Western storytelling, the East African “middle class” and how to account for “politics”

Here we have an interesting paradigmatic story from Der Spiegel, translated from German for their English version, “Up and Coming in Kampala; Africa’s Growing Middle Class Drives Development” by Horand Knaup and Jan Puhl:

Three good anecdotal stories here of successful start-up African businesses generating local jobs and wealth through import substitution with domestic production. They help to grow a domestic consumer market and ultimately look to export as well. One of the two in Uganda got significant assistance from the national government and the Kenyan business got financing from a German international development arm.

She earned her starting capital by importing clothes from the West, but then she began designing her own collections, and soon “Sylvia Owori” was the most popular label among women in East Africa.

Owori has her collection produced by seamstresses in villages. She has trained 200 women and sponsors the purchase of their sewing machines. “When I receive a big order, I can deliver quickly and flexibly,” she says. On the other hand, she says, the women can stand on their own feet when she doesn’t happen to have any work for them.

Her latest creation is a denim laptop bag shaped like the map of Africa. “This bag was once a pair of jeans,” she says. “You threw it into a container for old clothing and sent it to Africa. We made something new out of it and will sell it back to you.” Swedish fashion giant H&M is interested in the bag, and two other Western fashion chains have asked Owori to meet with them in London.

It’s a question of finding new ways to stimulate economic growth. The corrupt oligarchies in many African countries have made money from the export of commodities, but only a fraction of the population has benefited from the proceeds. The growth being generated by Africa’s middle class is more sustainable, say development experts. Much of it is based on the processing of African fabrics, wood and fruits, and it creates jobs.

Good examples of what is going right and working, from two of Africa’s 50+ plus countries. Well done as such.

“She is the epitome of a success story. And success stories are no longer a rarity in Africa, despite its reputation as a continent of poverty and suffering.” Right and important.

But then we get into the broad assertions and big selective extrapolations. “This growth is producing a middle class that’s growing from year to year. According to the African Development Bank, this middle class already includes 313 million people, or 34 percent of the total population.” To say that “this middle class” includes roughly a third of the population of the entire continent is to me quite misleading in the context of this story,

Continue reading

Meanwhile, aside from the famine, business is moving . . .

Upsidedown Freightcar

The latest on financing for the latest iteration of the Rift Valley Railroad, from “African Capital Markets News”:  a mix of public and well-connected private entities will have various debt and equity investments going forward:

The International Finance Corporation (www.ifc.org) and 6 leading international finance institutions provided $164 million in financing to Rift Valley Railways International (www.riftvalleyrailways.com) to rehabilitate the Kenya-Uganda railway today (2 August). The aim is to boost cross-border trade and investment in East Africa. Other key shareholders are Kenya’s TransCentury, which listed on the Nairobi Stock Exchange on 14 July, and Uganda’s Bomi Holdings Ltd, reportedly owned by Charles Mbire. The financing is part of a $287m capital expenditure programme to improve the operating company’s infrastructure and rolling stock.
Other institutions participating in the package include: African Development Bank ($40m), Germany’s KfW Bankengruppe ($32m), Dutch Development Bank FMO ($20m), Kenya’s Equity Bank ($20m), Cordiant’s Infrastructure Crisis Fund ($20m) and the Belgian Investment Company for Developing Countries ($10m). The balance of the funding for the $287 million capital expenditure programme is being contributed by shareholders and generated through operations.
IFC is the largest financier to Rift Valley Railways and provides a $32m loan, of which $10m is already disbursed, and an additional $10m in equity to be committed. RVRI is a portfolio company of Citadel Capital, an Egypt-based private equity firm with $8.7 billion in investments across 14 countries in Africa.

We can certainly hope that this combination of interests and expertise will get the job done this time.

Meanwhile, Time features a story on “The Repatriate Generation” about African business executives leaving the North to return to Africa:

Such bonanzas — opportunities in troubled places with huge needs — are increasingly being sought out by a fast-growing group: Africans who have returned home after years of living, working and studying in the West. Though still a small subculture, African executives who have abandoned high-flying careers on Wall Street, in the City of London and in other financial hubs are becoming a force across the continent, their impact far outstripping their numbers. By moving home, they and others are bucking the trend of generations of Africans who headed west in search of brighter prospects, better education and decent jobs — and stayed abroad for good. Millions of African families have been kept afloat for decades by remittances from relatives working abroad as everything from street cleaners to physicians. Now with economic prospects and, in some cases, political stability improving in Africa while both are declining in the West, some of those relatives have concluded they are better off back home. “There is a momentum among young, upwardly mobile people to come home,” says Rolake Akinola, a Nigerian business analyst with years of work experience in London. “We call ourselves the Repatriate Generation.”

Working on(or over?) the Railroad–“What is emerging as one of Kenya’s most infamous privatisation scandals” and “the new scramble for Africa”

Today’s Corruption News–Education Funds, Rift Valley Railways, Maize and More

The latest on the Rift Valley Railways saga–how business is done in Kenya