two quick thoughts. First, this is a really cool finding that should get African central bankers excited about how the financial sector can be put to use in boosting mass employment. Second, it is a caution against the odd idea prevalent in development programs of trying to turn poor people into entrepreneurs (see below). The best solution to poverty is jobs. Entrepreneurship is a risk that shouldn’t be imposed on people with already super slim margins of error in terms of income security. As Mckenzie rightly observes:

The results of this evaluation show that a business plan competition can be successful in identifying entrepreneurs with the potential to use the large amounts of capital offered as prizes, and that these individuals appear to be otherwise constrained from realizing this potential. The prize money generates employment and firm growth that would not have otherwise happened. However, the results also highlight the difficulties of picking winners. Conditional on reaching the semi-finalist stage, neither the scores for the business plans, nor individual and business characteristics have much predictive power for predicting which firms will grow faster or benefit most from the program. This remains an area for active research, but also highlights the inherent riskiness of entrepreneurial activity.

The potential impact of a Chinese slowdown on Africa’s economies

The FT reports:

For Africa’s non-oil exporters, the collapse in crude prices has provided a cushion. But, with many African countries import-dependent, the depreciation of currencies affects inflation and the cost of imports. It will also put a strain on those nations that have taken advantage of investors’ search for yields to tap into international capital markets.

The likes of Zambia, Ethiopia, Rwanda, Kenya, Ghana, Senegal, and Ivory Coast have all issued foreign currency dominated sovereign bonds in recent years. “In the past, foreign exchange weakness in Africa was largely shrugged off. Economies adapted and found a way to cope with it, but the recent surge in eurobond issuance has been a game-changer,” says Razia Khan, chief economist for Africa at Standard Chartered.

“Now, when currencies depreciate, external risks are magnified, public debt ratios rise, and perceptions of sovereign creditworthiness alter quite dramatically.”

Prof. Deborah Brautigam of SAIS sees the following happening:

  • Prices for African commodities will worsen, then improve. In recent years, China’s slower growth has pushed down prices for gold, crude oil, copper, platinum and iron ore. South Africa’s mining sector was expected to lose over 10,000 jobs due to lower demand
  • Africa will import even more from China. Cheaper Chinese exports will please African consumers while putting Africa’s manufacturers at a further disadvantage. There will be more pressure for tariff protections
  • [L]ow wages in Ethiopia and elsewhere had been attracting significant factory investment from China. With costs now relatively lower in China, the push to relocate factories overseas will slow. This will save Chinese jobs, but postpones Africa’s own structural transformation.

And concludes that:

In the short term it is hard to see how this devaluation can help Africa, notably its productive and export sectors.

The thing to note is that different African countries have different kinds of exposure to China. The commodity exporters (both petroleum and metals) will be hit hard. The effects will be somewhat attenuated in countries exposed primarily through Chinese FDI and infrastructure loans. Domestic fiscal reorganization and resources from the AfDB and other partners should plug a fair bit of the hole left by declining Chinese investments (although certainly nowhere near all of it). And with regard to sovereign debt, a Chinese downturn might persuade the US Central Bank to delay its planned rate hike — which would be good for African currencies and keep the cost of borrowing low.

Lastly, for geopolitical reasons I don’t see China rapidly reducing its footprint on the Continent. In any case, as Howard French makes clear in his latest book, there is a fair bit of (unofficial) private Chinese investment in Africa. Turmoil back home may incentivize these entrepreneurs to plant even deeper roots in Africa and expatriate less of their profits. The net result will be slower growth in Africa. And like in China, slower growth will challenge prevailing political bargains in democracies and autocracies alike.

How much does it cost to construct an MDG borehole in Abuja?

The Premium Times of Nigeria reports:

Nigeria’s Millennium Development Goals (MDG) office spent N154.2 million to construct a single borehole in Abuja, in a shocking example of contract inflation that has helped undermine the country’s ability to achieve its MDG goals.

Drilling a single borehole drilling in Abuja averages N1.5 million. A hydrology firm told PREMIUM TIMES that the amount should cover drilling and casing, installation of a solar-powered submersible pump, steel tower for the tanks, tanks, pipes, joints & suckers, installation and labour.

The firm allowed an expanded estimate of N10 million if a water treatment facility is included alongside other optional accessories.

The Abuja borehole, constructed at Gwarinpa, an expansive estate in the federal capital, had no such fittings. Indeed, the borehole had long become dysfunctional and was no longer dispensing water to the residents when PREMIUM TIMES visited in June 2015.

Still, the Abuja MDG office told this newspaper it was more concerned with service delivery to the people, than the amount it takes to do so (emphasis added).

The politics of unemployment numbers

I just discovered the website Africa Check. It’s a fantastic resource dedicated to “sorting fact from fiction.” Three posts caught my eye, on unemployment numbers in Nigeria, Zimbabwe, and South Africa.

In Zimbabwe:

Zimbabwe’s unemployment rate is 4%, 60%, or 95% depending on who you ask. The ruling ZANU-PF, in a campaign manifesto, admitted that the rate was 60%! You know things are really bad when a ruling party (in an election year!) says that this big a proportion of the working-age population is unemployed. The World Bank apparently claims that the rate is closer to 5.4%.

In Nigeria:

The state stats agency controversially claimed that the unemployment rate is only 7.5% (for the last quarter of Goodluck Jonathan’s presidency). Tolu Ogunlesi then offered this explainer on how the government arrived at the number. The numbers suggest that the actual figure varies from 7.5 to 24.2 depending on the choice of cut-off for what it means to be employed. 

And in South Africa:

ANC claims that the unemployment rate at the end of 2013 was 21.9% but skeptics insist that the actual figure closer to 24.1%.