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1. Exporting out of China or out of Africa? Automation versus Relocation in the Global Clothing Industry

Author:
Tilman Altenburg, Xiao Chen, Wilfried Lütkenhorst, Cornelia Staritz, and Lindsay Whitfield
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
The Discussion Paper examines the opportunities that the rising industrial wages in China will bring for Africa. China has been the industrial workbench of the global economy for decades. However, its competitive advantages are waning, particularly for labour-intensive assembly activities in the clothing, shoe, electronics and toy industries. The Chinese government estimates that up to 81 million low-cost industrial jobs are at risk of relocation to other countries - unless China can keep the companies in the country through automation. Against this background, three complementary studies were carried out. The first examines where the automation technology for clothing and footwear production stands today; the second, how clothing companies in China deal with the cost pressure: to what extent they automate, relocate within China or abroad and how great is the interest in Africa as a production location. The third part is devoted to Africa’s competitiveness in clothing assemly, with empirical findings from Ethiopia and Madagascar. The Discussion Paper shows that the manufacture of clothing can already be robotized today, but that for sewing, robotization will probably remain more expensive than manual labor in the next 15-20 years. China’s companies are investing heavily in the automation of all other production processes and at the same time shifting production to neighbouring Asian countries. In Africa, only Ethiopia is currently competitive in the manufacture of clothing, and here too there are significant institutional difficulties in absorbing large amounts of direct investment.
Topic:
Industrial Policy, Labor Issues, Foreign Direct Investment, Exports, and Automation
Political Geography:
Africa, Europe, Germany, Ethiopia, and Madagascar

2. African Jobs in the Digital Era: Export Options with a Focus on Online Labour

Author:
Elvis Melia
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
This study asks what impact the Fourth Industrial Revolution will have on job creation and catchup development in Sub-Saharan Africa over the coming decade. Can light manufacturing export sectors still serve African development the way they served East Asian development in the past? If factory floor automation reduces the need for low-cost labour in global value chains, can IT-enabled services exports become an alternative driver of African catch-up development? I present case study evidence from Kenya to show that online freelancing has become an interesting sector, both in terms of its growth trajectory, and in terms of worker upward mobility in the global knowledge economy. As life everywhere moves further into the digital realm, and global internet connectivity between Africa and the rest of the world grows, more and more young Africans who stream onto the labour market may find work in the world of global online freelancing. I discuss the building blocks needed to make online work a sustainable vehicle for African catch-up development in the years ahead.
Topic:
Development, Science and Technology, Labor Issues, Internet, Exports, Manufacturing, and Industry
Political Geography:
Kenya and Africa

3. Digitalisation and its Impact on SME Finance in Sub-Saharan Africa: Reviewing the Hype and Actual Developments

Author:
Sabrina Disse and Christoph Sommer
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
The vast majority of enterprises worldwide can be categorized as small and medium-sized enterprises (SMEs). They play a crucial role in providing a livelihood and income for diverse segments of the labour force, in creating new jobs, fostering valued added and economic growth. In addition, SMEs are associated with innovation, productivity enhancement as well as economic diversification and inclusiveness. However, almost half of the formal enterprises in low and middle-income countries (LMICs) are financially constrained, meaning that SMEs’ financing needs are unserved or underserved. Digitalisation is often seen as game changer that overcomes the challenges of SME finance by capitalising on the reduced transaction costs, the broader access to more and alternative data and the new customer experience shaped by convenience and simplicity. This paper aims to answer the question what the role of digital financial instruments in SME finance in Sub-Saharan Africa is. It reviews and discusses the opportunities and challenges of digital advances for SME finance in general and of three specific financing instruments, namely mobile money (including digital credits), crowdfunding (including peer-to-peer lending) and public equity. It contrasts the hype around digital finance with actual market developments and trends in Africa. Main findings indicate that even though digital advances have led to impressive growth of certain digital finance instruments, it has not triggered a remake of the financial system. Digitalisation of the financial system is less disruptive than many expected, but does gradually change the financing landscapes. Some markets have added innovative and dynamic niches shaped by digital financial services, but new digital players have in general not replaced the incumbents. Furthermore, the contributions of digital instruments to finance in general and SME finance in particular are still very limited on the African continent compared to either the portfolio of outstanding SME finance by banks or the capital raised by similar innovative instruments elsewhere in the world. Many uncertainties remain, most importantly the response of regulators and responsible authorities. They need to provide a suitable legal framework to strike a balance between the innovation and growth aspiration of the digital finance industry and the integrity and stability of markets and the financial system at large. Also regulators have to safeguard data privacy and cybersecurity and prevent illicit financial flows, bad practices around excessive data collection, intransparency and poor reporting as well as exploitation of vulnerable groups with limited financial literacy. Governments also have to address the increasing gap towards those left behind by digital finance due to issues with ownership of a digital device, mobile network coverage and the internet connection or issues of basic digital and financial literacy.
Topic:
Development, Science and Technology, Digital Economy, Business, Economic growth, and Diversification
Political Geography:
Africa

4. The Trade Effects of the Economic Partnership Agreements between the European Union and the African, Caribbean and Pacific Group of States: Early Empirical Insights from Panel Data

Author:
Frederik Stender, Axel Berger, Clara Brandi, and Jakob Schwab
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
This study provides early ex-post empirical evidence on the effects of provisionally applied Economic Partnership Agreements (EPAs) on two-way trade flows between the European Union (EU) and the African, Caribbean and Pacific Group of States (ACP). Employing the gravity model of trade, we do not find a general EPA effect on total exports from ACP countries to the EU nor on total exports from the EU to ACP countries. We do, however, find heterogeneous effects when focusing on specific agreements and economic sectors. While the agreement between the EU and the Caribbean Forum (CARIFORUM), which concluded several years ahead of the other EPAs in 2008, if anything, reduced imports from the EU overall, the provisional application of the other EPAs seems to have at least partly led to increased imports from the EU to some partner countries. More specifically, the estimation results suggest an increase in the total imports from the EU only in the Southern Africa Development Community (SADC) EPA partner countries. On the sectoral level, by comparison, we find increases in the EU’s agricultural exports to SADC, Eastern and Southern Africa (ESA) and the Pacific. Lastly, in the area of manufactures trade, we find decreases of exports of the ESA and SADC countries to the EU, but increases in imports from the EU into SADC countries. While this early assessment of the EPA effects merits attention given the importance of monitoring future implications of these agreements, it is still too early for a final verdict on the EPAs’ effects and future research is needed to investigate the mid- and long-term consequences of these agreements.
Topic:
International Relations, Development, International Cooperation, Regional Cooperation, Treaties and Agreements, Manufacturing, and Trade
Political Geography:
Africa, Europe, South Africa, Caribbean, Asia-Pacific, and European Union

5. Socially Responsible Public Procurement (SRPP) in Multi-Level Regulatory Frameworks: Assessment Report on Policy Space for SRPP Regulation and Implementation in Germany and Kenya

Author:
Tim Stoffel
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
Public Procurement is a highly regulated process ruled by a complex legal framework. It comprises not only national but also, increasingly, sub- and supranational regulations, giving rise to a multi-level regulatory governance of public procurement. The integration of sustainability aspects into public procurement, as called for in goal 12.7 of the Sustainable Development Goals (SDGs) of the Agenda 2030, needs to take this multi-level character into account. This reports focuses on social considerations, which are a central part of sustainable procurement – whether with a domestic focus or along international value chains. Social considerations have been somewhat neglected in Europe, whereas they feature prominently in procurement regulations in many countries of the Global South, especially in Sub-Saharan Africa (SSA). The advanced process of regional integration in the European Union (EU) and the progress made towards integration in some regional economic communities in Sub-Saharan Africa call for deeper analyses of the influence of the higher levels of the regulatory framework on the lower levels. The question is whether public entities, from the national down to the local level, are required or at least have the option to integrate socially responsible public procurement (SRPP) into their procurement processes and tenders, or at least have the option to do so. This report is conducted as part of the project “Municipalities Promoting and Shaping Sustainable Value Creation (MUPASS) - Public Procurement for Fair and Sustainable Production”, implemented by DIE in cooperation with Service Agency Municipalities in One World (SKEW) with funds from the Federal Ministry of Economic Cooperation and Development (BMZ) and compares public procurement in Germany and Kenya. In both countries, the multi-level regulatory frameworks allow for SRPP regulations and practices ar the national and sub-national levels of government. There is, however, an implementation gap for SRPP in Germany and Kenya that appears to be independent from the specifics of the respective regulatory framework. To tackle this, supportive measures, such as capacity building, are key. Furthermore, Regional economic communities, such as the EU and the Common Market for Eastern and Southern Africa (COMESA), can play a role in promoting SRPP, even without introducing mandatory provisions. At the other end of the multi-level regulatory spectrum, municipalities in the EU had and have an important role in SRPP implementation, that might be replicable by sub-national public entities in Kenya and other contexts.
Topic:
Development, Governance, Regulation, and Sustainable Development Goals
Political Geography:
Kenya, Africa, Europe, and Germany

6. The Impact of Information and Communication Technologies on Jobs in Africa: A Literature Review

Author:
Elvis Melia
Publication Date:
01-2019
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
In the past two decades, Africa has experienced a wave of mobile telephony and the early stages of internet connectivity. This paper summarises recent empirical research findings on the impact that information and communication technologies (ICTs) have had on jobs in Africa, be it in creating new jobs, destroying old jobs, or changing the quality of existing jobs in levels of productivity, incomes, or working conditions. The paper discusses various channels in which ICTs can impact jobs: In theory, they have the potential to allow for text-based services platforms that can help farmers and small and medium-sized enterprises (SMEs) become more productive or receive better access to market information; mobile money has the potential to allow the most vulnerable workers more independence and security; and the internet could allow women, in particular, to increase their incomes and independence. This literature review examines what rigorous empirical evidence actually exists to corroborate these claims. Most of the studies reviewed do indeed find positive effects of ICTs on jobs (or related variables) in Africa. On the basis of these findings, the paper reviews policy options for those interested in job creation in Sub-Saharan Africa. The paper concludes by highlighting that these positive findings may exist in parallel with negative structural dynamics that are more difficult to measure. Also, the review’s findings - while positive across the board - should be seen as distinct for ICTs in the period of the 2000s and 2010s, and cannot easily be transferred to expect similarly positive effects of the much newer, Fourth Industrial Revolution Technologies (such as machine learning, blockchain technologies, big data analytics, platform economies), which may produce entirely different dynamics.
Topic:
Development, Science and Technology, Labor Issues, Women, Internet, Economic growth, Political Science, and Literature Review
Political Geography:
Africa

7. Migration: Solid Nations and Liquid Transnationalism? The EU’s Struggle to Find a Shared Course on African Migration 1999-2019

Author:
Irene Schöfberger
Publication Date:
01-2019
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
The European Union (EU) has been struggling to find a shared course on African migration since the entry into force of the Schengen Agreement (1995). It has done so through two interrelated processes of negotiation. Firstly, parties have negotiated narrative frames about migration and, in particular, whether migration should be interpreted in terms of security or in terms of development. Secondly, they have negotiated internal and external migration policies, that is, how migration should be managed respectively inside the EU (based on cooperation between EU member states) and outside it (based on cooperation with third states). In times in which narrative frames increasingly shape policy negotiations, it becomes very important to analyse how policymakers negotiate narrative frames on migration and how these shape policy responses. However, such an analysis is still missing. This discussion paper investigates how European states and institutions have negotiated the relation between EU borders and African mobility between 1999 and the beginning of 2019. It focusses in particular on how the process of negotiation of migration policies has been interrelated with a process of negotiation of narrative frames on migration. It does so based on an analysis of EU policy documents from 1999 to 2019 and on interviews with representatives of European and African states and regional organisations. Two major trends have characterised related EU negotiation processes: migration-security narrative frames have strengthened national-oriented and solid borders-oriented approaches (and vice versa), and migration-development narrative frames have strengthened transnational-oriented and liquid borders-oriented approaches (and vice versa). Since 1999, the European Council has mostly represented security- and national-oriented approaches, and the European Commission has mostly represented development- and transnational-oriented approaches. The two competing approaches have always been interlinked and influenced each other. However, in the last years, security-oriented national and solid border approaches have gained prominence over development-oriented transnational and liquid border approaches. In particular, the Commission has progressively mainstreamed national objectives in its transnational actions and security concerns in its development measures. Prioritising security over transnational development has augmented inequalities, in particular at the expenses of actors with scarce political representation in Africa and the EU. Such inequalities include increasing migrant selectivity and wage dumping.
Topic:
International Relations, Development, International Cooperation, Migration, History, and Negotiation
Political Geography:
Africa and European Union

8. Comparing Global Trends in Multidimensional and Income Poverty and Assessing Horizontal Inequalities

Author:
Francesco Burchi, Daniele Malerba, Nicole Rippin, and Claudio E. Montenegro
Publication Date:
01-2019
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
The 2030 Agenda has provided new impetus to two facets of the struggle for poverty alleviation, which is a central goal of the international development community. First, poverty is no longer viewed strictly in monetary terms, but rather as a multidimensional phenomenon. Second, the need to reduce poverty for different social groups and not just at the aggregate, national level is explicitly recognised. Against this background, this paper has three objectives: (1) to analyse the trends in multidimensional poverty in low- and middle-income countries, (2) to explore rural-urban differences in poverty over time, and (3) to assess the validity of the claim that there has been a feminisation of poverty. The analysis relies on a new indicator of multidimensional poverty, the Global Correlation Sensitive Poverty Index (G-CSPI), that incorporates three key components: education, employment and health. The G-CSPI has several methodological advantages over existing measures, including that it is an individual rather than a household-level measure of poverty, which is crucial for gender-disaggregated analysis. Regarding aggregate trends, this paper shows that both income poverty and multidimensional poverty fell between 2000 and 2012. However, the decline in (extreme) income poverty in percentage terms was twice as large as the decline in multidimensional poverty. There is significant heterogeneity in the results across regions. Multidimensional poverty declined the most in Asia, converging towards the relatively low levels of Latin America and Europe, while sub-Saharan Africa’s slow progress further distanced it from other regions. These findings point to the existence of poverty traps and indicate that more efforts are needed to eradicate poverty. Regarding the urban-rural comparison, our analysis shows that poverty is predominantly a rural phenomenon: the rural G-CSPI was more than four times the urban G-CSPI. This difference remained nearly constant over time. As for the third objective, we find no gender bias in 2000 at the global level. This contrasts with the claim made in 1995 in Beijing that 70 per cent of the poor were women. However, we find that multidimensional poverty declined more among men (-18.5 per cent from 2000) than women (-15 per cent), indicating a process of feminisation of poverty. This was triggered by the decline in employment poverty, which was much slower among women. As most existing studies conclude that there was no evidence of the feminisation of poverty, this finding is new to the literature.
Topic:
Gender Issues, Poverty, Inequality, Urban, and Rural
Political Geography:
Africa, Europe, Latin America, and Global Focus

9. South Africa’s Changing Role in Global Development Structures – Being in Them but Not Always of Them

Author:
Elizabeth Sidiropoulos
Publication Date:
01-2019
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
South Africa’s engagement in global development structures has evolved since 1994, when the country re-entered the international community. The historical philosophical underpinnings of the African National Congress, the governing party, aimed to reaffirm the country’s place in the Global South and African firmament after the end of apartheid. This understanding is necessary in the context of South Africa’s priorities over the past 25 years, not least in the development debates. The last two decades have seen significant attempts to develop global norms that tackle the serious developmental challenges faced by developing countries. The paper explores these initiatives and divides them into three streams – those undertaken by the United Nations, those begun by the Development Assistance Committee of the Organisation for Economic Co-operation and Development (OECD-DAC), and those that may be understood as part of club governance processes (such as the G20, the BRICS (Brazil, Russia, India, China, South Africa), and the India-Brazil-South Africa Dialogue Forum (IBSA). South Africa’s engagement in these global development structures is analysed, along with its contribution to the evolution of African agency on the issues of global development. South Africa has strongly criticised existing power relations while undertaking strategic engagements with the North, centred on the vision of an African renaissance and the New Partnership for Africa’s Development initiative. The country has consistently argued that Northern aid cannot be put on the same platform as South-South Cooperation as they have different origins. Other African states and continental institutions have also ramped up their engagement on global development and development cooperation in recent years, which the paper also explores. While South Africa has always identified Africa as a core pillar of its foreign policy, its interests have not always cohered with those of the rest of the continent. Lastly, the paper explores possible avenues that South Africa might pursue in the current polarised multilateral environment. Its biggest challenge is the tension regarding its Global South identity, which has to balance its commitment to African issues and institutional processes, and its positioning via its membership of the BRICS as an emerging power that seeks to contest the current global power configurations.
Topic:
Development, United Nations, Multilateralism, and Economic Development
Political Geography:
Africa and South Africa

10. The Influence of EU Migration Policy on Regional Free Movement in the IGAD and ECOWAS Regions

Author:
Clare Castillejo
Publication Date:
01-2019
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
Establishing free movement regimes is an ambition for most African regional economic communities, and such regimes are widely understood as important for regional integration, growth and development. However, in recent years the EU’s migration policies and priorities in Africa - which are narrowly focused on stemming irregular migration to Europe – appear to be in tension with African ambitions for free movement. This paper examines how the EU’s current political engagement and programming on migration in Africa is impacting on African ambitions to establish free movement regimes. It focuses first on the continental level, and then looks in-depth at two regional economic communities: The Intergovernmental Authority on Development (IGAD) in the Horn of Africa, and the Economic Community of West African States (ECOWAS). The paper begins by examining how free movement has featured within both EU and African migration agendas in recent years, describing how this issue has been increasingly sidelined within the EU’s migration policy framework, while receiving growing attention by the African Union. The paper then discusses the impact of EU migration policies and programmes on progress towards regional free movement in the IGAD region. It finds that the EU is broadly supportive of efforts to establish an IGAD free movement regime, although in practice gives this little priority in comparison with other migration issues. The paper goes on to examine the EU’s engagement in the ECOWAS region, which is strongly focused on preventing irregular migration and returning irregular migrants. It asks whether there is an innate tension between this EU agenda and the ambitions of ECOWAS to fully realise its existing free movement regime, and argues that the EU’s current engagement in West Africa is actively undermining free movement. Finally, the paper discusses the differences between the EU’s approach to migration and free movement in these two regions. It offers recommendations regarding how the EU can strengthen its support for free movement in both these regions, as well as more broadly in Africa.
Topic:
Development, Migration, Regional Cooperation, and Economic growth
Political Geography:
Africa, Europe, and European Union