In the opening chapter of economist Thomas Piketty’s book, Capital in the 21st Century, which focuses on the growing gap between the rich and poor, he cites the Marikana massacre (a 2012 incident in South Africa) as an example of the huge wealth disparities that exist between shareholders and senior management at the top, and workers at the rockface. he made several arguments suggesting areas where Africa could take steps to reduce the huge gap that exists.
Piketty emphasizes the difference between wealth, which is the net value of your assets, and income, the sum of remuneration for labour and return on assets. Obviously, wealth can be passed from one generation to the next through inheritance. Secondly, he divides society into the have-lots and the have- littles; in the African context there is also the 30% or more of unemployed have-nots who have little or no voice.
Now, to his interesting suggestions…
First, raise the minimum wage: everyone has the right to work for a decent wage and the government should set the minimum wage at a level which ensures this.
However, as we have already seen in Africa’s agricultural sector, higher minimum wages lead to lay-offs, increased automation, higher unemployment and the bankruptcy of vulnerable small businesses.
Across Africa, office blocks, shopping malls, and factories are springing up. In some African countries, international agribusinesses are pushing local peasants aside as they grow and export sugar, coffee, flowers and a host of other agricultural commodities.
Second, every small and medium business should have the right to trade, with decent transport and other infrastructure.
As with mobile-phones, where Africa leapfrogged across the copper divide, Africa’s business ecosystem needs to find a way to replace the orthodox of the nineteenth century with a model that does not depend on governments, trade fairs, bureaucracies and informal channels to trade across the continent and beyond.
Finally, Piketty recommends the creation of a global trade register.
This is not an idea that is going to appeal to African kleptocrats whose families have stakes in everything from European telecommunications companies to plush Californian beach villas. However, it could be another small step in creating transparency and markets access where none exists today.
That’s why we are proud of Kuueza
In fact, just this week, Kuueza digital hub made its way to the city of Kumasi (Ghana) to introduce its new and soon-to-be-launched mobile app to the informal business community.
The most touching aspect is our outreach to the community of physically-challenged business people who run their own shoe-making ventures on a continent where most people with disability beg on the streets. We were proud to see these individuals who refuse to be limited by their physical condition and have taken their future in their own hands.
The big question is: how can these kinds of people have a broader access to market to sell their products, not just in Kumasi, but also in other major cities and across the rest of Africa?
It all seems like yesterday when, in 2015, we first started using our website and word-of-mouth promotion to help African entrepreneurs and businesses sell their products to the United States and also invite American medium-sized businesses looking to build their value chain in Africa.
Now, we have our sights on 2025; a date that seems very far away even though it’s a mere five years away.
So, what’s our latest view on where the world is headed?
Well, in a few brief words: the world will have “too many” people, the majority unemployed; businesses collapsing and shutting their doors, global economy in crisis, climate change and dangerous levels of inequality.
The population of the world continues to grow, as does the average standard of living, increasing the demand for food, water, energy and waste disposal, and placing increasing pressure on the environment.
Certainly, the dramatic decline in global fertility has led to a decrease in the population growth rate from 1.52% per year in 1990 – 1995 to 1.15% in 2010 – 2015. Nonetheless, there is an 80% probability that the world population, now 7.4 billion or more, will increase to between 9.6 and 12.3 billion in 2025.
Relentless productivity improvements are causing rising unemployment. The challenge to provide decent work to young people is a concern for both industrialized and developing countries. The global economy will need to create 600 million productive jobs over the next decade in order to absorb the current unemployment levels and to provide employment opportunities to the 40 million labour market entrants each year.
Paradoxically, while the world’s workforce is growing apace, education systems are failing to provide enough skilled professionals, artisans and managers to meet demand, particularly for the mining, energy, construction and education sectors. This situation is likely to worsen as an ever-shrinking proportion of the world’s population is able to provide the goods and services required by all.
All these issues are placing pressure on private and state social security systems. As a result, national budget deficits are likely to worsen and could lead to default as African businesses, especially small and medium-sized businesses, need to start producing instead of consuming.
Though food supplies have more than kept pace with rising population levels in the past, a combination of biofuels, rising standards of living and climate change, including floods and drought, are stressing agricultural production and leading to significant increases in food prices.
With food already representing 10-20% of developed consumer spending but 65% of developing nation consumer spending, this impacts most on the world’s poor.
Worse still, applying modern agribusiness methods in Africa will drive subsistence farmers off the land.
According to the UNDP, 40 percent of the world’s population could suffer water shortages by 2050. Scientists forecast that there could be no commercial fishing by 2048 as present levels of fishing would cause stocks to decline to less than 10% of maximum catches recorded.
If Africa is to survive in this future, Africa needs to start producing more and earning more from exporting more of its goods. Staying a consuming continent and relying on aid has never worked for the past 50 years, and conditions will remain the same if drastic measures are not taken to take Africa off its current trajectory.
What is the solution?
As Africa’s economy grows, though very slowly, this growth will likely be dependent on buoyant consumer markets in Europe and North America. The growth itself is expected to be uneven within different countries, with the rich growing richer and the poor, poorer.
As the average standard of living in booming economies rises, so too will the number of poor people across Africa; many of them moving from the countryside to unemployment in the city slums as part of a search for a better lifestyle.
More than half the human population became urban by 2008. Cities and towns are now growing at an estimated 1.3 million persons per week. International migration has become a key feature of globalization in the 21st century and 230 million people, 3% of the world’s population, currently live outside their country of origin.
Globalization now comprises the movement of not just physical goods, but also services, finance, people, information and ideas. As a result, the world is becoming ever more interlinked, putting pressure on global, national and local governance systems designed in a previous era by those with power and influence at the time.
As important as it is, there is a need for Africa’s small and medium-sized businesses to increase trade with a proven access to markets to compete with their counterparts in other parts of the world in order to contribute to the socio-economic development of their country.
Technology is already building the future
Technology and digital hubs like Kuueza provide the best hope for solutions to challenges ranging from poor to no access to markets for MSMEs, poor delivery systems, poor packaging and low-quality product.
Technology continues to play an important role in communication, business and improving productivity. The rise of the Internet has made people data rich and information poor, while convergence is leading to the merging of computers, cellphones, hi-fi, TV and other electronic devices, as well as the blending of cable, wireless and satellite communication.
Mobile phones have become the cake and circuses to distract the modern unemployed. The rise of outsourcing services in countries such as India is underpinned by improvements in the global telecommunications infrastructure which Africa has not taken advantage of.
In the financial sector, technology is also allowing stock exchanges of the developed and developing worlds to merge and provide sophisticated trading products. A shift is taking place from traditional money managers to sovereign wealth funds managing the proceeds from huge trade surpluses, hedge funds and private equity groups, all of which are less transparent and relatively unregulated.
In time, technology improvements will also lead to knowledge management jobs being replaced by artificial intelligence.
Africa is on the edge of a precipe
Sub-Saharan Africa is set to be by far the fastest growing region, with a population rising from 1.2 billion today to between 3.5 and 5 billion in 2100.
In the short to medium term, the continent will be prized as a source of minerals, energy (oil, gas, uranium, coal, solar) and arable land rather than for its people. The challenge for its inhabitants will be to avoid corruption while making best use of the rest to educate a fast-growing population and provide an infrastructure so they can produce competitive goods and services, for local consumption and export purpose.
Kuueza is closing the gap between Africa and the world
Finally, changes in how we trade in Africa will have a great impact if technology and the advent of digital hubs like Kuueza could increase the demand for African products. Each African country will be impacted differently by these trends.
For Africa’s people, the biggest drawback will be if the continent is not ready to embrace what has come to stay with the rapid growth of mobile phone usage across Africa and use of a technology that enables simple trade solutions across Africa and beyond that Kuueza a tech start up provide will make a huge impact at the short or long term.
That’s a thumbnail sketch of today’s world and some of the intertwined factors we need to consider. What will Africa be like in 2025 or even 2050? We don’t know. All we can do is scan the mass of data coming our way and try to identify the signposts which might only hint at where we are all headed.
For more information please visit www.kuueza.com to pre-register for the mobile app coming soon on google play and apple store.
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This article was contributed by Maxwell Adew, Founder & CEO of Kuueza, an emerging provider of cross-border trade solutions with a mission to significantly boost the reach and potential of African SMEs.