P 31: Sustainable investments in Africa: creating synergies of profits, people and planet

Sustainable investments in Africa: creating synergies of profits, people and planet

Dr. Karin Wedig, Regional Chief Economist Africa, GIZ
Dr. Matthias Rompel, Head of Division Southern Africa, GIZ

Short abstract:

Poverty rates are decreasing, but inequality is increasing in many African countries – aggravated also by the effects of climate change. The panel discusses different pathways to achieve synergies between investors’ interest, local people’s demands for decent jobs and the necessity for transforming economies in ecologically sustainable ways.

Long Abstract

Poverty rates in Africa are going down, but inequality rates are among the highest in the world and especially in African countries with fast economic growth, inequality is increasing even further. Simultaneously, the effects of climate change are threatening to aggravate inequality, to endanger livelihoods, and reduce living standards for large parts of the population at an unprecedented speed. At the same time new development policy agendas have emerged which put the promotion of investments and job creation in African countries at its core. Against this background, the drive to increase investment in Africa requires an intensive focus on creating synergies between investors’ interest in profits, local people’s demands for decent jobs and the necessity for transforming economies in ecologically sustainable ways. This panel discusses different pathways to achieve such synergies at the level of regional economic development initiatives, national investment strategies, sector specific development plans and individual investment projects. Drawing on current debates about the structural transformation of African economies, as well as relevant project examples from international cooperation, the panel seeks to illuminate and discuss in how far existing strategies for investment promotion, including approaches that form part of bi- and multilateral initiatives, address the key challenges for socially and ecologically sustainable investment on the continent. This includes a critical reflection of the current focus on FDI, which on the one hand helps to mobilize muchneeded private sector capital, but on the other hand poses significant challenges for locally owned economic development, because the creation of an investment environment that is  conducive to foreign investors is likely to put domestic investors at a disadvantage. The panel aims at critically reflecting current strategies for economic transformation and illuminates potential solutions that adapt existing concepts and theories in a context-specific manner.

01 Debelo Diyana Jetu: Land use, Utilization and Challenges of Real Estate Investments in Oromia Towns Surrounding Addis Ababa, Ethiopia

Recent years have witnessed an increasing interest in real estate investments. Economic efficiency and productivity permit to convey land to investors who would enhance the economic and social utility of the land which benefits not only the individual developers but the society at large. Kept idle or underutilizations of investment land hampers expected economic developments. There were high concentrations of modern investments and high amounts of urban land transfer for this service were witnessed in the study area. However, the study that reveals the amounts of land transferred to investments, their status of land use as well as challenges to govern land utilization's was hardly available. This paper assessed the land use and utilization of real estate investments and challenges in the study area by hypothesizing under and unutilized land which was acquired for real estate investment have created significant and serious negative impacts on political- economic of the towns in the study areas. For this study,  secondary data from selected governmental agencies, books, articles and reports were gathered; 4 officials of the towns were interviewed to collect primary data were the methods this research followed. The results of this research indicated that although about 1160 hectors of urban land transferred for investments and 666.87(57.5%) utilized and 492.90(42.5%) kept idle. The findings further identified that there were challenges of capacity, lack of awareness, temptation of speculations and lack of law enforcement. Therefore, the researcher recommends, effective organizational structures with have sufficient capacity to monitor investment lands to achieve economic efficiency and environmental sustainability from it.

Debelo Diyana Jetu (MA in Economics, MSc. in Land Administration and Management focusing to Real Property Valuation and Currently PhD candidate in Land Policy and Governancce at Bahir Dar University and DAAD scholarship holder) is a Lecturer and Researcher of land Administration and Management at Ambo University, Ethiopia.

02 Frauke Banse: Foreign direct and portfolio investments in Africa - a contribution to rising inequality and externally dominated development strategies

The input wants to shed light on portfolio investments of institutional investors to finance the SDG - as suggested in the Compact with Africa or in the Maximizing Finance for Development Agenda of the World Bank.

It will be argued that these investments lead to a dramatic increase of social inequality - in the host countries of investment as well as globally.

Additionally, it will be argued that a strong focus on Foreign Direct Investment (FDIs) is detrimental for sustainable development strategies in Africa: in order to attract FDIs, investment rules are adopted according to the demands of external investors. These policies tend a) to make African societies economically and politically depending on FDIs and b) to crowding out domestic capital and therefore hamper a domestically rooted development strategy.

Frauke Banse is a political scientist and lecturer at the University of Kassel. Her research and teaching addresses the political economy of development policies, especially on the African continent.

03 Carolin Hulke: Unstable institutions - stable inequalities? The role of collective and state dynamics in the emerging horticulture value chain in Namibia`s periphery

Despite the fact that small-scale farmers are significant contributors to the global demand for food, they often remain disconnected from technological and organisational upgrading and therefore from global markets. Behind the background of climate change, however, this actor group is likely to face increasing pressures in regard to food security and market access and thus is highly exposed to poverty. Scholars therefore demand for critically looking at local impacts of changing global dynamics and interlinkages to regional economies to understand rural development patterns and resulting inequalities. Nonetheless, regional value chain conceptualisation, empirical examples and political implications remain underrepresented. We address this gap by examining unintended side effects of top-down value chain policies in the agricultural sector aiming at the integration into global economic networks but actually (re-)producing regional inequalities in Namibia`s periphery – the Zambezi region. The central aim of this paper is to unpack enabling and constraining mechanisms of such policies on the one hand and the response of small-scale horticulture farmers and regional lead firms on the other for the emergence and consolidation of the horticulture value chain. This case study conveys the central message that agricultural value chains must be strengthened on a regional level prior to venturing into domestic or even international markets. We provide evidence for the importance of local, bottom-up collective attempts both by producers, input-suppliers and distributers for regional value chain consolidation. The findings contribute to the political debate on how new sustainable agrarian pathways in peripheral regions can be made, considering the potential of endogenous institutions compared to governmental facilitation and regulation. The gained understanding of intra-regional inequalities is key in bringing peripheries closer to core areas and their markets and counteracting increasing societal discontent towards formal institutions.

Carolin Hulke is a research fellow at the University of Cologne, Institute of Geography since 2017 and associate to the multi-disciplinary research project “Future Rural Africa” (CRC-TRR228/1) where she is conducting her PhD research on southern African agricultural value chains and rural development.

04 Dr.Umar Kabanda & Mr.Corti Paul Lakuma: Foreign Direct and Public Private Partnership Investments for Inclusive and Sustainable Reconstruction of Uganda amidst Covid-19 pandemic

Public and Private Partnership (PPPs) in Uganda is a new growing arrangement between the government and the private sector. PPPs facilitate the provision of public service, including public infrastructure and related services at a competitive cost. PPPs also utilize public sector enterprise and finance reducing the user cost, delivery time, and risks inherent in service deliver and infrastructure project development. This paper unveil how PPPs can leverage Foreign Direct Investment (FDI) to contribute to a more inclusive and sustainable recovery of Uganda amidst covid-19 pandemic. The paper will make effort to characterize how PPP approaches can be a mechanism for attracting employment-intensive and ecologically sustainable FDI in Uganda. Specifically, the paper will pay attention to investments that promote skill intensive attributes, facilitate green tech transfer and promote inclusive access to infrastructure. A qualitative methodological approach with both primary and secondary data will be deployed in the study. Interview guides will be used for primary data collection. Key Informant Interviews will be conducted with key stakeholders.

Mr Corti Paul Lakuma is an adviser to governments and international organizations on macro-fiscal institutions, tax policy and administration and the impact of COVID-19 on Labour, Employment and Productivity. Dr.Umar Kabanda is a Research Associate at the Economic Policy Research Centre and an ad- hoc Advisory Working Group Member to Study the Social-Economic impact of Covid 19 for Africa under the Africa Scientific, Technical and Research Commission of the African Union Commission.