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Africa: Fighting the Global Economic Crisis through Private Enterprise, Innovation and Integration

February 9, 2010

  • Sub-Saharan African countries are looking for innovative ways to increase growth.
  • Entrepreneurs are helping lead the way with innovative approaches to trade and exports.
  • Governance initiatives and infrastructure development also are key to staving off the effects of the global crisis.

ADDIS ABABA, February 9, 2010 — At the start of a new decade, Sub Saharan Africa is reeling from the effects of three major global crises – food, fuel and financial – that have reversed many of the economic achievements of the last 10 years and left some growth projections at levels below those of 30 years ago.

While the effects of the most far-reaching of these—the financial crisis—are still being computed, the impact on private capital flows, infrastructure development, commodity prices, remittances and human life is evident.

But, the nations of Africa and their development partners are well on their way to finding responses to the crisis. From Ethiopia to Sierra Leone to Cote d’Ivoire, three stops on Bank President Robert B. Zoellick’s recent eight day trip to Africa, private enterprise is combining with governance initiatives and attention to infrastructure to create a positive climate for growth.

I leave Africa impressed by the actions taken by many of its governments to cope with crisis,” Zoellick said, “and the progress I have seen across the region confirms my belief in Africa's potential to become another source of growth for the world economy.”

Entrepreneurs Boosting Africa’s Growth

Entrepreneur Bethlehem Tilahun is the young founder of SoleRebels shoe factory on the outskirts of Ethiopia’s capital, Addis Ababa. Launched in 2004, the company produces handcrafted shoes from local and often recycled materials, and has risen to become Ethiopia’s leading footwear exporter to the United States. Not hard to see why World Bank Africa Region Vice-President Obiageli Ezekwesili, who traveled with Zoellick to Africa, branded the company "the waste to wealth enterprise".

Tilahun and her employees, often marginalized members of her community who she trains, use the Internet to market products and conduct deals with foreign buyers. The company is the first internationally certified fair trade footwear firm in Ethiopia.

Tilahun, an energetic and passionate 30-something, who started her factory at home and now employs 50 full-time and 75 part-time employees, says her goal is to reach a $1 million sales target before the end of her first decade in operation. But, like Agathe, another female entrepreneur in Cote d’Ivoire, who helps women secure land titles to cocoa farms, property rights and access to credit emerge as one of the top challenges to reaching her goal.

Back in Addis Ababa, the Ethiopian Commodities Exchange (ECX) is an innovative and cutting-edge enterprise that has demonstrated in under two years how trading in key agricultural commodities can transform a traditional and largely informal system into a modern electronic initiative which provides transparent quality and pricing, and connects local farmers, global buyers and consumers.

The ECX opened its doors in April 2008 and is the brainchild of its Chief Executive Officer Eleni Gabre-Madhin, whose entrepreneurial efforts along with Tilahun’s and others’ are helping boost Ethiopia’s economy and steer it through the global economic storm.

Gabre-Madhin, talks about her dream of revolutionizing Ethiopia’s traditional agriculture marketing system by providing “a secure and reliable end-to-end system for handling, grading, and storing commodities, matching offers and bids for commodity transactions, and a risk-free payment and goods delivery system to settle transactions.”

She speaks with pride about having placed Ethiopia on the map as having one of the most refined, domestic, specialty coffee classification and discovery systems in the world, benefitting millions of small-scale producers who have little knowledge of premium beans.

A Systematic Approach to Good Governance

In Sierra Leone, a country that only recently has emerged from violent conflict, the Anti-Corruption Commission (ACC) is poised to give practical interpretation to the much talked-about notion of good governance. Zoellick came away from a meeting with ACC members convinced of the group’s efficacy.

You have one of the most integrated systems for fighting corruption I have seen,” he told energized ACC members. “I admire your capacity and endurance, and would like to take lessons from you to others."

One issue of concern for the Commission is security for its staff and for the body of evidence the commission gathers, which requires storage in secure, permanent facilities. But, commissioners made clear they would stop at nothing to clean up society and bring about the behavioral changes Sierra Leone needs.

We are determined to deal with the systemic issues, not just arrest and lock up people,” ACC commissioners said, as they described a work agenda that includes monitoring and compliance issues, public education and outreach and alliances with parliament, civil society and media.

Infrastructure Development

How African governments handle corruption and other governance matters will determine how they manage the major infrastructure challenges that have crippled much of the region and stymied development. The region has an abundance of sources of energy but remains the least endowed in energy infrastructure. Whether Africa becomes the global economic growth pole will depend largely on what it does to harness energy, through national or regional initiatives.

Zoellick visited two projects that have been created to reach that goal: the Azito gas-fired station in Abidjan and the Bumbuna hydroelectric dam in Sierra Leone. He made note that the dam will not only bring electricity to the majority of homes but could transform Sierra Leone into an energy exporter.

Zoellick made it clear at the start of his trip to Africa that he was there to listen and learn. He heard about initiatives in information and communication technologies that are revolutionizing the development context in some countries, but that need scaling up; about small- and medium-sized enterprises that could expand beyond national borders, achieve economies of scale and find new markets in the region and beyond. He also heard about public and private institutions that are redefining the notion of governance and setting the stage for more transparent and accountable government.