Welcoming the new Saviours- Good luck- you’ll need it.

Development in Africa is getting a new lease of life- after decades of policies and billions of dollars by the World Bank and IMF with varying success. Efforts by NGOs basically turned parts of sub saharan Africa into a big helpless dependent- foreign aid accounts for up to half or more of some African countries' national budgets. Even though one can point to recent economic growth indicators, fact remains, the benefits have occurred to a few and not a majority of Africans. In many places, such as Tanzania, there are little signs of a growing middle class and a huge informal economy still exists. The main coastal city of Dar es Salaam contributes an estimated 85% of Tanzania’s economic activity yet with about 5M people, barely an 8th of the country’s population.

But now a new set of players are getting into the development game bringing a new set of rules with the promise to save Africa. Call it “development 2.0” we now have microfinance banking institutions lending to small scale entreprenuers and targeting women, new social enterprises, foundations and “philanthrocapitalists” with huge fortunes to spend and a new determination and focus. With Western countries reeling from a recession, China, India and the middle east are becoming more and more active in African development as they seek partnerships of mutual interest and bring new models and approaches to providing aid and investment to Africa. Even western donors such as the USA are demanding more transparency and accountability before aid is disbursed and in many cases playing favourites with African countries that “behave” and are making efforts in stamping out corruption.


Suddenly the African development landscape looks different- major recessions like the one we are experiencing creates opportunities for things to be shaken up- consider these points:



People- Brain Drain to Brain overflow

- Migrant workers are not only sending less in remittances back to their homeland developing countries due to the recession but may also return home and use the skills and any leftover capital to build real businesses and bring much needed employment opportunities in the private sector. From former London investment bankers joining African banks or raising development funds for small businesses to Silicon valley engineers building the next ISP or working on mobile banking.

- Talented new graduates from the top schools with less employment opportunities in their countries are turning to emerging markets and considering new career paths- Suddenly a team consisting of Chinese, European and American students in an energy or healthcare startup in Africa is not that far fetched.
I recently met two young American women working in an Tanzania energy startup who are living in the less afluent myananyamara suburb rather than the posh ex-pat heavy areas of Dar es Salaam's oysterbay- their experience and perspective will be very different if they lived in and brought families to the oysterbay peninsula as is the case with many aid development workers seeking a "cushy utopia" lifestyle and risk becoming out of touch with the people thy are trying to save.

Money new sources

- Traditional donor countries are slashing development budgets to focus on their economies- recipient countries are now forced to look for new funding sources from bond issues in capital markets to investments from china and the middle east.

- Private Equity and other investment funds looking for the next growth sectors and markets are now seriously considering investing in Africa.

- Philanthrocapitalism donations have been increasing to Africa. For instance the Gates foundation is disbursing up to $1B a year thanks to the Buffet contribution that is kicking in this year. All this money is good, but makes ZERO difference if the reciepient countries do not have the capacity to absorb these funds due to widespread corruption and incompetence on the ground.

These are just a few areas that will bring both opportunities and challenges to the next phase of African development. While many organizations' marketing and PR outlets will highlight on their successes (they have to in order to raise funds and generate interest), I want to bring balance in the discussion on what is going directly on the ground with development 2.0, I also want this blog to be a discussion resource to anyone new or considering moving to Africa to join this movement- I welcome comments and guest postings. Be warned that this is not the place to just trumpet your successes- I will take a skeptical tone and ask tough questions. So you want to save Africa? There are many reasons why 40+ years of aid has not worked, some of those reasons may form the same obstacles in the next 40 years no matter how novel the approach- the fact is change, especially originating externally, is hard.