🔅 New Roads --> Better Diets?
An Artificial North/South Divide & Africa Has Too Many Startups - Not Enough Giants
Good Morning from Cape Town, South Africa!
New Roads, Better Diets? Why Balanced Meals Might Be a Highway Away
A new study from the Center for Development Research (ZEF) has some news for you. It turns out that the best way to help hungry folks in Africa just might be better roads, not forcing every smallholder farmer to grow a grocery store’s worth of crops.
Wait, Roads Can Solve Malnutrition?
Apparently, yes! Researchers at the University of Bonn looked at data from nearly 90,000 households in Ethiopia, Malawi, Niger, Nigeria, Tanzania, and Uganda. Their big takeaway? Having diverse crops on farms does some good, but it’s even more crucial to have decent roads so farmers can get their veggies, grains, and livestock to market—and, by extension, bring home the goodies they don’t personally grow.
Poor roads mean long travel times, spoiled goods, and smallholders stuck in the “grow everything ourselves” mentality—AKA subsistence farming. With better roads, farmers can specialize in the crops that thrive in their region, sell them for profit, then buy whatever else they need. It’s like upgrading from dial-up internet to fiber optics: everyone gets more options, faster.
In short, being near a city with a decent highway might matter more than planting that third variety of kale.
We can’t forget that floods and droughts can ruin harvests (and ruin diets in the process). Also, planting a profitable “cash crop” (like coffee or cotton) can help a family earn more money—money that can buy other foods for a balanced plate.
Africa's Artificial Divide: North vs Sub-Saharan Africa.
Here’s an extract to whet your appetite:
“Today, the debate over whether such constructs [‘North Africa’ and ‘sub-Saharan Africa’] should be retained or abolished continues to be animated by geopolitical rivalries among African countries; domestic political ideologies; geopolitically debased interpretations of the root causes of the contemporary tragedies of migratory movements to the northern coast; influences from various socio-political movements, especially in the US; evolving identities; and even by the great game of football.”
We strongly recommend this article from The Republic, which dissects the history of Africa’s divide, and looks to the future.
Africa’s Business Bonanza: Too Many Startups, Not Enough Giants
According to The Economist, Africa is brimming with entrepreneurs—maybe a bit too brimming. While African leaders are busy high-fiving themselves over the continent’s booming small business scene, there’s a little hiccup: Africa has too many businesses, too little business. Sounds paradoxical? Let’s dive in.
African presidents like Paul Kagame of Rwanda are all about celebrating small and medium enterprises (SMEs) as the “backbone of Africa’s economy.” With 71% of young Africans itching to start their own ventures and 25% of adult women jumping into the entrepreneurial fray, it's easy to see why the praise is pouring in.
But here’s the thing: not all these startups are born from pure passion. Many are fueled by necessity, not choice.
Think of Africa as a hub of entrepreneurship, where everyone’s hustling to make ends meet, but where the real game-changers hardly feature. And who are these game-changers? According to The Economist, they are the big, productivity-packed business/industries.
The Big Firm Blues
While Africa hosts about 345 firms with revenues topping $1 billion (compared to China’s 1,500), there’s a glaring gap. A 2018 report revealed that, excluding South Africa, the continent has only about 60% of the large firms you’d expect given its economic size. And these big players aren’t exactly giants—they’re more like the cozy middle-sized friends at a party. No wonder Africa is the only inhabited continent without any of the world’s 500 biggest firms according to Fortune.
Mass literacy and a skilled workforce could be the secret sauce for the continent’s economic takeoff, but Africa’s got a bit of a recipe problem. While primary-school enrolment has climbed, 60% of 15- to 17-year-olds aren’t in school, and literacy rates for 15- to 24-year-olds lag at around 75%. Compare that to the global average of 90%, and you’ve got a rough patch on your hands.
And whereas African firms are stuck at the bottom of the global list for educated workers, they top the charts when it comes to needing elusive capital and electricity. With less than 10% of small firms tapping into bank financing and eye-popping interest rates averaging 25% (compared to 9% in places like India and Vietnam), borrowing money is about as fun as a root canal. Plus, 78% of firms faced annual power cuts in 2018, costing them an average of 25 days of lost economic activity.
What’s more, transporting goods in countries like Ethiopia and Nigeria costs 3.5 to 5.3 times more than in the U.S. Thanks to a mere 20% road density compared to the global average, getting products from A to B is more of a trek than a trip.
So what’s the solution?
According to The Economist, Africa needs more large firms to brigdge the gap with the rest of the world. Firmst that can drive productivity, innovation, and economic growth. It’s not about shunning SMEs – they’re essential – but about creating a balanced ecosystem where startups can scale into the giants of tomorrow. Think of it as upgrading from a rowboat to a cruise ship – both are useful, but one takes you much further.
Food for Thought
“He who does not ask questions learns nothing.”
— Gabon Proverb
Many Nigerians go into entrepreneurship not out of a desire to solve a problem or fill a gap but as a response to unemployment. They’re tired of waiting for the government and they decide to make their own way.
However, entrepreneurship is not the all-encompassing solution it’s often portrayed as. Nigeria’s business environment is hindered by weak infrastructure, making it difficult for businesses to thrive.
Entrepreneurs face challenges such as a struggling naira, limited access to finance, rising production costs, and high overheads. As a result, many SMEs barely break even, leading to poor wages, substandard products and services, and a struggling customer care industry.
To cut costs, many businesses avoid investing in quality, further exacerbating these issues.
This matter is such a hot topic at all levels of business.