by Lionesses of Africa Operations Department
“In the last two decades a large number of African countries have registered solid growth in per capita GDP. What is deeply worrying is that in most cases the impact of this growth on poverty and employment has been limited. Africa has the lowest elasticity of poverty reduction with respect to growth of any developing area of the world. And, despite growth, it is not creating enough good jobs.”, this was in 2015 in a paper entitled Aid, Employment and Poverty Reduction in Africa (here) by John Page and Abebe Shimeles for the AfDB’s excellent ‘African Development Review’ (‘ADR’) which brings study and analysis of development policy in Africa to the fore.
They open their paper by simply stating that “Growth in Africa is weakly linked to poverty reduction. The reason is that Africa has failed to create enough good jobs.” Good jobs…
Fast forward to 2022 and little has changed, in fact one could argue given corruption, fraud and countless occasions when Government, aid, development money or even private sector investment, simply has not reached its intended target, that we have actually gone back, not forward.
The ‘elasticity’ of poverty reduction to growth is still far too loose, and although the talk is all about employment driving growth, too many African countries continue to allow raw materials to flow out to the west with zero ‘value add’, too many African governments welcome outside companies that leave very little value behind, too many African countries have allowed essential water and electricity infrastructure to collapse (shout out to our long suffering SA Lionesses), too many African countries such as SA are teetering (as we write) on being black listed by the international anti-money laundering regulator, FATF. Believe us, none of these tighten the elasticity between growth and uplifting employment.
Sadly this is being written at a time when so many are complaining about yet another load of tenders (this time high value road tenders in SA, here) going to Chinese firms, rather than local ones. Of course, many local companies may indeed have to bring in outside expertise to assist and train up their staff, but at least following the end of the project, cash, trained and higher value staff will be left in South Africa - surely that must count for something? Certainly would tick the ‘Let’s close the infrastructure and skills gap’ box nicely!
Likewise running after international lenders sounds like a quick fix, but as Ghana, plus a few other African countries such as Mozambique (don’t mention Tuna please) and certainly Zambia with their ‘hidden' Chinese loans (here) are all now finding - someone has to ‘Pay the Piper’. As Warren Buffet has said: “It’s only when the tide goes out that one starts to see those who have been swimming naked”.
As Olumide Olusegun Olaoye wrote recently (here) “…recent increase in the economic growth rate in SSA is not sustainable and inclusive…if economic growth is debt induced, more money will be spent on servicing public debt, thus depriving governments of funds for critical intervention programs…a public debt/gross domestic product ratio threshold of 34% beyond which public debt impairs growth inclusiveness across SSA.”
Just so we are clear - Public Debt to GDP ratio currently stands at over 50% for Africa, Mozambique 102%; Ghana 84.6%; Rwanda, Kenya and RSA at 70%; Tanzania and Nigeria showing what is possible when such things are taken seriously at mid 30% with Botswana top of the class at around 20% (here).
The sad point that Olaoye slipped in there was the word ‘inclusive’. We have written enough about the truly iniquitous lending and investment world when it comes to women entrepreneurs (our latest one here), but the truth is that when the tide rises with cheap and plentiful investment cash, some rise faster than others - more investment flows to men than women. Likewise when the tide goes out, women are the first to see investment dry up, no wonder our inspirational membership keep a close eye on Cash Flow.
This has serious knock on effects with our economies, if as the World Economic Forum write (here): “Female led startups in Africa and beyond are not only as profitable (if not more) than male led startups but more likely to drive women’s empowerment and make a positive social impact on the continent.”, and you hold that back, then it is no surprise surely that the elastic band holding growth to poverty slackens.
This social impact of the Lionesses was also confirmed in our first South African Women Entrepreneurs Job Creators Survey (here) from our Data Division, published as we came out of Covid. It showed that “…even as the economy has started to re-open in South Africa, women are experiencing a slower recovery than men [as above - the tide is not equal], while at the same time dealing with additional domestic responsibilities [yes, see here]. To cope with COVID-related disruptions, many businesses have been forced to lay off staff or reduce staff wages. Remarkably, 70% of respondents…chose to lead by example. They either reduced or cut their own pay first. Nearly two-thirds found a way to protect and retain jobs during the pandemic.” That’s Lionesses for you.
Yet if employment is such a central driver of the success of a country and as we see across Africa unemployment is such a concern of policy makers, why is not more being done to assist women entrepreneurs? The latest from RSA shows that more than a third of working age people are unemployed, with a shocking 25% aged 15-24. So it was with much excitement that today on our 8th Birthday, Melanie launched our latest South African Women Entrepreneurs Job Creators Survey (again brilliantly sponsored by ABSA and working with New York University to dissect the incredible data), announcing (amongst other things) that of the 1,340 women entrepreneurs surveyed in RSA, they employed a massive 8,503 people, mostly women and because of this have an incredible impact across another 50,000 people in their local communities. The multiplier effect of Lionesses.
Lionesses in manufacturing had the largest number of employees with an average of 14 each, and this for us is the most interesting statistic at first glance (we shall be diving deeper over the coming weeks).
If women are such a huge employment multiplier and manufacturing is top of the list, why do so many African governments not start by supporting women in manufacturing more? There is so much interest across the globe in seeing African countries strong, able to stand on their own feet and not having to accept poorly negotiated loans or deals. There is so much foreign aid in the form of low interest loans and even grants and sadly so much Government money wasted in thinking they can just throw money at any problem that comes along. There has to be a more structured approach to this and given the numbers that we are seeing and also from the World Bank and others, with women is where one should and must start.
Some of the world’s greatest honorary Lionesses issued a Statement on Gender Equality in June 2021, they were the global leaders Kristalina Georgieva, Managing Director, IMF; Christine Lagarde, President, European Central Bank; Ursula von der Leyen
President, European Commission; Baroness Minouche Shafik, Director, LSE and then two who must be actual Lionesses, not just honorary - the great Ngozi Okonjo-Iweala, Director-General, World Trade Organisation, and of course the inspirational Vera Songwe, UN Under-Secretary General and Executive Secretary of the Economic Commission for Africa. This ‘Inspiration’ (surely, the collective noun of these incredible women) simply stated (here):
“We have no time to waste. 2021 presents key opportunities, including the Generation Equality Forum and the rethinking of loans and support for the world’s poorest countries, to push forward with new resources and programs. The risks of inaction cannot be overstated. Refusing to economically support women and girls will not just set this recovery back, it will leave our economies more vulnerable to future shocks. Only if we seize on this opportunity to prioritise gender equality can we build a more prosperous world for all.”
One of the recommendations they suggested was: “…governments must reduce the burden of unpaid care work and support better childcare to strengthen women’s labor force participation.” Sounds simple, but both issues we have highlighted before as being an iniquitous burden on women, here.
If we are ever to tighten the elasticity of the relationship between job creation and economic growth, Governments, Development Agencies, Banks and Investors must use and also help this incredible superpower that Lionesses clearly have across the continent to generate good, meaningful and sustainable jobs, by thinking outside the box, by daring to do something different.
Want to lower poverty and increase growth? It might be as simple as just providing free childcare. We know over 1.5 million entrepreneurs who would at least agree this would be a great start!
Stay safe.