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Low commodity prices a wake-up call for Africa to boost manufacturing

The slowdown of China’s economy and its declining demand for commodities is a “good wake-up call” for African economies, according to Geoffrey Qhena, CEO of South Africa’s Industrial Development Corporation (IDC).

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Speaking at the recent World Economic Forum on Africa, Qhena said this situation presents an opportunity for the continent to figure out how to grow in the face of lower commodity prices.

Despite having vast resources, most African economies rely on imports for everything from food to clothing to electronics due to an under-developed manufacturing industry that faces many hurdles.

Johan Aurik, managing partner and chairman of consulting firm A.T. Kearney, said local manufacturing is an enormous “missed opportunity”. Aurik observed Africa’s shortcoming in manufacturing has to do with inefficiencies across the value chain, such as the sourcing of raw materials, distribution and innovation.

“When people think about production or about manufacturing they see a factory… and that’s the wrong image because it is often the least important part of what [we] are talking about.”

“If one part of the chain does not work well or is not optimal then the final product… often doesn’t even reach the final customer. These are very complex systems and that is why it is so hard to do. In Europe and in North America they had 200 years – or even longer – to grow the systems over time slowly. Africa needs to move faster,” noted Aurik.

Supply chain gaps one key hurdle

Namibian entrepreneur Ally Angula said she faces several hurdles operating manufacturing businesses. She is co-founder and managing director of Leap Namibia, a diversified group of companies involved in the agro-processing and fashion industries.

One of Leap’s divisions manufactures garments that are retailed through its network of My Republik branded outlets. She cited gaps in the supply chain and labour market as key hurdles. For instance, her company imports print labels for clothing from South Africa because they are not available locally.

“There are a lot of links within the supply chain [that] as a manufacturer you have to either fill those links yourself – or you pay double the price to fill those links,” Angula said.

“In some of our manufacturing industries that we are going into it is industries that we are creating from scratch.”

She explained how her company set up a manufacturing plant in a village in Namibia that employed locals. But when the rainy season started, the village did not have power for three weeks. While this was a fate the locals were used to, it was distressing for her business.

“Unfortunately for a manufacturing entity you can’t be without power for three weeks.”

Technology vs employment

Technology could help address some of the challenges in Africa’s manufacturing sector, however, the panelists argued there should be a multifaceted approach that involves both new technologies and employment. Innovation that excludes human labour, the IDC’s Qhena warned, would leave behind millions who desperately need jobs.

“The important [thing] is to create real jobs, sustainable work. Yes, it is true that technology if it is introduced too quickly often has a negative effect on unemployment. You see that in many places around the world – for instance, online retail is replacing many retail jobs. But over the long run they tend to be replaced with other types of work.”

Need to highlight manufacturing success stories

Although it involves various elements – from product design to production to retail – manufacturing is not as hard as people make it seem, said Angula. Once the process is broken into digestible parts, people become more inspired to go into industry.

“What we have experienced is exposure plays such a big role. We have had many people come through to our company to see what it is that we are doing. Once you have had the conversation the person will say to you: ‘But I didn’t know it was so easy to make clothes’ or ‘I didn’t know it was so easy to dehydrate an onion product and get that on the shelves’.”

“We need to be showcasing a lot more in terms of the success stories on the continent when it comes to manufacturing… That will motivate people to get into the different industries,” she added.

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Source: howwemadeitinafrica


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Seven ways to get water on the climate agenda

1. Create a grassroots movement

There is a need for a grassroots movement to strenghten the case for water in the climate debate. This grassroots movement for water exists, but could be stronger. In many countries local NGOs, water committees and youth associations have worked on raising awareness. In France, local water parliaments work together to tackle water and climate change issues. These initiatives could be further shown in other countries. Heloise Chicou, deputy director and climate program officer,French Water Partnership, Paris.

2. Get communities involved

Community involvement starts with recognizing that community members are key stakeholders in the water debate. We need to seek their opinion from the planning of programmes, to their implementation. We shouldn’t turn to them only when everything has already been decided from the office. Community involvement can be costly, particularly in terms of the time invested, but it is a necessity. James Williams Kisekka, project officer and consultant, Aidenvironmentand Rain Foundation, Kampala, Uganda.

3. Secure funding for developing countries

Funding is a key issue for developing countries, who need it to develop their water and climate-related projects. Development banks have a role to play, but so do other innovative types of financing. For instance, a local authority from a developed country can help another local authority in a developing country to build sustainable technologies such as micro irrigation measures. Heloise Chicou, deputy director and climate program officer, French Water Partnership, Paris.

4. Use digital technologies to share experiences

Water professionals can use digital platforms to share best practice, access information and to engage in project or action-related planning and discussion. At the World Economic Forum we are working to get all our networks onto digital platforms to share and connect. Dominic Waughray, head of public-private partnerships and member of the managing committee at the World Economic Forum, Geneva.

5. Build successful alliances

A successful alliance is one that recognizes the strength of each member and allows them to tackle the part of the issue that they are best suited to address. For example the scientific community has great data and analysis that everyone can use, but they need to simplify knowledge and implications to get stakeholders on the same page. And we all need to leave our egos behind. Vidal Garza Cantú, director at the Femsa Foundation, Monterrey, Mexico.

6. Influence decision-makers and politicians

We must understand the political landscape. The best technical fix in the world will never be implemented if it results in the decision-makers losing office or power. We need to think about what is driving the decision-maker and whether is it possible to appeal to it. Deciding who to target is also critical. We often spend time trying to influence water ministries when we should be talking to the treasury. Louise Whiting, senior policy analyst at WaterAid, London.

7. Keep up the good work – and constantly strive to improve

We should keep up the good work advocating for water, but we must also constantly strive to improve. Scale-up success stories and share lessons learned, as well as ideas and inspiration. World Water Week was a great stepping stone towards New York and Paris later this year. Let’s continue the momentum.Therese Sjömander-Magnusson, director of transboundary water management atthe Stockholm International Water Institute (SIWI), Stockholm, Sweden.

Source: theguardian


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World Economic Forum Ranks Water Crises as Top Global Risk

More than nuclear weapons or a global disease pandemic, impairments to water supplies and punishing cycles of flood, drought, and water pollution are now viewed by heads of state, nonprofit leaders, and chief executives as the most serious threat to business and society.

For the first time, water crises took the top spot in the World Economic Forum’s tenth global risk report, an annual survey of nearly 900 leaders in politics, business, and civic life about the world’s most critical issues. Water ranked third a year ago.

The report measured 28 risks on two dimensions: the likelihood of occurring within 10 years, and impact, which is a measure of devastation. Water ranked eighth for likelihood and first for impact. It was one of four risks — along with interstate conflict, the failure to adapt to climate change, and chronic unemployment — that were deemed highly likely and highly devastating.

Water’s ascent reflects a remarkable shift in thinking among the members of the World Economic Forum, the Geneva-based think tank known for its yearly meeting in the Swiss Alps that draws the elite of wealth, business savvy, and political power. Water’s top ranking also reflects the growing recognition among world leaders that diminishing supplies of reliable, clean water, if not well managed, will be a significant impediment to health and wealth for the poor and for the richest economies and largest cities.

Residents of California (GDP $US 2 trillion) and Sao Paulo (population 12 million) felt the first tremors of such disruptions during dreadful droughts in 2014. The 2.5 billion people without toilet facilities that protect them from disease and personal danger feel the stress every day.

“So much of life is affected by what happens with water,” said Bob Sandford, chair of the Canadian Partnership Initiative, which helps governments connect the science of water with public policy. “We didn’t realize until recently how much our economy and society relied on hydrologic stability.”

Water Rises in the Ranks

A decade ago, the global risks report was dominated by financial worries and macroeconomic concerns: the pace of China’s growth, sharp swings in stock and bond prices, and roller-coaster oil markets. Water merited little attention and climate change, pushed aside as a “still emerging” threat, was the only risk out of 120 in the 2006 report that was deemed too distant for a rigorous statistical analysis.

Image courtesy of the World Economic Forum Water crises ranked as the top risk for impact, according to the World Economic Forum’s survey of nearly 900 global leaders in business, academia, and government. Click image to enlarge.

 

 

Today, the script is flipped. Respondents to the 2015 survey viewed social and environmental risks as the gravest threats to the planet’s 7 billion people. Experts offered several explanations for the new direction.

Howard Kunreuther, a professor at the Wharton School at the University of Pennsylvania who served as an academic advisor in the development of the report, said that the large number of weather disasters in the last decade has captured the attention of government officials. Floods in Pakistan’s Indus River Basin in 2010, for instance, displaced 20 million people, caused at least $US 43 billion in economic damages, and killed 2,000 people.

“Events that used to be extreme are more likely today,” Kunreuther told Circle of Blue. The risk increases as global temperatures rise, with climate change expected to cut water availability in Southern Europe, the Middle East, North Africa, and the American Southwest while also increasing the number of severe rainstorms. Engulfing rains or deep droughts could slash crop yields by 25 percent by mid-century, according to worst-case projections cited by the United Nations climate panel.

A second factor is also responsible for water’s rise in the risk rankings, argued Giulio Boccaletti, global director for water at the Nature Conservancy and a member of the World Economic Forum’s global agenda council on water. An evolution in the balance of world power may explain a greater emphasis on water, he said.

“The types of countries that are more vulnerable to water crises are becoming more important in global politics as the center of gravity moves from the United States and Europe to China and India,” Boccaletti told Circle of Blue.

Photo © Aaron Jaffe / Circle of Blue Most of China’s fresh water is in its wet south. Much of its energy production, urban development, and agriculture is in the dry north. One solution to the geographical mismatch, in a nation that has been building immense public works projects for centuries, is to transport was from the south to the north. The $US 81 billion South-North Water Transfer Project is in operation. The middle canal, under construction in 2010, opened late in 2014. Click image to enlarge.

In China and India, there is a much closer connection between infrastructure development, water resources, and economic growth, he added. Home to more than one-third of the world’s people, the two countries have severe mismatches between water availability and water demands. Both nations rely on unsustainable supplies of groundwater in their prime food-growing regions, suffer from polluted rivers, and have hydropower ambitions that can be wrecked by Mother Nature. As many as 30,000 people were killed and 10 hydropower stations were destroyed in a vicious June 2013 flood in Uttarakhand, an Indian state at the foot of the Himalayas.

A Broader Look at Water

Water rose as a global priority in the 2015 report, and it also acquired a new designation. The report reclassified water from an environmental risk to a societal risk, an acknowledgment that nearly all human activity — from growing wheat and catching fish, to preventing child-killing bacterial diseases and powering industries and communities — has water at its base.

“That’s big,” said Sandford about the reclassification. “I agree with the change. Water is environmental but it transcends that category. People are being devastated by these events of flood and drought. How you manage these impacts becomes an important political question.”

California is in the fourth year of a dire drought that is the worst in its recorded history. The dry weather is prompting policy changes and infrastructure investments in water conservation and transport, and testing a modern democracy’s capacity to cope with an ecological emergency. Click image to enlarge.

The world is not doing enough, the report asserts. Though the problems of floods, drought, and inadequate water supplies that were projected more than two decades ago have come true, little is being done to address them effectively. Leaders are especially ill-prepared for widespread social instability, the risk perceived to be the most interconnected, according to the report. Those connections were most visible in the Arab Spring uprisings, which began in 2010 with turmoil in the public square over food prices and resulted in the toppling of governments. A 12-year drought in Australia’s Murray-Darling Basin, which crippled the largest rice industry in the southern hemisphere, contributed to shortages of grain and escalating food prices that year.

Not all agree with the assessment that the response is lagging. The report is too pessimistic in its assertion that little progress has been made to address water issues, Boccaletti said, pointing out the report’s discussion of Australia’s Murray-Darling Basin as one example of an effective solution.

The Murray-Darling is Australia’s most important river basin, providing water for two million people and 40 percent of the country’s agriculture. The long drought, which ended late in the 2000s, forced water managers to completely rework the system for allocating water to farmers, cities, and ecosystems. Less water would be available for farmers and more would be set aside to maintain the health of the river. What was needed was a credible idea of how much water would be available in the future.

Out of the crisis came the world’s most advanced system for analyzing the water flows in a river basin. Leaders committed money and made politically difficult decisions to throw out longstanding management practices in favor of decisions based on data and scientific merit.

The global risks report, Boccaletti said, is evidence that leaders elsewhere may be at a similar stage – ready to consider seriously the idea of water.

“What this report says is that leaders now recognize that they need to take care of water,” Boccaletti said. “It’s an opening to engage. We’re not necessarily ready to solve all problems. But politically we’re at a stage to have a conversation about sustainable development, to have a discussion about water and development.”

Source: Circle of Blue


 

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