Managing Africa’s Rising Debt: Time for a Multi-Pronged Approach

Debt sustainability in Africa has emerged as a key concern among policymakers and development finance institutions (DFIs). Currently, 19 out of 54 countries in Africa exceed the 60% debt-to-gross domestic product (GDP) threshold prescribed by the African Monetary Co-operation Programme (AMCP) and 24 countries have surpassed the 55% debt-to-GDP ratio suggested by the International Monetary Fund (IMF). Of concern is the changing structure of Africa’s debt: countries are tilting towards non-concessional and domestic debt with higher interest rates. Governments’ ease of access to and control over the domestic debt market is leading to excessive public debt accumulation and macroeconomic instability. Aside from the high interest rate and debt-servicing burden, excessive domestic debt also stifles credit to the private sector, the main engine of growth and job creation. Click to Download the full report 
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Migration and Demography: Shaping Migration Policies for Demographic Dividend in Africa

The 8th African Policy Circle (APC) meeting which was hosted by the Centre for the Study of the Economies of Africa, in collaboration with Konrad Adenauer Stiftung (KAS) and Global Public Policy Institute (GPPi), focused on the theme: “Forced Migration within and out of Africa: Innovative Solutions from African Civil Society and Think-tanks”. The meeting provided a platform for African think tanks and civil society organizations to share knowledge, discuss strategies and develop actionable recommendations for policymakers to meaningfully address the problem of forced migration within and out of Africa. Deliberations were centred around the causes, consequences, local perspectives, and solutions to conflict-induced forced migration. However, while many people are forced to migrate because of conflict and violence, many more, particularly young people, migrate for economic reasons. In light of this, the APC deemed it appropriate to further deepen deliberations and discuss Africa’s economic migration in the 9th APC meeting which will hold on November 29-30, 2018 in Dakar, Senegal. The APC will meet on the central theme “Migration and Demography: Shaping Migration Policies for Demographic Dividend in Africa”.

MOTIVATION FOR AFRICA’S ECONOMIC MIGRATION

Individual motive(s) for economic migration vary, and many ‘economic migrants’ take to the road because of a number of different factors; but the most commonly cited reason for Africa’s economic migration is the ‘search for better economic opportunities and jobs’. There is an increasing realization that a large number of people are leaving Sub-Saharan Africa for economic reasons, they migrate with ideologies that life is easier across the frontier. In 1990, about 40 percent of migrants moved for economic reasons, this share more than doubled to 90 percent in 2013[1]. According to the European Commission, 6 out of 10 of those heading for Europe are not refugees fleeing war or persecution, but economic migrants in search of better lives, many of which are from peaceful countries in North Africa. Underlying these and many more statistics are baseline problems such as bad governance and inadequate job creation, which has resulted in a range of economic difficulties, including increase in unemployment and underemployment. Every year, the continent creates only 3.7 million jobs, but between 10 and 12 million people join the African labor force annually[2], disproportionately higher than the jobs created.

 

THE NEXUS BETWEEN DEMOGRAPHY AND ECONOMIC MIGRATION: COST OR BENEFIT?

Africa’s population growth is extremely rapid, with almost all countries growing at over 3% annually. The increasing rate is necessary evidence needed to show that there may well be a surge in economic migration in the next decade or two. By 2050, Africa will account for the highest population spurt, which will more than triple the current 650 million, to reach an estimated 2.3 billion[3]. An increasing number of young and energetic people, who are willing and probably able to work, would make up a huge part of the population boom, and local labor markets may not be able to absorb them. At the same time, the aging population in some advanced economies and segmentation of their labor markets, would create demand for skilled and unskilled labor from Africa’s young population.

On one hand, a mis-management of Africa’s increasing young population will worsen unemployment, and could form the basis for other economic and social issues such as trafficking, conflicts and brain drain. On the other hand, if properly harnessed, there could be increase in remittance flows and knowledge transfers, which will serve as drivers for growth and development in the African region.

WHY DISCUSS AFRICA’S ECONOMIC MIGRATION?

Africa’s economic migration is set to continue its expansion as it will be shaped by the demographic transition already ongoing in the region. Therefore, the subject has steadily risen on the agenda of the international community. Also, the APC’s strategic stance - on providing policy advise and frameworks for stakeholders and governments - is crucial towards addressing issues surrounding this hot topic. The 9th APC meeting aims to provide a platform for African CSOs and think tanks to share knowledge and discuss strategies for policymakers to meaningfully harness the benefits and counter the challenges of economic migration amid demographic transition in Africa. Panel discussions will more in-depthly focus on a range of topics: Profile of economic migrants, drivers/causes, as well as demographic/population growth trends and implications for African migration; the impact of African migration; and the European Perspective of Africa’s economic migration. The workshop will also feature a panel discussion to develop an agenda on African economic migration that South Africa can advance at the United Nations Security Council (UNSC).

We encourage you to join discussions online by connecting with us via twitter (@csea_afric and @africanpolicyO). Please use the following hashtag for related tweets: #9thAPC #Migration.

You can also download the outcome of the meeting below.

     
[1] Gonzalez-Garcia J, Hitai E, Mlachila M, Viseth A, Yenice M. ‘Spillover Notes: Sub-Saharan African Migration Patterns and Spillover’. 2016. Washington D.C. International Monetary Fund.
[2] Chatterjee, S. and Mahama J.D (2017). ‘Promise Or Peril? Africa’s 830 Million Young People By 2050’. United Nations Development Programme.
[3] Ahmed, M. and Gough, K. (2018), ‘African Migration to Europe is Not a Crisis. It’s an Opportunity’, Centre for Global Development.

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Challenges and Interventions Needs in the Nigerian Electricity Supply Industry (NESI)

Although Nigeria has been generating electricity in commercial quantities for over a century, the pace of electricity infrastructure development in the county is very slow and power supply remains highly inadequate. In 2013, two segments of Nigeria’s power sector (generation and distribution) were privatized to resolve the challenges associated with the prior monopoly of government in power generation, transmission and distribution. However, privatization only changed the dimensions of the challenges and power supply remains largely inadequate, unaffordable and unreliable in the country.

Presently, seventy-six million Nigerians or 40.7% of the Nigerian population (more than twice the population of Canada) are not connected to the national power grid[1]. For those connected, power supply is a serious problem as about approximately 90% of total power demanded is not supplied. Here is the problem: Presently, total installed generation capacity is 12,522 MW[2], but average operational generation capacity is just 3,879MW of which 7.4% is lost in transmission, and up to 27.7% load is rejected at distribution. This leaves Nigeria with just about 2,519MW. Yet, Nigeria’s electricity demand is estimated at 24,380 MW in 2015. As a result, Nigerians self-generate a significant portion of their electricity with highly polluting off-grid alternatives and at a cost that is more than twice the cost of grid-based power. How can the Nigerian people and industries be globally competitive without access to affordable and reliable power?

In the coming years, electricity demand is expected to rise significantly. Household electricity demand, which has the largest share, will rise due to growing urbanization (at a rate of 4.23% per annum) and population growth (estimated at 2.7% per annum, while global growth rate is 1.1%), at rates more than twice global averages. Industrial and commercial demand is also expected to increase as Nigeria slowly rise from the recent recession (with projected gross domestic product rates trending between 4.50% and 7%. A GIZ study estimates electricity demand to rise to 45,490 MW by 2020 and by 213,122 MW by 2040. Although the results of electricity demand studies vary widely, they all conclude that the current gap between supply and demand is already very substantial and that, it will become more entrenched under a ‘business as usual’ scenario.

Some of the key challenges in the NESI include:

  • Infrastructure Constraints across the entire value chain from fuel to power distribution chain, including undiversified energy sources for electricity (80% thermal and 20% hydro), insufficient gas pipelines, obsolete generation plants and equipment, as well as inadequate and poorly maintained transmission and distribution networks. All worsened by vandalism
  • Insufficient End-User Tariffs/Pricing: Due to rising supply cost (associated with inflation, currency devaluation, unexpected infrastructure constraints) that have not been accompanied by timely adjustments to tariffs.
  • Inability to Reduce Aggregate Technical, Commercial and Collection (ATC&C) Losses: The design of the power sector reform makes the viability of the distribution companies (DisCos) critical to the long-term sustainability of the sector. However, DisCos are unable to recover cash shortfall on account of the lack of investment in network rehabilitation and metering (partly due to low tariffs and inability to obtain loans from Nigerian banks due to unpaid debts).
  • Sector’s Cash Shortfalls: Total cash shortfall in the sector between 2015 and 2016 is estimated at $1.3 billion. Out of which $1.2 billion accounts for deficits caused by tariffs being lower than the cost of service delivery, and the remaining $100 million caused by DisCos inability to reduce ATC&C losses.
  • Debts, Electricity Theft, and Non-payment Culture of the Public: Especially government ministries, department and agencies who owe the industry an estimated $72 million as at the end of 2016; contributing to the sector’s cash shortfall.
  • Sector governance: Inconsistent enforcement of rules and policies reinforces aforementioned challenges.

While multilaterals (through initiatives with the World Bank and Power Africa) as well as the Nigerian government and private sector are making efforts to address key challenges in the Nigerian Electricity Supply Industry (NESI), the efforts are slow-paced and insufficient. For instance, the government has inaugurated a several projects aimed at expanding thermal and hydro sources as well as extended two intervention facilities to GenCos and DisCos to ease their financial constraints. DisCos have also embarked upon mass metering of customers, as well as implemented maintenance and upgrades on their network by installing new transformers and building dedicated lines to commercial and industrial customers over the past years to reduce these losses and enhance service delivery. However, the investments are marginal compared to existing deficits and targets.

To enhance the effectiveness of service delivery in NESI, several interventions are needed to attract significant private sector capital, improve baseline power supply with data-driven innovations, and enhancing sector governance. Specifically, Operational and Technical and Interventions are needed to improve baseline power supply (using data-driven, innovative on- and off- grid solutions); improve transmission wheeling capacity and redundancy; as well as improve grid design and electricity demand estimation. Governance Intervention is also necessary to improve sector governance and transparency, to make contracts fully effective, as well as to improve sector communication, coordination and monitoring. A clear and concise contractual, regulatory, and financial framework is a critical requirement for attracting private sector capital to the NESI. Lastly, Regulatory/Policy Interventions, especially related to tariff that balances the protection of electricity customers with the interests of investors, outlines a trajectory to cost-recovery tariff, and is implemented in a timely manner is essential. Well-enforced policies that incentivize improvement in DISCOs performance, as well as fiscal and monetary policies aimed at encouraging private sector investments are needed.

[1] See 2016 World Bank statistics on population and electricity access.

[2] Despite having a far larger population, Nigeria generates less electricity relative to other major African economies and failed to expand its power generation along with its growing population. For instance, South Africa with a population of 48 million generated 35,000MW out of an installed capacity of 52,000MW in 2015.

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Educational Performance in Nigeria

Six research projects were chosen for the first “Southern Voice on the State of the Sustainable Development Goals” (SVSS) report. The Southern Voice “State of the SDGs” initiative will provide evidence-based analysis and recommendations to improve the delivery of the Sustainable Development Goals (SDGs). As a collaborative initiative, the program will compile a broad range of perspectives to fill an existing knowledge gap that will also enrich the discussions on the SDGs and level the playfield with new voices from the Global South. OVERVIEW

Nigeria has the largest number of out-of-school children in the world. According to UNICEF, 10.5 million primary school age children were not enrolled in school. Certain factors continue to determine the underperformance and achievement of quality of education in Nigeria. They can be regional and/or gender and economic factors. There has been notable improvement in the quantity of people with access to education, especially at the basic education level, for example thanks to the Millennium Development Goals (MDGs) and the domestic Universal Basic Education (UBE) Scheme. But unfortunately the same cannot be said of the quality of education, which has seen little or no improvement.

THE RESEARCH

In the proposed research titled: “Educational Performance in Nigeria: The Dimensions, Drivers and Implication for SDGs”, CSEA’s goal is to identify the key drivers of exclusion in quality education outcomes. The idea is to provide policy implications that point to what needs to be changed and the prospects of achieving quality education goals. The project aims to strengthen inclusiveness in Nigeria’s educational system, particularly in achieving SDG4(Quality Education). Exclusion is a multidimensional challenge. But we can make further progress in education if we identify the various groups that face the risk of being left behind. The study will provide an analysis of progress towards reaching SDG 4. CSEA will compare national progress with a particular focus on the most marginalized groups. Exploring the nature and dynamics of the underlying causes of marginalization will shape the design of policy interventions that can eventually bridge gaps in education quality. Our analysis will draw on possible trade-offs between SDG 4 and other goals in the 2030 Agenda. We will also analyse drivers of educational exclusion and evaluate the role of economic and social factors.

THE IMPACT

The research will provide empirical evidence on the dimension and drivers of exclusion, while also evaluating the adequacy of various means of implementation to achieve SDG 4. Although the Nigerian government is keen on achieving SDG 4, emphasis has been on quantity, rather than quality of education. Luckily, policymakers have recognized this and are making efforts to correct this. For instance, the Nigerian government had planned to declare a state of emergency in the educational sector in April 2018, meant as a measure to revitalize the quality of education. But the declaration by the government is yet to be put into motion. Meanwhile, little progress can be made without evidence-based research. It is needed to unpack the issues around poor quality of education in Nigeria and to identify proactive measures to address them. This is an important gap that our study seeks to fill. It will provide policy makers with insights on the method of delivery of the SDG programme to ensure that “no one is left behind”.

 

 

 
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The Socioeconomic Implications of Exclusion of the Girl child in Education

Throughout the world, millions of girls are being deprived of a fundamental right – the right to education. This all-important right set forth in the Universal Declaration of Human Rights of 1984 has been reinforced, recognized as a global priority, and incorporated into developmental agendas over the past decades. Developed nations have made tremendous progressive commitments towards achieving high rates in girl child education. However, the reality in most developing nations, including Nigeria, seems to be far-fetched. Statistics show that more than half of the 10.5 million out-of-school children in Nigeria are girls – the highest in the world, meaning that for every 5 out-of-school children, 3 are girls. Many  girls who are enrolled in school at an early stage, drop out on short notice even before completing primary school. Despite the alarming level of neglect in educating the girl child, only a few initiatives such as the  UNICEF’s G4G initiative[1] have provided support for the girl child in Nigeria.

Although, marginal progress has been made in enrollment rates - perhaps not so much of a feat to be celebrated- constraints such as social exclusion, cost, distance, poverty, gender inequality, traditional influences and early marriage, parental literacy continue to sideline many girls from getting an education. In Northern Nigeria, gender norms and stereotypes which define girls primarily by their function as wives and mothers often exclude them from decision-making processes and community involvements. They therefore reach adult age without control over many areas of their lives.

In reaching the SDG 4, it is pertinent to consider all possible ways to achieve this important goal; girl-child education is such a crucial part of the ways to achieve the goal. Evidence has been mounting on the pivotal role that educating a girl plays in improving economic and social outcomes, for herself, the family and the society. The yields from investing in girls’ education are substantial.  This piece seeks to explore the potential economic and social losses resulting from the girl child education.

What Economic Rewards will be lost by not educating the girl child?

Failure to provide sustainable access to education for girls have a strong causal impact on individual earnings, labor productivity and economic growth. A World Bank report reveals that a country’s growth increases by 0.3 percent when the share of girls completing secondary school are increased by just 1 percent. Even more significantly, increasing the number of girls with strong literacy skills (a measure of quality education) boosts economic growth by a significant 2 percent. Thus, access to and successful completion of at least secondary education for girls contribute significant to the acquisition of skills necessary for the labor force, influencing prospects for sustained growth. This is particularly important for Nigeria whose growth rate has shrunk in recent years, and needs all possible ways to boost it.

Considering that women are often down the pyramid in the informal sector, more access and years of schooling can take them up the pyramid and increase their expected level of earnings.  Existing research shows that better-educated women earn more, have better jobs and invest their earnings into their families. In fact, every additional year a girl spends in school increases her future wages by up to 10 percent. The gap in gender education attainment has cost the Nigerian economy $538 in Purchasing power parity per working-age female, translating to a total of $17 billion foregone earnings. As a tool for poverty alleviation, girls’ education triggers better productivity, reduced illiteracy rate and ultimately reduced poverty rate.

Are there Social Costs of Not Investing in Girls’ Education?

Education serves as a strong and important indicator of whether a girl will marry as a child. The UNICEF reports that in Nigeria, 44 percent of girls are married off before they turn 18 – violating the age limit for marriage set in the Child Rights Act of 2003. Also, the Nigerian government has projected to reduce child marriage by 40 percent by 2020 and totally eliminate the practice by 2030, yet, just a few years to the deadlines, this National strategy is being threatened by poor educational attainment for girls. Progress report on the strategy suggests that Child marriage declined only 9 percent in 14 years (2003-2017). More so, girls without education are up to six times more likely to be married off as children than girls who stay in school up to secondary level. Thus, educating girls and investing in girls’ education are critical strategies for the prevention of child marriage, without which the strategy may not be achievable and may worsen in the coming decades, given the potential surge in population.

Furthermore, higher levels of education for girls have been associated with reduction in early births, smaller families and healthier households. If all girls had at least a secondary school education, early births will reduce by a significant 59 percent. On one hand, this presents smaller number of children and families to cater for. On the other hand, educated girls who become mothers are better informed to ensure their children benefit from adequate education, immunization and nutrition.  A UNESCO report suggest that in low-income countries, if all girls are educated up to primary level, the number of children who experience stunting would reduce by 1.7 million. For completing secondary school, the number rises to 12.2 million; and commits to achieving the SDG 2 on improved nutrition.

On the demand for gender equality and fairness, educating girls equip them with the needed knowledge to lend their voices in political and gender-based issues. Educated women are more likely to involve themselves in political processes, contribute to effective governance in the society and voice out on issues around sexual harassment, gender discrimination and domestic violence.

CONCLUSION

Nigeria must pay more attention to girl-child education as it may well be the highest-return investment available in the developing world as well as a lifeline to record high percentage of success in developmental processes. The pay-offs for the girl child, her family, her community and the society at large are too enormous to be neglected. All hands must be on deck to ensure that every Nigerian girl not only has access to education but is supported to remain in school.

[1]The target is to enroll one million Nigerian girls in school and support them to remain in school

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