KM & Economic Challenges

Knowledge Management for Revealing Modernity in Africa: A New Strategy

Jacques Hamel — Tue, 29 Jun 2010 02:42:42 -0600

Africa is perhaps the most culturally imaginative and creative region in the world. It is extremely diversified, rich in talents and ingenuity with unlimited resources and potential. It has colonized the planet and it enriches humanity through inimitable arts. Yet, one African out of two lives in dismal human conditions. And despite spectacular progress here and there, it also remains profoundly socially and culturally conditioned, corrupted, domesticated and debased by two self-inflicted intellectual and ritual servitudes – koranic and evangelical - and overwhelmingly regimented, disciplined and deceived by a host of indigenous erroneous beliefs, faulty dogmas, half-truths, intoxicating mythologies, life-denying superstitions, theological entrappings, mystifying fictions, unknown foundational assumptions, pipe-dreams, fantasies, charlatanisms, junk science and a flood of nonsense. It is a region, in comparison with other regions, that is excessively possessed, framed and misled by the unsustainable dearest fallacies, which keep part of it firmly into the darkness of ancient times. So what is needed is to make room for some sustainable, subversive and seditious ideas for the way forward, building on the authority of self-imposed scientific and technical rationality, keeping in mind that reason is before all an instrument of manipulation, deception and cunning, and on the blurred ruins of western modernities, born out of revolts against outdated and illegitimate wicked religious and nasty political powers.

The immense power of science should be directed at the ‘re-Africanization’ of Africa – a region which should be purged from the worthless rubbles of history - by submitting blind religious faith and traditional folkloric loyalty to the criticism of reason and move Africa from the oppression of ancient prejudices to the tyranny of modern ‘neo-Socratic’ rationality.

In this regard African policy-makers should recall the ideals of the French Revolution: down with paternalistic, autocratic and despotic kings and fear-mongering, deceitful and fraudulent merchant-priests. Translated into this region at the present time - obscured and disfigured by foreign metaphysical symbols - on top of the African agenda freedom thinkers, lovers and fighters should put (1) ‘deprivatizing, defragmenting and civilizing African states’ and (2) ‘desacralizing, secularizing and decolonizing African cultures’, for a less totemic, more cosmopolitan, non-Abrahamic, truly enlightened, scientifically-informed and much less patriarchal self-determined and self-empowered post-colony, in search of the superior genuine and purified meta-African, achieving the highest human possibilities.

Science, which should neither be demonized, idolized or worshiped, has never been the forte of the spiritually contaminated African human animal and can never be under current pre-modern overreligious knowledge systems, particularly science as a way of thinking and as a method of evidence and reasoning, that, if allowed to run free, would certainly transform the very cultural underpinning and identity of the continent. The modernization of these old-fashioned systems, as the backbones of any mode of modernity, requires in priority the modernization of our mental and intellectual costumes. This process is essentially the passage from closed, self-confirming, faith-based, customary, totalizing or terrorizing knowledge systems – propagated by bigoted and barbarous ecclesiasts and mysterious ‘witch-doctors’ - to essentially liberal, falsifiable, facts-based, scientifically-established, technically-proven and innovative knowledge systems (not a single new god in the last 1000 years!!). In these uninhibited systems scientific knowledge can be construed as a theory of the real and as a technology of truth and understood as the epistemological foundation of any form of Afro-modernity. It is also the passage from the ‘Book of Scripture’ to the ‘Book of Nature’ and from the submission to the white man’s colonizing gods to the more authentic African stuffs.

The key to an African revival or Renaissance is the breaking of the reigning hegemonic order, basically regulated and sustained by Islam and Christianity – two medieval phallocratic backward solitudes and perverted obscurantist establishments – living in the secluded past, thriving on holy lies, absurd fabrications, fears, mirages, delusions, false hopes and subservient obedience and, genealogically, on the non-African narcotics, values and moralities of ancient middle Eastern ‘slave’ mindsets and worldviews.

Historically, science has proven to be too toxic, troubling, unsettling or destructive for a region whose knowledge systems are plagued with spirituo-, mystico-, magico-, abrahamo-, euro- and phallo-centricity, that excessively seeks comfort in historical debris, bogus revelations, pseudo prophecies, imaginary deities, ancestors’ spirits, phony limbos, made-up angels, mind-boggling miracles, wonderful heavens, amazing demons, implausible resurrections…and other strange and unconscious chimeras, taboos and biases, providing ample material for Freudian theses. It is a region that fell prey to a gigantic fraud and misfortune and that babbles abusively in the invention of hypothetic other-worlds and after-lives, which confines the minds, poisons or vampirizes life, drags Africans outside nature and denies or weakens this worldly existence. It also wears down the natural self, consumes time and precious resources, drains valuable energies, devalues the body, camouflages the discovery of the earth, lessens control over natural environments and erects interreligious barriers, which split communities and undermines Pan-African solidarity. Uncovering an original Afro-modernity, distinct from the North-Atlantic style, requires liberating and supporting the few progressive, autonomous, scientific, secular and free thinkers on the continent, which entails unashamedly blaspheming in every meeting, on every wall, on every CoP, network and blogging site, with an unorthodox radical neo-narrative.

Science in Africa has to become defiantly offensive and utterly heretical and sacrilegious to be effective and win over the two great non-African pathetic phallocracies that deplete the African spirit and vitality and dampen African innovation, as the current state of a self-alienated region amply demonstrates. Muslim and Christian cosmic visions and phantasms, masquerading as divine revelations, are not helpful and absolutely not needed in Africa, as the degree of human development of Finland, Japan and Singapore, for example, abundantly demonstrates, for they constitute insidious obstacles to cognitive development and to the emergence of scientific ways of constructing and ordering realities. These anachronistic vestigial phallocracies, oppressive machineries of churches and mosques and institutionalized captive systems of mental cruelty, where escape is nearly impossible or statistically insignificant, flourishing on selling the shameless notion of personal immortality, impact sublimely and negatively on all aspects of African life, including in unsuspected places, such as in agriculture where repeated long periods of fasting, numerous religious holidays, prayers for rain, faith in providence, belief in humans as supernatural beings, women’s banned inheritance and ownership of land, fear of ungodly bio-engineering, dismissal of scientific facts and rejection of common-sense truths, etc. are contributing to hunger, poverty and underdevelopment. They also impact positively in many respects as they fill a basic human need and provide some soothing intelligibility to a fundamentally incomprehensible tragic world.

Part of the solution, in addition to economics and politics, for going beyond the trivial, superficial realities, entrenched mental habits, close-mindedness, demagogueries, populist pomposity, stubborn views, narrow provincialism, conventional system of thought, confounding appearances, mythical taming canons, self-deceptions, self-flagellation, wishful thinking, intellectual torpor, inflationary rhetoric, circular or tautological arguments, feel-good meetings and ceremonial entertainment, is to become compassionately disrespectful of long-established authorities, roll Imperial-Doctrinaire-Contemptuous Islam and Hebraic-Pauline-Constantinian-Roman Christianity out of Africa – two proselytizing religions of decadence - and battle magical witchcraft and mystical shamanism, which would open the way to superior insight, understanding and awareness and to a distinctive version of Afro-modernity, honoring unbelievers and infidels. This paradigmatic shift toward modern ways of knowing and acting requires championing the scientific method, the rule of technique and innovation as well as promoting decisive scientific arbitrations, increased technical mediations and a redefinition of STI’s relationships with religious, cultural, social and economic life. For this shift to occur there is a need to better appreciate modern science, not as a Christian crime, but as a method of both calculative and subversive thinking and as a means of achieving the systematic unmasking and renovation of conventional / medieval / pre-modern realities. This call for re-cosmologizing, re-mythologizing, ‘re-prophetizing’, re-charlatanizing and re-directing the evolution of a mutilated empirical reality toward a truly ‘African’ future, emancipated from the sacred relics of a convoluted history.

African science policy makers have to design sustainable visions, strategies and policies to let the scientific spirit out of the bottle, fight medievalism, drive a new relationship between Africa and the emerging modern cosmos, forge a new engagement with the naked world, de-technocratize the mostly empty development discourse in science and practice the science of the ‘hammer’.

Jacques L Hamel
Scientific Affairs Officer
UNECA
Profile: http://www.linkedin.com/in/jacqueshamel
jachamel@gmail.com

KM & Economic Challenges

Will Knowledge ‘R’ us (not “Knowlege 'R' ours”) shape the future of knowledge and KM?

Md Santo — Fri, 09 Apr 2010 08:04:48 -0600

Will Knowledge ‘R’ us (not “Knowlege 'R' ours”) shape the future of knowledge and KM?

By : Dr Md Santo – http://mobeeknowledge.ning.com

The nature of Homo Sapiens comprising three knowing tools components. The first is Peripheral Nerve System or Human Senses including our Autonomic Nerve System representing Human Knowledge with Lower Consciousness (KLC). The second is Central Nerve System or Mind Brain representing Human Knowledge with Medium Consciousness (KMC). The third is Human Consciousness DNA representing Human Knowledge with Higher Consciousness (KHC). If it is postulated that nature of Knowledge Management (KM) derived from the nature of Human or we could say Human System Biology (HSB)-based KM, then we will observe that KM Tools mainly generated from KLC, KM Process Framework generated from KMC as well as KM Standards (culture and value management) generated from KHC respectively ( http://mobeeknowledge.ning.com/forum/topics/brief-description-of-our )
Consequently Knowledge which is located at the domain of DIKW continuum model as commonly believed has a narrow meaning. Hence, I suggested to separate DI with KW considering each is an entity into DI – KW model to give emphasize the paradigm I’ve just mentioned above (http://mobeeknowledge.ning.com/forum/topics/blooms-taxonomy-knowledge-an... )
Therefore, Knowledge Management (KM) essentially is not management technique but behaving more as an access mechanisms that can be used across any management tool type such as Total Quality Management, Learning Organization, Benchmarking, Process Classification Framework, Business Process Reengineering, Balanced Scorecard, Business Intelligence including Social Media platforms etc. wherein each with their specific functions to be orchestrated under KM’s consciousness. So, here we put KM in incredibly broad meaning as subject with higher level than any other management tool type which is treated only as object ( http://www.scribd.com/doc/28696847/How-to-re-postulating-the-paradigm-of... ) From eastern concept, Knowledge with broad meaning also known as Noor or “Light”
I use the phrase “KNOWLEDGE ‘R’ US”, not “KNOWLEDGE ‘R’ OURS” as the expression of the paradigm of K as well as KM just mentioned above wherein human knowledge from beginning of our life represent human consciousness as well as our personality functioning to lead us in our journey through the path of Physical Realities – Data – Information – Knowledge (narrow meaning) – Wisdom and above . In eastern people beyond Wisdom frequently called as “Ma’rifat”
The overall description in schematic as well as in presentation forms could be accessed through the list of the links below. To get explanation more in details you could visit our gateway links by choosing relevant article(s) or topic(s) at http://delicious.com/mobeeknowledge and/or http://delicious.com/tags/mobeeknowledge?view=all& . And last but not least, just to emphasize from my point of view I’ve recognized at least 10 “symptoms and signs” toward the future of next gen KM – visit http://www.scribd.com/doc/27484344/Ten-Landmarks-Toward-Next-Generation-Knowledge-Management

List of the “KNOWLEDGE ‘R’ US” related links are as follow : (Source Link : http://www.scribd.com/doc/29259487/KNOWLEDGE-R-US )

Human Body Knowing Tools as Human Consciousness Related to Knowledge Management - http://www.scribd.com/doc/28959294/Human-Body-Knowing-Tools-as-Human-Con...
How to re-postulating the paradigm of Knowledge and Knowledge Management - http://www.scribd.com/doc/28696847/How-to-re-postulating-the-paradigm-of...
Road to Next Gen Knowledge Management : “Mobee Knowledge Top Four Articles of the Month” - http://www.scribd.com/doc/28435600/Road-to-Next-Gen-Knowledge-Management-“Mobee-Knowledge-Top-Four-Articles-of-the-Month”
Bloom's Taxonomy (Learning Domains)* related with Knowledge and Knowledge Management (KM)** - http://www.scribd.com/doc/28370204/Bloom-s-Taxonomy-Learning-Domains-rel...
How to convert Knowledge Into Knowledge Management - http://www.scribd.com/doc/28177748/How-to-convert-Knowledge-Into-Knowled...
Ten Landmarks Toward Next Generation Knowledge Management - http://www.scribd.com/doc/27484344/Ten-Landmarks-Toward-Next-Generation-...
The Origin of Knowledge and Knowledge Management derived from DI-KW separated entities model - http://www.scribd.com/doc/26869572/The-Origin-of-Knowledge-and-Knowledge...
Towards Human System Biology-based Next Gen KM - http://www.scribd.com/doc/25765257/Towards-Human-System-Biology-based-Ne...
Knowledge Management System Development Derived From Human System Biology - http://www.scribd.com/doc/25613526/Knowledge-Management-System-Developme...
Explaining Step by Step the Process of Knowledge Management 2.0 Map - http://www.scribd.com/doc/25036410/Explaining-Step-by-Step-the-Process-o...
KM Metrics to Locate Your Achievements in the Universe - http://www.scribd.com/doc/24808191/KM-Metrics-to-Locate-Your-Achievement...
You Are the Knowledge - Hybrid Definition of Knowledge - http://www.scribd.com/doc/24439826/You-Are-the-Knowledge-Hybrid-Definiti...
The Physics of Knowledge - http://www.scribd.com/doc/24339159/The-Physics-of-Knowledge
WEB-BASED KNOWLEDGE MANAGEMENT 2.0 MAP - http://www.scribd.com/doc/24331515/WEB-BASED-KNOWLEDGE-MANAGEMENT-2-0-MAP

@2010 Md Santo

KM & Communications

What mental or intellectual costumes Africans need to wear in order to develop modern knowledge systems?

Jacques Hamel — Mon, 22 Feb 2010 04:44:35 -0700

This is a free reflection on the power of modern science, technology, innovation and knowledge systems (STI) for revealing some distinctive style of modernity in Africa.

The modernization of these knowledge systems, as the backbones of any mode of modernity, also requires the modernization of our mental or intellectual costumes. This process is essentially the passage from closed, self-confirming, faith-based, customary, totalizing or terrorizing knowledge systems to essentially falsifiable, evidence-based, scientifically-established and technically-proven innovative knowledge systems. In these systems scientific knowledge can be construed as a theory of the real and as a technology of truth and understood as the epistemological foundation of any form of Afro-modernity. It is also the passage from the ‘Book of Scripture’ to the ‘Book of Nature’ or from the submission to the white man’s colonizing gods to the more authentic and genuine African identities, beliefs and values, such as those embodied in the concept of ubuntu. In this perspective rejuvenating knowledge systems can purge Abrahamic and Shamanic worldviews of non-scientific constituents and open a path from the mostly totemic, enchanted, mystified, supernatural, patriarchal / phallocratic and over-religious worldviews and mindsets of pre-modern Africa to the more desacralized, secular, rational, liberal, enlightened and autonomous worldviews and mindsets of modernity. This paradigmatic shift toward modern ways of knowing and understanding requires championing the scientific method, the rule of technique and innovation as well as promoting decisive scientific arbitrations, increased technical mediations and a redefinition of STI’s relationships with religious, cultural, social and economic life. For this shift to occur there is a need to better appreciate modern science as a method of both calculative and subversive thinking, as a means of achieving the systematic renovation of conventional / medieval / pre-modern realities and as a way to reconstruct and re-order African realities from fresh fundamentals and from the latest scientific insights. This may require strengthening various capacities to probe, undermine and rationalize oppressive systems (religious, cultural, social, economic, political). It may also require re-cosmologizing, re-mythologizing, ‘re-prophetizing’, re-charlatanizing and re-directing the evolution of the African reality toward a region free of wishful thinking, fallacies, lies, superstitions, prejudices, magic and witchcraft and toward an Islam-free and Christian-free scientifically-informed free-thinking innovative post-colony. The necessary capacities for achieving this shift toward more innovative scientific and technical orders and systems are grouped into eight areas.

Full reflection here: http://sites.google.com/site/revealingmodernityinafrica/newpaper

My website: http://sites.google.com/site/revealingmodernityinafrica/

Join me on LinkedIn: http://www.linkedin.com/in/jacqueshamel

KM, Emerging Technologies and Innovative Schemes

KMAfrica.com KnowledgeHub Greetings

KMAadmin — Tue, 22 Dec 2009 08:16:07 -0700

Zulu culture, language & traditions

GLOBAL KNOWLEDGE TOWARDS 2012

Md Santo — Wed, 02 Dec 2009 18:40:15 -0700

GLOBAL KNOWLEDGE TOWARDS 2012 or “CONTINUUM OF PHYSICAL REALITY WITH KNOWLEDGE AND BEYOND : GREAT TURNING FROM MIND BRAIN TO CONSCIOUSNESS DNA” (see the Attachment) showing global trends towards 2012 in which the domain of Knowledge evolved in continuum universe as emergent behavior within human body as complex (adpative) system, having consciousness and free will (mind and value) as well as behaving dynamically as subject

A brief description about the sentence ..."After Singularity between Human Mind and Technology reaching its peak (in 2012 ?)"... :
"Singularity" here means the phenomenon of the race between smartness of Human and Technology (Machine) which is at present occured exponentially and exponentially at very tremendous speed and will reaching its peak around the year 2012. To cope this situation, Human as Complex Adaptive System will migrate or making "great turning" from Brain as "center of play making in science or scientific knowledge" (locus of Mind) to the DNA as "new center" (locus of Consciousness). This migration or "great turning" will give impressive impact on how Human manage the Science and Technology. In this circumstances, it will appropriate if we put or coin a new term called as "Knowledgeable Science" which is entirely different with Scientific Knowledge as commonly used. (Consciousness) DNA as new vital locus will certainly has a higher level than the (Mind) Brain as former human vital locus.

To get more comprehensive insight, should you visit also :

http://isivivane.com/kmafrica/forum.hybrid.definition.of.knowledge - "We are the knowledge: a hybrid definition of knowledge"
http://mobeeknowledge.ning.com/forum/topics/next-generation-of-knowledge - "NEXT GENERATION OF KNOWLEDGE MANAGEMENT (KM)"
http://mobeeknowledge.ning.com/forum/topics/five-basic-implications-of-n... - "FIVE BASIC IMPLICATIONS OF NEW PARADIGM OF KNOWLEDGE"
http://mobeeknowledge.ning.com/forum/topics/knowledge-towards-2012-great - "KNOWLEDGE TOWARDS 2012 : GREAT TURNING FROM MIND BRAIN TO CONSCIOUSNESS DNA"

Tourism Knowledge SIG

Neocolonialism

KMAadmin — Thu, 19 Nov 2009 03:20:21 -0700

Neocolonialism is a term used by post-colonial critics of developed countries' involvement in the developing world. Writings within the theoretical framework of neocolonialism argue that existing or past international economic arrangements created by former colonial powers were or are used to maintain control of their former colonies and dependencies after the colonial independence movements of the post World War II period. The term neocolonialism can combine a critique of current actual colonialism (where some states continue administrating foreign territories and their populations in violation of United Nations resolutions) and a critique of the involvement of modern capitalist businesses in nations which were former colonies. Critics adherent to neocolonialism contend that private, foreign business companies continue to exploit the resources of post-colonial states, and that this economic control inherent to neocolonialism is akin to the classical, European colonialism practiced from the 16th to the 20th centuries.

In broader usage, neocolonialism may simply refer to the involvement of powerful countries in the affairs of less powerful countries; this is especially relevant in modern Latin America. In this sense, neocolonialism implies a form of contemporary, economic imperialism: that powerful nations behave like colonial powers of imperialism, and that this behavior is likened to colonialism in a post-colonial world.

In broader usage the charge of Neocolonialism has been leveled at powerful countries and transnational corporations who involve themselves in the affairs of less powerful countries. In this sense, 'Neo'colonialism implies a form of contemporary, conomic Imperialism: that powerful nations behave 'like colonial powers, and that this behavior is 'likened to' colonialism in a post-colonial world. In lieu of direct military-political control, neocolonialist powers are said to employ financial, bribery/corruption and trade policies to dominate less powerful countries. Those who subscribe to the concept maintain this amounts to a 'de facto' control over less powerful nations ('see Immanuel Wallerstein's World Systems Theory').

Both previous colonizing states and other powerful economic states maintain a continuing presence in the economies of former colonies, especially where it concerns raw materials. Stronger nations are thus charged with interfering in the governance and economics of weaker nations to maintain the flow of such material, at prices and under conditions which unduly benefit developed nations and trans-national corporations.

Multinational corporations

Critics of neocolonialism also argue that investment by multinational corporations enriches few in underdeveloped countries, and causes humanitarian, environmental and ecological devastation to the populations which inhabit the neocolonies. This, it is argued, results in unsustainable development and perpetual underdevelopment; a dependency which cultivates those countries as reservoirs of cheap labor and raw materials, while restricting their access to advanced production techniques to develop their own economies. In some countries, privatization of national resources, while initially leading to immediate large scale influx of investment capital, is often followed by dramatic increases in the rate of unemployment, poverty, and a decline in per-capita income. This is particularly true in the West African nations of Guinea-Bissau, Senegal, and Mauritania where fishing has historically been central to the local economy. Beginning in 1979, the European Union began brokering fishing rights contracts off the coast of West Africa. This continues to this day. Commercial unsustainable over-fishing from foreign corporations have played a significant role in the large-scale unemployment and migration of people across the region. This stands in direct opposition to United Nations Treaty on the Seas which recognizes the importance of fishing to local communities and insists that government fishing agreements with foreign companies should be targeted at surplus stocks only.

International Financial Institutions

Some portray the choice to grant or to refuse granting loans (particularly those financing otherwise unpayable Third World debt), especially by international financial institutions such as the International Monetary Fund (IMF), and the World Bank (WB), as a decisive form of control. They argue that in order to qualify for these loans, and other forms of economic aid, weaker nations are forced to take certain steps favorable to the financial interests of the IMF and World Bank but detrimental to their own economies. These structural adjustments have the effect of increasing rather than alleviating poverty within the nation. Some have pointed out that neocolonialism allows certain cartels of states, such as the World Bank, to control and exploit usually lesser developed countries (LDCs) by fostering debt. In effect, third world governments give concessions and monopolies to foreign corporations in return for consolidation of power and monetary bribes. In most cases, much of the money loaned to these LDCs is returned to the favored foreign corporations. Thus, foreign loans are in effect subsidies to corporations of the loaning states. This collusion is sometimes referred to as the corporatocracy. Organizations accused of participating in neo-imperialism include the World Bank, World Trade Organization and Group of Eight, and the World Economic Forum. Various "first world" states, notably the United States, are said to be involved, as described in 'Confessions of an Economic Hit Man' by John Perkins.

KM & Economic Challenges

The water debate

storytelling — Tue, 27 Oct 2009 09:03:06 -0600

Water is vital to life. It is the essential component in all aspects and activities related to our well-being and existence – including food and energy production and manufacturing in general. It’s clear that if our water supply continues to dwindle, and/or, if water became unaffordable, our lives would be detrimentally transformed. Billions of people are already experiencing and suffering from the mismanagement and unequal allocation of water. Between 1.1 and 1.5 billion people in the world lack access to safe drinking water and 2.6 billion people lack access to basic sanitation. 2.2 million people die each year due to low quality drinking water and/or lack of sanitation – that is 42,000 people per week, 90 percent of whom are children (WHO/UNICET:2005). Exclusion to socially necessary goods and services such as fresh water has horrific consequences that are catastrophic, yet entirely preventable.

The struggle over fresh water goods and services has taken the form of a conflict over increasing commercialisation, privatisation and liberalisation. This struggle takes place in an era of economic globalisation where neoliberal policies transform all forms of social reproduction so that all goods and services that were once held in common (things such as fresh water, education and healthcare etc.) are increasingly exposed to the free market and in many cases transformed into a form of private property. This regulatory shift – from public to private – is by no means inevitable. The processes that facilitate this shift are a direct result of political and corporate elites exercising their power and will, through an organised network of connections, in order to achieve the free market conditions that are necessary to expand the reach of capital.

Fireside Chat

Ecclessiastical knowledge depositories :Church libraries promoting social development

collence chisita — Wed, 14 Oct 2009 23:34:19 -0600

Libraries are critical institutions whose services permeate each and every aspect of human life. The pervasive natures of libraries make them indispensable tools for socio-economic and spiritual development of human kind. Libraries are the foremost cultural institutions of our times that provide a free space for the pursuit of knowledge. The essence of the library as a place and an institution lies in providing free and equal access to knowledge irrespective of race, caste, sex, or age .Appadorai views libraries as God’s gifts to humankind and this distinguishes libraries from those institutions whose services and products are profit driven.1

“…Gifts , and spirit of reciprocity, socialibility and spontaneity in which they are typically exchanged, usually are stark opposed to the profit –oriented self centered and calculated spirit that fires the circulation of commodities…”2 Libraries as repositories of human knowledge have existed since antiquity and archaeological evidence confirms their presence in ancient biblical places, for example, Nineveh, Asharbannupal in Syria, Egypt, Mesopotamia, Jerusalem, among other places .3. The existence of these ancient religious libraries renowned for their extraordinary cultural value is a clear testimony of the Church’s effort towards a spiritual heritage documented by a library tradition which is both a good and a universal good placed at the service of human society. The Archbishop of Milan Tettamanzi noted that Church libraries should be viewed as privileged seats of human and spiritual growth of information, formation, and elevation and of refinement of spirit and as the fundamental instruments of human and spiritual promotion. 4

Churches role in promoting access to recorded knowledge

Historical evidence points out that ancient library were associated with the church and this is validated by the archeological evidence which confirms the discovery of clay tablets, papyrus scrolls, skin parchments and print based materials as the traditional media of information storage and retrieval. These developments mark the progression of the book from clay tablets, to papyrus scrolls, skin parchments, codex and the modern means of information storage and retrieval. Shoham notes that the medieval times were the best for recorded knowledge, for example, in Europe monasteries became great centers for proper libraries. Kumar notes that in present times the Vatican which is the citadel of Christianity is considered to be the holder of the finest collection of manuscripts anywhere in the world. He further notes that while the Church libraries in the occidental world made progress in contributing to the development of a corpus of human knowledge the orient was not far behind in this respect because it made significant progress through its royal and religious libraries.

Historically it is an undeniable fact that church libraries have helped in saving from the destruction the fundamental documents of culture and tradition. These great institutions are products off Rabbinic and Koranic schools, and those schools in Cathedrals and Monasteries. Cardinal Tetamanzi notes that in more critical times, they have saved, preserved, conserved and handed down sacred and non sacred texts that have been and still remain essential for the development of their respective religious, cultural and social contexts. It is therefore imperative that in this modern world, the role of church libraries is called forthwith and it requires renewed force and has to be more precisely attuned to the needs of the moment through incorporating Information and Communication Technologies.. 5 The role of Church libraries transcends beyond the mere collection and keeping of books but they help to encourage consultation and study through providing unfettered access to information and knowledge in various forms.

There is great importance attached to church libraries because they house the monuments of learning of human and Christian culture and also represent an inexhaustible wealth of knowledge from which the entire Church community and civil society can draw into the present the memory of their past. They represent the collective memory of Christian civilization and they have also helped to sustain the organizational memory of Christian institutions and ideas. Librarianship, archival science and related disciplines represent an indispensable means to put generations, which have encountered the Christian faith and life, in contact with everything that Christianity has produced in history and in human thinking. The Christian tradition - guaranteed by its everlasting character for all generations finds in written books a constant contribution for its diffusion and transmission, for its deepening of meaning and comprehension and for its living insertion within people's traditions. The idea of protecting, preserving, encouraging and promoting the reading , and circulation of books is for the Church a noble activity very close to the churches evangelizing mission. The churches derives the origin of the continuous care that the Christian community has had in its endeavor to create, protect, enrich, defend and add value to library services. The evangelizing mission of the church is a noble goal has given impetus to the drive towards the development of vibrant and relevant church library services.

Indeed book culture is the epitome of man’s civilisational achievements because it is impossible to think of book culture without libraries or vice versa because in real practice libraries and book culture are inseparable. The market place of ideas has been built around libraries, authors, publishers and copyright. Libraries have through centuries helped to popularize the book culture and the concepts of authorship. Books by nature are treasured instrument and vehicle of fundamental messages because they have helped to capture the memory of a society.

Church libraries as agencies of culture

Church librarians have a moral and professional obligation to work towards strengthening and improving with utmost reverence the real meaning of their work; and this can be achieved through using the inestimable cultural heritage they guard with passion, and by making use of the technical competence and cultural background which belongs to them and which they keep on updating through continuous professional development. These librarians should help to encourage and to develop common educational strategies in order to form mature and well balanced human beings, who are able to give material and spiritual values full weight and develop men who are able to find out and to cultivate their own real essence, who are cautious and respectful of the highest values of freedom and solidarity. It is through such efforts that church libraries will fully achieve the aim for which they were founded and to which the librarians have to devote and dedicate themselves to. They will become thus a network of laboratories for the formation and the growth of well rounded human beings who are physically, spiritually and intellectually well balanced.

The late United Nations Secretary General Sir Dag’s Hammarskjöld noted that libraries were critical institutions in the drive towards preventing destructive wars because problems of human kind originated in the mind and it is therefore imperative to use libraries to build in people’s minds defensive mechanism that help to prevent war, promote peace, progress and spiritual growth for the good of humanity. The world as it stands today is bedeviled by numerous problems and these can be solved through the promotion of an information and multi-modal literate society that really values and appreciates the role of information in development and uses information in a judicious manner.

There is great need to ensure that the noble goal that librarians fulfill as encapsulated in the “ministry of a librarian" should be considered fully and honorably within the Christian community. This is justified that librarians are not mere workers but also promoters and sponsors of culture and, consequently, of evangelization of the Church through working to increase the knowledge of the church community and promoting research conducted by those who want to deepen their own knowledge.

References

APADORAI, a.(ed)The social life of things:Commoditiesin cultural perspective.Cambridge:Cambridge University Press, 1986.p.11-23.
Ibid.
Kumar, G.Sociology of Information Management.New Delhi:Har-Anand Publications, 1998. p.15.
Tettamanzi,D.(cardi)Religious libraries;Common laboratories of educational strategies.Paper presented at the offsite conference of Ifla on Religious libraries at the Biblitheca Ambrossiana, Milan on 24th. August , 2009.
Pontifical Commision for the cultural patrimony:Ecclesiastical Libraries and their role in the mission of the Church .Rome:1992.

KM & Economic Challenges

Food price increases; is a practical, comprehensive government response possible?

storytelling — Tue, 04 Aug 2009 04:56:12 -0600

By : Josephilda Nhlapo-Hlope , Chief Policy Analyst , Policy Advisory and Coordinating Services Unit, Presidency, South Africa

Introduction and Background

This paper discusses the food price crises of the first/second/third quarter of 2008. It briefly outlines trends and reasons for the rising food prices, the impact and then suggests appropriate practical measures to alleviate the impact on the poor and generally increasing food security at a household and country level.

Whilst this is a food price crises impacting negatively on access especially for the poor, the response for South Africa is three fold, enhancing job creating/inclusive economic growth, cushioning the poor and enabling the agriculture sector within South Africa to be more productive. This paper concentrates on the two latter responses because the government of South Africa has a program called Accelerated Shared Growth Initiative of South Africa (ASGISA), a set of concrete economic proposals aimed to tackle directly constraints to inclusive growth. According to its 2009 annual report much has been achieved since ASGISA was launched in 2006.

Macroeconomy: Unemployment fell from over 31% in 2003 to around 22% by late 2008. Poverty also decreased in this period, due to the expansion of social grants and higher levels of employment. Economic growth averaged over 5% from 2004 to 2007, only to be curtailed first by the electricity emergency and then by global economic meltdown.
Infrastructure Investment: Gross Fixed Capital Formation averaged 22% of GDP by 2008, up from 15% in 2004.
Governance: The review of DFI’s has been completed, and recommendations of how to increase the efficiency and efficacy of DFI’s in driving the development agenda were made. The Competition Commission capacity has been strengthened and more and more cartels and other anti-competitive behaviour unearthed; a programme to curtail red tape in municipalities is also gathering momentum. Siyenza Manje and Project Consolidate programmes have strengthened weaker municipalities, and areas where the public service needs further strengthening have been identified.
Skills: The Joint Initiative for Priority Skills Acquisition (Jipsa) has been declared in all quarters as one of the most successful skills interventions in South Africa and will be incorporated into the widely consulted and recently approved Human Resource Development Strategy.
The Marginalised: The lives of many young people have been transformed though initiatives such as the Umsobomvo Youth Fund and the National Youth Service (NYS) and the Expanded Public Works Programme has made a real impact. Programmes such as the Community Work Programme, show promise by providing guaranteed income while at the same time enabling the poor to improve or beautify their surroundings and build community cohesion.
Industrial Strategy: Through the Industrial Policy Framework, jobs were created in the three top priority sectors in AsgiSA – tourism, BPO and biofuels – and progress was made in developing policy frameworks as well as providing limited and targeted subsidies. All three sectors grew considerably, but there is much room for further growth…...
There already exists a tri-partite response to the global economic meltdown anchored on principles such as protection of the poor and vulnerable and growing the economy to create decent jobs. (ASGISA annual report 2008/2009)

The unsaid thesis of the paper is that it is the poorest that suffer most from price shocks and that global trade cannot be relied upon completely for food security for all the country’s citizens in spite of rules and institutions put in place. It therefore is important for countries like South Africa to:

embark more vigorously on poverty alleviation strategies anchored on inclusive growth hence ASGISA
invest in agriculture for increased food production. South Africa has a comparative advantage in some types of agriculture production and thus government and the private sector must invest in reducing constraints to increased production and increased efficiencies.

The paper draws heavily from research done by the South African Government Departments such as the Department of Agriculture, the National Agriculture Marketing Council and quasi government bodies such as the Competition Commission and various other briefs written by international organisations such as the World Bank and the Food and Agriculture Organisation (FAO).

Profile of food price increases

Food price inflation at a global level reached crisis proportions with high food prices leading to unrest in countries such as Egypt, Cameroon, Ivory Coast and Haiti as well as demonstrations in South Africa, Kenya, Bolivia etc. The World Bank puts food price increases from January 2002 to third quarter of 2008 at 140%, with a 45% increase in the latter 9 months alone (FAO). At that time FAO further forecasted that the cereal import bill of the world’s poorest countries would rise by 56 percent or more in 2007/2008 due to the sharp rise in international cereal prices, freight rates and oil prices.

As seen from the graphs below food prices increased and peaked in 2008.

Figure : Nominal Global Cereal price trends,
Source: NAMC January Quarterly Bulletin (adapted from FAO)

Maize from which the South African staple food “porridge” is made, peaked at US$ 294.18/ton in June 2008, decreased to US$ 158.36/ton in December 2008 only to increase again to US$176.42 in January 2009. (NAMC 2009).

Wheat the main ingredient for bread, peaked at US$ 481.50/ton in March 2008, decreased to US$ 235.25/ton in December 2008, i.e. a decrease of 51.14 %, only to increase to US$ 256.4/ton January 2009. (NAMC 2009)

Rice price peaked at US$ 962.60/ton in May 2008; by December 2008 prices had decreased steeply by 39.54% to increase again in January 2009 to reach US$176.42. (NAMC 2009).

Though there has been a decrease in food price and food price inflation, food prices are sticky downwards. Conceicao and Mendoza (2009) show that for cereals, 2009 prices are way above their 10 year averages. As of March/April 2009:

maize prices are 43% above its ten-year average;
wheat prices were 31% above its ten-year average;
rice price is 49% above its ten-year average (Conceicao/Mendoza 2009)

Indeed in spite of the decrease in food price inflation, for many countries as table one below shows, food inflation is still above ordinary inflation. We therefore dare not be complacent, policies and programmes should be put in place now to enhance food security at a household level and country level.

Table : Country Comparison of Food Inflation v.s Overall Inflation

Country	Month	Overall inflation (%)	Food inflation (%)
Botswana	December 2008	13.7	24.9
South Africa	January 2009	8.1	16.1
China	January 2009	1.0	4.2
Turkey	January 2009	9.5	11.5
Canada	January 2009	1.1	7.3
Brazil	January 2009	6.1	8.6
United States	January 2009	0.4	5.3
United Kingdom	January 2009	3.0	10.2
Australia	December 2008	3.7	5.6

Source: NAMC adapted from Central banks and statistics reporting institutions of these countries, as well as press

Meat prices did not behave differently and prices today are still above 2007 price levels.
See figure 2 below which illustrates that the price of beef increased to US$ 4 940/ton in November 2008. Between November 2007 and November 2008 it increased, by 14.33 %. The price of pig meat fluctuated around US$ 2 100/ton between mid 2005 and early 2008, and increased by 17.77 % between October 2007 and October 2008. The price of poultry meat has been increasing steadily since mid 2006, but decreased by US$ 286/ton between September 2008 and October 2008. It increased by 21.99 % year-on-year ending October 2008”. (NAMC February 2009 quarterly review p.g .12)

Figure : Nominal Global Meat Prices
Source: NAMC January Quarterly Bulletin (adapted from FAO)

Many countries responded to the high food prices by either banning food exports, or increasing tariffs on imports of food thereby worsening the food price crisis by reducing the supply available. Experts wrongly projected that there will be little relief from high commodity and food prices in the short to medium term. However with the sharp decline in raw commodity prices, generally lower transportation costs, a softening demand for more expensive food items, and the lower demand for bio fuel food crops as crude oil price fall, price inflation has fallen.

How global trends are transmitted to South Africa

These global trends impact directly on South Africa because South Africa deregulated and liberalized its agricultural and food sector in the mid 1990s, and introduced trading in the futures market i.e. South African Futures Exchange SAFEX. Factors that determine the price in SAFEX include:

The international price. Even the price of domestically produced maize is impacted upon by the international market.
The exchange rate – the ZAR is unstable against the dollar, very volatile,
Local production (influenced by weather conditions and hectares planted)
Local consumption (usually fairly constant)
Production levels in the South African Development Community region. Levels at a regional level are currently not looking good. Prospects for imports from South Africa are increasing. (South Africa is generally the main source of white maize for these countries in times of shortage).
Stock levels (both domestically and internationally) – International stocks for wheat declined by 16 percent; maize by 0.8 percent (very small) and domestic stocks for maize are about 1.06 million tons compared to a long term average of 2.8 million tons in 2008. Stock rebounded a bit because of the food price hike mainly in developed countries.The 2008 planting season cereal output is estimated 12.3% higher in developed countries, and only 2.3 % higher in developing countries. This is due to the production constraints pertaining in developing countries and volatility of the prices making long term investment decisions difficult. (Conceicao/Mendoza 2009).

Price increases for the commodities (except vegetables) that make up a large percentage of the food basket of the poor are summarised in table 1 below. As shown below the three main items driving inflation are wheat, sunflower (oil and fats) and to some extent dairy.

Table : Price changes in food mostly consumed by the poor.

Commodity	June 07 to Feb 08 % change	Feb 07 to Feb 08 % change	Jan 08 to Jan 09 % change
Wheat products/ bread	26.79%	31.98%	29.51 %
SAFEX Wheat R/ton	52.97%	103.85%	-13.37 %.
Maize products (mealie meal)	6.73%	22.54%	8.59%
Maize (SAFEX) R/ton	1.02%	13.16%	1.20%
Cooking Oil	66.67%	71.67%	28.90%
Sunflower Oil, fats margarine	39.36%	44.08%	43.6 %
SAFEX Sunflower R/ton	49.65%	85.69%	-12.29 %
Average meat	10.25%	13.13%	7.88 %
Full cream 1 litre	12.98%	31.59%	5.21%
Full cream long life 1 litre	19.21%	32.29%	-5.86%
Eggs 18s extra large	9.17%	16.97%	26.49%

Source: Adapted from STATSA, NAMC and AC Nielson

Reasons for high food inflation especially of wheat

The high food spikes were due to a combination of factors which alone would not have fuelled the price increases but because they happened simultaneously, they together set the conditions for “a perfect storm” in terms of food price increases. The increases in agricultural commodity prices on the international market can be attributed, but not necessarily restricted to (i) competing demands; the lower availability of grains for human consumption because of biofuel production and animal feed (ii) unfavourable climatic conditions for the production of grain in major grain producing and exporting countries, (iii) trade restrictions that were imposed by major grain exporting countries, such as Argentina, (iv) increasing energy and fuel costs making transport of grains more expensive, and (v) potential misuse of market power on the input and output sides of the agro-food chains. Each factor is discussed in detail below.

Competing demands

South Africa does not use food crops to produce biofuel, but at a global level according to the World Bank, 11% of global maize production and 7% of global vegetable oil supplies were used to produce bio fuel. The high and increasing demand for biofuels, was fuelled by high crude oil prices, legislation, and incentives pertaining in many of the major grain producing countries and this has negative effects on the production of grain for human and animal consumption in two ways. (i)Less land is available for ploughing grain as farmers re enticed to switch to alternative biofuel crops. (ii) Maize and oil seed is used to produce bio fuels instead of being made available for humans. So in spite of the fact that there is an increase in maize production globally, the increase is offset by the even greater demand for biofuel. “Global maize production increased 55 million tons from 2004 to 2007 according to the USDA and biofuel use in the U.S. increased 50 million tons. Global consumption for all other uses increased 33 million tons, which caused global stocks to decline by 27 million tons and maize prices to more than double” (World Bank note on rising food prices pg 5.)

Another competing demand is the use of oil seed for animal feed. The increase in prosperity mainly in India and China has increased the demand for animal protein and thus may have contributed marginally (according to the World Bank) to the increase in prices of oilseed from which both cooking oil for human consumption and oil cakes for animal feed are produced.

Reduced food availability at a global level

According to the International Food Policy Research Institute (IFPRI) in 2006, global cereal stocks—especially wheat—were at their lowest levels since the early 1980s. The reduction in food stock available for trading in international markets was a product of unfavourable weather patterns and a reduction in land available for planting wheat. For example the combination of the 2006 and 2007 Australia drought and poor cropping season in the European Union and the Ukraine reduced exports by 19.2 million tons at a global level. It was however the policy responses of major food exporters that fuelled the increase in food prices. Trade restrictions that were imposed by major grain exporting countries, such as Argentina who early last season closed registration for new export orders of grains and oilseeds as well as increased their export taxes (from 10% to 35% on various grains) to curb food inflation in the run up for the elections. In June 2007 Australia changed the Wheat Marketing act to include the right to veto bulk wheat export applications. Australia established a new company AusWheat to oversee and control bulk wheat exports in a single desk arrangement that operate a pool system. China introduced value-added tax as well as temporary taxes on wheat exports during December and January 2008 to restrain exports. Export restrictions were also exercised by India, Kazakhstan, Pakistan, Russia and the Ukraine. Even Zambia in March 2007, put an export ban on grains to ensure that it has enough grain for the season. Brazil and the USA livestock producers have lobbied for export taxes to counter their local rising feed costs.

The shortage and rise in global prices has impacted directly from South Africa directly since domestic prices are a function of global prices (see section 2) and indirectly as South Africa animal feed buyers faced difficulty this past season in sourcing grain from its traditional supplier, Argentina, to prevent potential grain shortages

Increased input costs

The production of food requires a range of fertilizers. The price of natural gas and petroleum is one of the biggest components in the production of ammonia and potash (fertiliser components). Crude oil prices had at some points soared nearly 70%. This means that not only the cost of producing the inputs has risen, but in addition the costs of transporting these input to farms and the grains from where they are farmed and stored to where they are processed and sold has increased.

Potential abuse of market power on the input and output sides of the agro-food chain (mainly a South African phenomena).

A study done by the competition commission on grain point to that farmers’ margins are squeezed as they face buyer power from processors and also face high input costs. Thus in spite of the high prices, farmers are not necessarily the beneficiaries and thus not incentivised to increase production and thus increase food availability. Consumers on the other hand, face prices that are not necessarily determined by the market, but through anti competitive behaviour such as price fixing, market allocation and speculation. The high concentration and vertical integration pertaining to the entire value chain of the grain industry facilitates anticompetitive behaviour. While a concentrated market structure does not necessarily mean anticompetitive behaviour, the classic case where Tiger Brands was fined millions for collusion and price fixing is proof that there is anticompetitive behaviour post the farm gate and it is contributing to the high prices and asymmetric price transmission.

Another high profile case of anticompetitive behaviour is the Dairy case. Milk processors are being investigated for market allocation and price fixing as well as playing a “supply stabilising role”. Dairy prices last peaked in the period July-Oct 07. Since then, they have been declining by over 30% on average. However at a retail level dairy products showed a September 07/08 year on year inflation of 10%.

“legal” restrictions

The USA had surplus yellow maize grain stocks but SA suppliers could not procure from the US because of the present limitations put by the SA GMO legislation. South Africa Industry was then forced to use white maize for animal feed and processing. This situation almost led to an absolute shortage on maize in the country during January and February 2008.

Electricity Crises

Electricity is vital for the maintenance of the cold chain and for irrigation. Farmers lost crops in early January when the crisis was at its highest and irrigation could not be done. (Load shedding was erratic and at its maximum as ESKOM attempted to stabilise the system) A lot of perishable food had to be discarded. Both these factors led to shortages and an increase in the price.

Conclusion

It must be emphasized that none of these factors on their own would have led to the price spike we see. The good crop in USA, Kazakhstan and Argentina offset the decline brought about by the drought in Australia and the bad cropping season in Ukraine and the EU. What caused the price hike therefore is a combination of all these factors. An additional factor being debated amongst analyst is the impact of increased population, urbanisation and increase in wealth. There is the IFPRI school of thought which suggests that urbanization and increase in global incomes contributed to the price increase by increasing demand for food. This thesis is also supported by some leading analysts in South Africa who assert that population growth and a rising middle class increased demand and because of the constraints in supply both domestically and globally, this also contributed to the price spike. However there are other statistics that point to the fact that demand especially for grain remained relatively stable in South Africa, and therefore the increase in wealth and population could not have necessarily caused an increase in price. The World Bank which has gone even further and attempted to quantify the contribution of each of these factors to global price increases seems not to support the thesis that increased global incomes led to an increase in price of food. “Rapid income growth in developing countries has not led to large increases in global grain consumption and was not a major factor responsible for the large grain price increases” (World Bank note on rising food prices pg 10).

Impact of high food prices

As table below shows lower income levels spend a greater proportion of their income on food and thus are impacted the most by high food prices. As table 3 shows, LSM1 1 spend over 71% of their income on food, compared to the 11% of LSM 10.

Table : % expenditure on food by LSM

Main expenditure group

LSM 1

(poor)

LSM 6

LSM 10

(richest)

Food

4 284.01

70.81

17 235.54

24.18

37 072.65

(Adapted from Food scoping exercise: competition commission)

Food items most consumed by the lowest income quintile are grain products maize meal and bread, meat, vegetables, sugar, fats and cooking oil and dairy and eggs. (see table 4)

Table : types of food spend by LSM category

Main food group	LSM 1 %	LSM 6 %	LSM 10 %
Grain products	32.9	15.8	9.6
Meat products	37.4	35.1	27.8
Fish products	0.3	2.6	3.3
Fats & oils	3.7	3.3	2.3
Milk products & eggs	3.3	8.0	9.4
Vegetables	13.1	11.9	9.4
Fruit & nuts	0.9	4.3	6.2
Sugar products	4.1	3.7	3.6
Non-alcoholic beverages	2.7	3.6	5.4
Miscellaneous food	1.6	5.2	6.1
Prepared food	-	6.5	16.9
Total	100.0	100.0	100.0

(Adapted from Food scoping exercise: competition commission)

As discussed earlier the main drivers of food inflation are grain (wheat and maize) as well as oil. According to table 3 above, these three food items alone constitute about 36% of the entire food bill of the poorest households.

It is these households that are challenged in terms of access to food even before the food price crises and the crises made it worse. According to the National Agriculture Marketing Council households in poorest households needed 22% additional income to maintain status quo whilst the richest household only .5% of their income.

Chronic hunger is still prevalent as exhibited by the high wasting and stunting incidence (see table 4). “Children most affected are those living in rural areas and African children are 5 times more likely than white children to exhibit signs of malnutrition and inadequate access to food……Children from the poorest 10% of households are 3 times more underweight and 8 times more stunted than children from the highest 10% income households.2

Table 5: Provincial stunting rates3

Province	E. Cape	Free State	Gauteng	KZN	North West	Mpumalanga	Limpopo	W. Cape
2002 Poverty incidence	27.9%	20.3%	7.9%	18.9%	21.9%	20.0%	23.5%	8.5%
Stunting %	31.5	25.2	18.2	24.6	23.4	19.5	27.2	16.5

Source: food scoping exercise competition commission)

South African children also suffer from a lack of micro nutrients deficiencies with average daily intake of energy, calcium, iron, zinc, selenium, vitamin A, vitamin D, vitamin C, vitamin E, riboflavin, niacin, and vitamin B6 below 65% of the daily recommended allowance. So whilst basic food stuffs are fortified, the high food price of bread for example means the impact of efforts will be minimal.

Studies show that when the poor are faced with high price increases they either eat less or move to less value more bulky food items, thus increasing general morbidity as poor nutrition compromises the immune system even of a healthy individual. Chronic malnutrition retards growth (physically and intellectual) and hunger makes it impossible for children to concentrate at school and for adults to be productive at work, in addition a healthy diet is an important prerequisite to antiviral medication or even living positively.

Impact of high and rising food prices on inflation and various anti poverty strategies

Food contributes about 20% to the CPIX. High inflation (above the 4%-6% target range), forces the reserve bank to increase interest rates, an instrument at the Bank’s disposal for curbing inflation, it also puts an upward pressure on wages as workers attempt to maintain constant real wages and living standards. High interest rates have the negative effect of reducing aggregate demand and growth.

At a household level, high food prices reduce disposable income i.e. the buying power of consumers including vulnerable consumers that depend on social security grants. It is well documented that grants are used mainly on food followed by fuel and housing. High food costs therefore means that an even higher proportion of income will be used on food, reducing the income available for paying for services such as clean water, reducing income available for investing in income generating activities like job seeking, or even in education.

High food prices impact negatively on government programmes. For example, high food prices inflate the cost of the Integrated School Nutrition Programme meaning less children can be fed, or schools have to resort to cheaper but less nutritious food.

On a positive note however, increased prices can serve as incentives for farmers to produce more impacting positively also on the programmes of government for encouraging the entry and growth of formally disadvantaged farmers. The increased production can add a further boost to the Agroprocessing sector strategies of the industrial strategy. However this assumes a market that is able to respond. Competition issues, inadequate infrastructure (poor agrologistics and irrigation Infrastructure), and increased threat of global warming may mean that farmers may not be able to appropriately respond to the price incentives.

Suggested response

Important principles anchoring the suggested policy response include:
Any measures to alleviate the current impact of high food prices should account for the dualistic nature of the agricultural sector. On the one hand South Africa has a large number of subsistence and small-scale farmers that have to date not been able to produce surpluses of such proportions that it can be absorbed into the mainstream agriculture. On the other hand, South Africa has a commercial sector that is responsible for producing the majority of commodities that are available for the food processing sector to produce food that is sold in retail outlets across the country. Optimally responses by government should focus on both groups of farmers since asymmetric responses will not address the current challenges the country faces in terms of high food prices.

Public-Private Partnerships must be utilized to address the current food price crises. In this way responsibility is shared and the competencies and areas of influence are leveraged optimally.

Innovative response and research into alternative, environmentally sustainable methods of production is called for. With climate change threatening agricultural capacity, it cannot be business as usual. The elasticity of past supply responses may prove to be a poor guide for the future. Scarcity of water and arable land means that the boom in food prices could last longer than most expect. It is impossible to know yet whether the agricultural market was facing a structural or a cyclical change but we are probably up against a long cycle of rising prices. Limitations facing production still aggravate the situation. Water and land scarcity, together with slow improvement in agronomics, would be key factors shaping food production.
Whilst this is a food price crises impacting negatively on access especially for the poor, the best response for South Africa is three fold, enhancing job creating/inclusive economic growth, cushioning the poor and enabling the agriculture sector within South Africa to be more productive.

As said earlier, this paper concentrates on the two latter responses. The additional advantage of improving the productivity of the agricultural sector is that positive impact on employment and GDP. The agricultural, forestry and fishery sector’s contribution though declining still contributed about 8.1% to employment and 2.4% to GDP in 2006 (Quantec 2008)

Immediate response:

Government sponsored safety-net measures and welfare

Given the risks currently facing vulnerable groups due to the high food prices, it is important that safety net programmes be strengthened and expanded. These programmes are currently under the political leadership of the economic and social cluster. These include:

social welfare grants: the threshold for receiving a state grant was reduced to enable more poor people to have access and inflation related increases were granted. (Social assistance in South Africa is premised on that young able bodies individuals will be able to fend for themselves and thus only the aged, the disabled including those disabled by a chronic disease, poor children under the age of fourteen, and children who live in foster care receive social assistance).
food parcels and starter-packs for household backyard gardens were increased from 70 000 to 140 000 households per annum. The Letsema campaign whereby families in a village are encourage to help each other plough or plant gardens was intensified
School feeding schemes were given a financial boost of R 4billion in the next three years as an attempt that the poorest learners get at least one good meal at school everyday. The departments of education are struggling with trying to ensure that the meals are balanced yet affordable, (guidelines have been issued) and some schools face challenges in that there is inadequate education infrastructure as well as in adequate infrastructure to store food hygienically.

Challenges in implementing all these programmes include administrative inefficiencies in some areas as well as eliminating perceived corrupt practices in the roll-out.

Public/private welfare

Corporate South Africa can be encouraged to donate and distribute basic foodstuffs to vulnerable groups as part of their corporate social investment. In the previous food price hike, corporate South Africa, branded and sold mealie meal at cost in economically depressed localities. “yiyo lena”
Civil Society
Most church organisations run food kitchens generally but most called for increased contributions during the crises.
Organised labour mobilised and marches were held. Alternative research and knowledge was shared by government with Food and Agriculture Workers Union in various fora including at National Economic Development and Labour Council a tripartite social dialogue institution that aims to promote social and economic policies and development

Medium term response

Attempts should be made to improve the productivity, efficiency and profitability of the Agricultural sector. This would include:

Increasing investment in core public goods such as technology, infrastructure and mechanisation
Improving efficiency along the entire food value chain and this would require
broadening the Competition Commission investigations to include input suppliers and storage, commodity traders and retailers. Efforts should go towards removing barriers to entry and participation for smaller industry players in the food value chain so as to enhance competition. In this regard, the support and incentive programmes of the Department of Trade and Industry should be expanded to include the food processing sector
investing in transport and logistics (Spoornet),. This should be done in collaboration with other public and private agricultural industry stakeholders in order to maximise the leveraging of existing tacit knowledge..
Broadening the mandate of the food price monitoring capacity at the agriculture marketing council to include early warning. Government should develop protocols that will be triggered automatically to respond to any crises that reduces the ability of the vulnerable to access food.

Long term initiatives should include

the Development and implementation of an agricultural strategy that will bring about food price stability and sustainably enhance:
- food security,
- farm land productivity including land currently fallow especially in the former homelands,
- exports and employment creation
Effectively negotiating a package at the global level that will benefit farmers from the South.

Is a government response possible?

In South Africa, the:

very concentrated agriculture/food industry
complex land question and dual agriculture system

forces the state to play a very big role to try and put in institutions/policies that will level the playing field for all farmers, thus increasing food production and access to food for the poor as well as protect the poor from negative shocks. The African National Congress has been given a resounding mandate by rural voters because of the promise to concentrate more on rural areas and to focus on enhancing food security. Programmes suggested by the election manifesto include:

Intensifying the land reform programme to ensure that more land is in the hands of the rural poor and will provide them with technical skills and financial resources to productively use the land to create sustainable livelihoods and decent work in rural areas
Expanding agrarian reform programme, which will focus on the systematic promotion of agricultural co-operatives throughout the value chain, including agro-processing in the agricultural areas. Government will develop support measures to ensure more access to markets and finance by small farmers, including fencing and irrigation systems.
Ensuring a much stronger link between land and agrarian reform programmes and water resource allocation and ensure that the best quality of water resources reach all our people, especially the poor. (ANC Manifesto 2009)
Governments will also ensure that the current economic crisis does not deter from investing in farming, farmers and rural areas.

The Competition Commission has embarked on a massive food study across the value chains to attempt to unearth anti competitive behaviour.

There however is a role for all society. Food production is in the main in private hands.
Civil society must continue to agitate to make sure that the poor don’t get a raw deal from the private sector and from government, because in this very globalised world famines or decreased nutrition is rarely not solved by increased food production, even if the problem is food accessibility rather than food availability. Churches and NGOs should continue providing a safety net in any way they can.

Conclusion

There still is an answered question why food price decrease does not immediately translate into cheaper prices at retail level i.e. why are prices so sticky downwards? Is someone along the food chain taking advantage of the food price inelasticity of demand? In South Africa is the concentrated food chain structure beyond the farm providing an enabling environment for sticky prices downwards? A food summit in Johannesburg held early in 2009, tried to answer this enigma. No conclusive answer was reached. So the government will continue to invest in agriculture and land reform for increased food production and hope that an increase in supply will lead to increased food security for all.

The Competition Commission and academia will continue conducting research to facilitate evidenced based solution/policies to deal with food price fluctuations and asymmetric food price transmission. Indeed work has begun by academics such as Cutts and Kirsten. “From our analyses it follows that in agro-food industries with some market concentration there is a high level of asymmetric price transmission. This, however, is considerably lower when the retail product is perishable. The results concur with a priori expectations that retailers and/or processors respond more rapidly when their margins are squeezed than when they are stretched. The ability of processors and retailers to “delay” passing on certain price changes depends among other things on their market power.” https://www.up.ac.za/dspace/bitstream/2263/2714/1/Cutts_Asymmetric(2006).pdf

Selected References

Government of South Africa (www.gov.za)
2008 ASGISA Annual Report
Competition Commission (2008) Food Scoping Exercise
Competition Commission (2008) Food Study
Department of Agriculture (2008) Response to the global food price crisis
National Agriculture Marketing Council: Quarterly Food Price Monitor’ February 2009
National Agriculture Marketing Council: Quarterly Food Price Monitor’ October 2008
Framework Response to the Economic Crises (2009) the Presidency
2003 UNDP Human development Report
African National Congress 2009 Election Manifesto
African Development Bank (2008) Briefing note for Governors Food Prices: Overview of the Current Situation and Possible Way Forward
Cutts M and Kirsten J: (2006) Asymmetric price transmission and market Concentration: an investigation into four South African agro-food industries in https://www.up.ac.za/dspace/bitstream/2263/2714/1/Cutts_Asymmetric(2006).pdf
Conceicao/Mendoza 2009 in http://www.voxeu.org/index.php?q=node/3459
Evans A (2008) Rising food Prices, Drivers and Implications for development, Centre on Economic Cooperation, New York University
Mitchelle D (2008) Note on Rising food prices
Treacy & Wiersema (1993) Customer Intimacy and Other Value Disciplines, Harvard
Business Review, Jan-Feb 1993
Von Braun J (2008) The World food Situation, New Driving Forces and Required Action, International Food Policy Research Institute

Footnotes

Living Standards Measure

http://www.pubmedcentral.nih.gov/articlerender.fcgi?tool=pubmed&pubmedid...
Source: Adapted from 2003 Human Development report and http://www.pubmedcentral.nih.gov/articlerender.fcgi?tool=pubmed&pubmedid...

KM & Economic Challenges

A knowledge and practice review in water sector financing

KMAadmin — Sun, 02 Aug 2009 02:36:40 -0600

Main Author : Mwiinga Godfrey with co-authors: Kevin Wall (CSIR) and Mike Marler (DBSA)
Postal address (main Author): PO Box 1234, Halfway House, Midrand 1685, Gauteng, South Africa; e-mail address – godfreym2@dbsa.org

Abstract:

There is global acknowledgement that the financing of water projects is not easy. Preparation of water sector projects is understood to take long and still when they are finally financed, cost-recovery is comparatively difficult. The challenges in preparing water sector projects relate to the fact that water cuts across all spheres of society, and therefore many stakeholders are involved. Bringing them to one table for a single goal (supply water services) has often become a daunting task. Often, because of their complicated nature and their high social flavour, the associated risks in financing water sector projects are usually not well analysed to ensure development of attendant risk mitigation measures. This has particularly been the case where community involvement and participation issues are inadequately addressed. As a result water sector projects, especially in developing countries where the poverty trap adds to service deliver challenges, have been financed without much long-term consideration of sustainability aspects. The political use of water as a vote-winning vehicle has exacerbated the challenge of delivering water services sustainably. Political promises of delivering water are common, but often forgotten after the elections. These sector issues have meant that many water sector projects remain unattractive to private sector financing and participation.

Although historically water has largely been taken as a free social good, it has in recent years been receiving its due attention as an economic good as well that could be provided commercially. Hence, many developing countries are now acknowledging the relevance of providing water commercially in order to ensure financially sustainable services. This development is seen to be slowly easing the challenges of cost-recovery in many water projects. It is becoming clear that additional funding is not the panacea to sustainability of water services.

This paper presents a review of recent knowledge and practices in water sector financing, with particular focus on Africa. The paper aims to give an overview of the challenges and opportunities in financing water sector projects and describe the way forward for Africa’s efforts towards delivering sustainable water services.

Background

The water sector is divided into water resources and water services. The water resources subsector deals with management, development and protection of water sources, while the water services deals with the supply of water to various users and consumers for social and economic development. The focus in this paper is on water services.

Some of the more alarming global statistics pertaining to water services are: 1 billion people lack access to clean water; 2.4 billion people do not have access to safe sanitation; 4 in every 10 people do not have access to safe sanitation (DBSA, 2006). Experience to date has shown that the packaging and financing of water sector projects is more risky than other public infrastructure sectors. One of the main issues include the lack of information and long project preparation periods characteristic of water projects as a result of their social and environment impacts, which require consultations with many stakeholders. This is particularly more challenging where governance systems are weak or not in place.

Although historically water has largely been taken as a free social good, it has in recent years been receiving its due attention as an economic good that could be provided commercially. Hence, many developing countries are now acknowledging the relevance of providing water commercially in order to ensure quality and sustainable services to its consumers. This development is seen to be slowly easing the challenges of cost-recovery in many water projects. It is becoming clear that additional funding is not the panacea to sustainability of water services.

Objective

The objective of this paper is to present a review of knowledge and practices relating to the financing of water services, with particular focus on Africa.

Methodology

The paper was written from a desktop review of selected literature. Commentaries and analysis on the reviewed literature has been provided based on the authors’ knowledge and experiences.

Scope

The paper largely limits its coverage to water services, although some of the issues raised apply to water resources as well. It begins by presenting the water services challenges that Africa faces. Thereafter, financing practices, opportunities and way forward for Africa are presented in separate chapters, before concluding comments are made.

The challenges of water services Africa

General

Although water resources in Africa are relatively abundant, it has the lowest water supply coverage of any region in the world (DBSA, 2006). This is because of the continent’s insufficient capacity to exploit water resources. Some key statistics regarding the supply water services in Africa include (Mwanza, 2005):

300 million people are without access to safe water.
313 million people are without access to appropriate sanitation.
It is estimated that 84% of Africa’s urban residents have basic sanitation but only 45% of rural residents.
82% urban populations have access to water supply coverage.

The specific challenges of the delivery of water services in Africa include: meeting the increasing water demand due to population and economic growth; ensuring food security using water; dealing with the low investment/financing in the sector; and managing the performance of water services providers. Above these challenges, serious defects in the governance of the global water sector have been reported to fetter its ability to generate finance (Winpenny, 2003).

Since this paper focuses on finance, the financing/investment issues are discussed in a separate section. Given the significant role Water Governance plays in financing, it is also discussed separately. Before discussing the financing and governance challenges, it is necessary to discuss the characteristics and associated risks of the water sector projects.

Characteristics of water projects

The challenges of the water services delivery are exacerbated by the inherent features of the water sector compared to other sectors. These features cause financial and operational risks even if the governance issues were overcome. The specific characteristics and attendant risks which apply to the commercial funding of water services projects are:

Packaging water projects require sufficient and accurate information such as the reliability of water resources, treatment technologies, analysis of water demand from all consumers, sources of funds (tariffs, taxes and transfers), affordability aspects, condition of water infrastructures, billing and revenue collection systems. As the water services are largely in public hands, the capacity to gather such information is usually lacking. As a result most water projects are implemented without sufficient information, which increases the failure risks and sustainability challenges.
Contract periods of water services projects tend to be longer (up to 30 years). Therefore, the likelihood of the operating environment changing due to emerging information is higher and contracts are may not be flexible enough to allow changes. As a result, the risks pertaining to contracts not being fulfilment are higher.
A typical water project profile comprises a high investment in the initial years with a large negative cash flow, eventually turning into a modest positive cash flow due to revenue increases, which continue into the long term (Winpenny, 2003). Hence one of the main characteristic of water projects is that they very capital intensive and are usually characterised by long-payback period.
The financial rate of return in the water sector is the lowest (5-10%) compared to other sectors (Roads15-20%, telecommunications 25-30%, power 17-25%) (Winpenny, 2003). This is partly due to delayed returns because of the high capital intensiveness in the early years. Furthermore, water has historically been considered as a social good resulting in resistance to cost-recovery tariffs.
Water services are usually a responsibility of local utilities, which normally lack financial powers, resources and credible credit standing. Hence the capability of these utilities to effectively deliver water services is low, resulting in high sub-sovereign risks.
Unlike other public sectors, the water sector is seen as unavoidably social in nature and evokes political emotions like no other issue (Prasad (2006: 669). The risks of political pressure on contracts and tariffs are therefore high and affect the financial sustainability. Normally, absent, weak and/or inconsistent regulation is breeding ground for high political interference. This impacts on the willingness to pay, which is exacerbated where there poorer services in many cases.
Local sources cannot meet the magnitude of funding required in the water sector. Hence most water projects in Africa are supported financially from foreign funding as well. In such cases, there is a likelihood of mismatches between local currency earnings and foreign exchange funding. The dependency of water projects on external funding results in high currency risks.

To address the challenges brought in by the characteristics and risks of water projects, the role of effective governance becomes critical. In recent developments, the role of water governance has come to the fore of the water sector. Pegram et al. (2006) and Winpenny (2003:9) specifically reported on water governance as being a key root of problems pertaining to the delivery of sustainable water services. Given its importance, the topic is dealt with in the following section.

Water Governance

Water Governance refers to a range of political, social, economic and administrative systems that are in place to develop and manage water resources, and the delivery of water services, at different levels of society (Rogers & Hall 2002). It is further perceived in its broadest context as entailing those social, political and economic organisations and institutions and their relationships, which are regarded important for the management of water and sanitation (UNDP, GWP & ICLEI 2002).

The indicators for effective Water Governance include participation, transparency, equity, accountability, coherency, integrative, and ethical consideration (UNESCO 2006). An additional criterion is that there must be predictability in the political and administrative systems such that all players know the rules and accept that these will be applied consistently (Pegram et al. 2006). The issues of lack of coordination in governance systems and lack of accurate information to inform decisions need to be dealt with (Mwiinga 2008).

The Report of the World Panel on Financing Water Infrastructure indentified that serious defects in the governance of the global water sector fetter its ability to generate finance (Winpenny 2003:9). The report enlists the following governance issues as important:

The apparent low priority that central governments give to water sector issues
Confusion of social, environmental and commercial aims
Political interference
Poor management structures with imprecise objectives for water undertakings
An inadequate general legal framework
Lack of transparency in the award of contracts
Non-existent, or weak and inexperienced regulators
Resistance to cost-recovering tariffs

The relationships among the above issues were not presented in the report. Therefore, an attempt to prioritise the above issues and analyse their relationships was made and the results are illustrated in Figure 1.

Figure 1: Relationships among governance issues in the water sector
(Direction of arrow indicate direction of adverse influence: e.g. political interference negatively influences efforts to implement cost-recovery tariffs)

From the relationships of the governance issues shown in Figure 1, three indications can be drawn:

Management structures are influenced by a host of issues. Effective delivery of water services and ability to attract and sustain financing depends on how management structures are protected from adverse effects of these issues.
The political interference has the largest influence on other issues. This concurs with current sector sentiments that the water sector requires strong political will and support in order for it to be sustainable.
The legal framework and regulation issues have a high-level role in the management of the water sector. It is thus important these issues are adequately dealt with to ensure predictability in the governance of the sector and prevent protracted adverse impacts in the sector.

It should also be noted that without addressing the apparently low priority that central governments give to water sector issues, it would be difficult to address the current low financing and investment woes faced by the water sector. The issues of low financing and investment are discussed in more detail in the following section.

Low financing and investment

The characteristics of the water projects and the attendant risks (see Section 2.2) have resulted in low investment participation from the private sector. On the other hand, the public sector responsible for water services, has not fully appreciated the complexity of the risks of water projects. As a result, the water sector is in many circles reported to be poorly prioritised, which leads to under-funding and low investment.

Due to short-comings in governance systems, associated risks in financing water sector projects are usually not well analysed to ensure development of attendant risk mitigation measures. As a result water services projects have been financed without considering long-term sustainability aspects. This practice is common in Africa where poverty and high politicisation of water add to water services delivery challenges. Therefore, many water sector projects remain unattractive to private sector financing and participation.

It is not surprising that the continent’s investment in water is comparatively low given its historical economical and governance profile. Although history tells us that African governments have given the sector low priority in funding, the recent recognition of the sector being a linchpin in achieving the MDGs have led to African states making several declarations that are envisaged to propel investments in the sector (Manu 2008). Manu (2008) estimates that Africa needs about US$6 Billion per year to meet water and sanitation challenges of the MDGs. This funding is likely to come from public sources as the private sector is slowly shunning away from participation in the water sector. The generally poor enabling operating environment that exists in many African countries is reported to be the reason for poor PSP. The sector is potentially political in African where the majority of the population is poor and located in rural and peri-urban areas where the challenges of providing water services are further hampered by lack of adequate infrastructure. Therefore, commercially viable tariffs are a challenge to implement in such areas and political interference would be potentially rampant if PSP was sought.

Financing practices for water services in Africa

Challenges in financing water sector projects

Prasad (2006:670) reports that “It is estimated that over 90% of the world’s population is currently served by the public sector1”. This means that financing for public services largely depends on public funds and the attendant challenges are dictated by the capacity of National and Local Governments to raise funds. AMCOW (2008) reports the following challenges in financing the water sector in Africa:

Lack of adequate funding levels.
Lack of adsorption capacity where funds are available leading to inefficient and ineffective use of funds, especially due to corruption. It is estimated that about a third of funds invested in the water cannot be accounted for (ICA, 2008).
Focussing on increasing supply coverage resulting in the financing for operation and maintenance receiving little attention.
Political interference in water pricing and resource allocation.
The “financing monopoly” of Governments is making it difficult to develop bankable projects.
Current attempts to develop innovative financing is focussing on urban water utilities, neglecting rural water supply and water resources infrastructure development necessary for water security.

The above challenges have largely been attributed to the fact that a large part of the public sector in Africa is inefficient and incapacitated but are still responsible for the provision of water services.

Sources of revenue and financing practices

Sources of revenue for the water sector can be categorised into basic and repayable (Winpenny, 2008:9). The former include tariffs, taxation and transfers, while repayable funding sources include loans, bonds and equity. The fundamental difference between these sources of revenue is that the basic revenues provide an assured cash flow which can be used to attract repayable finance.

In Africa, the public sector is largely responsible for providing water services and water utilities usually survive on a financial hand-to-mouth basis reliant on infrequent and inadequate government tax-funded subsidies. Because water is in many countries considered a free social good, hence governments and consumers are unsure as to how far water can be commercialised. Thus tariffs are in many cases below economic levels resulting in basic revenues not covering recurrent costs. The poor cost-recovery is making it difficult to attract repayable funding sources.

In order to improve the financing and delivery of water services, various options for Private Sector participation (PSP) and commercialisation have been sought. However, the lack of operating environments that are conducive for PSP has been a main hindrance. In Africa, the commercialisation of water services through establishment of public water utilities that emulate private sector performance was being promoted against the backdrop of economic decline, reduced incomes, increasing poverty and high national indebtedness (IPCIG, 2008:1).

Currently, the water sector in Africa is experiencing targeted financing initiatives aimed at improving the operating environment for investment. The recognised inherent complexities of water projects have led to the development of project preparation facilities aimed at assisting with the preparation of bankable projects. Examples include the African Water Facility (AWF), The European Investment Bank’s Facility for Water Projects and the Technical Assistance Grant Facilities in many Development Finance Institutions. The AWF was established as an instrument designed to assist the successful implementation of the African Water Vision 2025 (AMCOW, 2008).

Experiences with private sector

To presumably bring in efficiency, the water sector in Africa has experienced various options for PSP. Earlier attempts were more inclined towards full-privatisation and the subsequent failures led to the emergency of Public-Private Partnerships (PPPs) models (see Table 1).

Table 1: Main types of PPPs models and allocation of responsibilities (World Bank, 1997)

Despite distinctions of PPPs shown in Table 1, the World Bank says that many governments often use hybrid models. For instance, it is possible to have Management Contracts in which the private sector takes on some commercial risks, or Lease Contracts in which the private sector is responsible for some capital investments. The world’s largest water privatisation has to date taken place in Manila through a concession contract (Dumol, 2000). Concession contracts have been reported to be favourable where the area of service is large enough to take advantage of economies of scale (Farlam, 2005:24). However, where the operating environment is too complicated or the area of service too small to take advantages of economies of scale, public water utilities have tended to opt for ‘partial management contracts’ rather than full-privatisation.

While there have been some successes in privatisation, the high expectations of privatisation of basic utilities have not matched the results in the sub-Saharan region (Ivo 2008:2). Ogunbiyi (as cited in Farlam, 2005:20) reported that “PPPs have not had much success in Africa’s water sector”. The implementation of PPPs models has yielded mixed results and in several instances the private sector has seemed no more efficient in delivering services than the public sector (Prasad, 2006: 669).

Prasad (2006:688) concluded that experiences with PSP worldwide suggest that there is a significant conflict between social development, public health and environmental concerns and poverty reduction, on the one hand, and the private sector’s motive of profit maximising, on the other. The profit concerns from the private sector should not be a surprise as any PSP business comes at a cost and must ensure financial sustainability in the long term. However, what seem to have received little attention are efforts to balance the objectives of financial sustainability and financial profitability in order to achieve social development, environment sustainability and poverty reduction. It is possible to achieve financial sustainability without financial profitability being the key driving force (Prasad, 2006:688). But such a possibility can only be held true where there is minimal PSP, otherwise the need for financial profitability still remains.

One of the key contractual lessons learnt in financing water projects based on PPPs models is the need to ensure that contracts are concluded based on sufficient information and predictability of the future operating environment. Otherwise, contracts remain susceptible to renegotiations, which can be frustrating to both the private and public partners. Farlam (2005:21) reports of a case in South Africa in which a 30-year water services concession contract was subjected to renegotiations due to extreme changes in the operating environment within 5 years of its implementation.

Despite the challenges and reported failures of the implementation of PPP models, there have been successful ones. The Senegal Water Sector Reform that led to successful implementation of PPPs is a good case study for Africa (DBSA, 2006:111). Amongst several other African Countries, South Africa has also recorded some failures and successes in PPPs (Farlam, 2005:21-25).

Investment opportunities

Water is life and there will always be a growing demand for it. Investment opportunities in water can only be realised by appreciating the true value of water and its role as a key input to social and economic development and environmental sustainability. Consideration should be given to managing the development of water resources and water supply in the same manner as sectors such as energy. Water has a central role to play in society and most importantly managing it as a business can also address poverty and health challenges.

The poor condition of water infrastructures in a many African countries as a result of years of ineffective operation and neglected maintenance provides a huge investment opportunity. Manu (2008:21) reports that targeted investments of US$12 billion per annum in drinking water and sanitation over the next ten years should be sufficient to attain the Millennium Development Goals (MDGs). However, the financing opportunities lie in understanding the implications of the sector challenges on public welfare. There is growing evidence that African Governments and development partners have taken major steps to respond to financing requirements of Africa’s aspirations in the water services sector, although a finance gap of the order of US$4 billion p.a remains (Manu, 2008:4).

Water services have to reach all communities and successful delivery entails engagement of local communities for sustainability purposes. Hence, job creation opportunities in the delivery of water services are inevitable. Ultimately, access to clean water and sewerage systems improves public health and protects the environment. Hence, investments in the water sector have a direct impact on the social-economic development and environmental sustainability. Many industrial processes need clean water and at the same time produce effluents that pollute the environment. Therefore, there are opportunities to optimise the use of water by industrial/commercial consumers.

The hydrology of Africa is that of extreme rainfall variability and distribution. There are regions that have scarce water resources and focussing on managing current water resources is becoming more important than the building of new physical infrastructures. Hence there are opportunities to invest in water conservation initiatives, which can minimise water losses and at the same time make more water available for other uses. However, the need to increase storage to ensure sustainable water services is very much necessary.

Although the provision of water is largely a responsibility of the public sector, the reality in Africa is that PSP and PPPs still have the potential to improve procurement of public services and enable more efficient use of resources. Given this scenario, there are numerous opportunities to invest in strengthening the implementation of PPPs options that can result in the sector attracting repayable finances.

The way forward for Africa

Africa is now in an era of abundant knowledge, experiences and commitments. The only way forward is to use these developments to deliver/implement commitments. It is thus inevitable for Africa to begin collating existing knowledge and experiences, a task that is seemingly on-going and has resulted in various declarations and commitments.

Findings in recent research indicate that ‘Effective Water Governance’ is now becoming a very important tool to measure the ability to attract finance. National Governments must take the lead in the water sector reforms and the attendant initiatives to promote investor/private interest in financing water projects. The trend of decentralising the provision of water services must go hand in hand with appropriate support from national governments and not leaving local authorities to their own demise. International Financing Institutions are now focussing on dealing with sub-sovereign (local) risks and requesting that local authorities be financially accountable on their own (Winpenny, 2008). Hence, national governments must invest more in supporting local authorities with respect to regulation and capacity building initiatives that create conducive environments for implementation. Expert knowledge is still largely in the private sector; hence PPPs models are still cardinal to bringing efficiency in the public water utilities.

Given the social value of water services, political risks in the sector have been high on the African Water Governance challenges. The relevance of political structures to facilitate delivery of public services cannot be overemphasised. However, these structures need strong water sector advisory services so that politicians avoid making unrealistic promises relating to delivering of water services. This would further assist politicians to establish operating environments that are predictable and conducive to PSP and financing.

Given the challenges regarding the poor status of existing water infrastructures in Africa, it is important to begin with managing what is available. The push for investigating in new infrastructure development must be preceded or move along with effective management of the existing infrastructure. The trend by Development Finance Institutions has been to fund new infrastructure developments and hope that resulting revenue would finance recurrent costs. The latter has not been forth-coming and it is increasingly becoming evident that targeted financing for rehabilitation, operation and maintenance is inevitable.

It is important that financing for physical water infrastructures be preceded by long term capacity building and institutional development support. This should include establishment of mechanisms to ring-fence water sector revenues so that attendant recurrent costs are met from the revenues. In Africa most local authorities are still managing pools of public services (water, electricity, buildings, transport) whose revenues all go in one basket. Water revenues are one of the reliable sources of municipal local funds, but re-investment in the water infrastructure is normally inadequate and need to be enhanced.

In addition, Government departments in many African countries usually have the largest water bills, at the same time the most payment arrears. Hence, African governments must lead by example in paying their water bills in order to improve the willingness-to-pay from consumers that would ensure the financial sustainability.

Conclusions

Currently, knowledge and experiences regarding the practices in water sector financing are abundant, but have not been optimally utilised. Hence some reported challenges in attempts to increase funding the sector from private capital markets are common. What is evident is that the large part of the management of water services in Africa still remains in public hands. Hence, the capacitating of state owned or supported water utilities / authorities must be given priority, even to a minimum level that would ensure professional engagement with the private sector. Although there have been mixed results pertaining to PSP in the water sector, the chronic lack of capacity and low funding in the sector still retains the potential for the use PPPs.

Given the abundance of the sector financing knowledge and experiences, it is important that Africa starts focussing on prioritising water sector projects and ensuring targeted implementation. The commitments that have been made so far must be followed through if the ever rising challenge of financing is to be stalled. Improving governance issues relating to water must be accelerated as matter of urgency to ensure conducive operating environments that will be able to attract sustainable financing.

In considering various financing options, it is important that Africa acknowledges and understands the inherent characteristics of the water sector projects and attendant risks, both in the short and long terms. In mitigating such risks consideration of the existing operating environment and status of water infrastructures must be given primary attention. Furthermore, in attempting to involve the private sector, a balance between financial profitability and sustainability need to be negotiated considering social and environment impacts. Experience shows that state subsidies are necessary in Africa to facilitate the attainment of such a balance given that a large part of its population is indigent.

Finally, financing opportunities in the water sector are evident given the strategic role water plays, both socially and economically. Given the numerous lessons learn, the potential for Africa to optimise the use of water as a social and economic development vehicle is immense. The trans-boundary characteristics of Africa’s water resources also provide opportunities for cross-border collaboration using water as the common denominator.

References

African Development Bank (AfDB). 2008. Mobilising Private Financing for Water Projects. Presentation at the Infrastructure Consortium Meeting on “Financing Water for growth in Africa. Dakar: AfDB
AFRICAN MINISTERIAL COMMITTEE ON WATER (AMCOW). 2008. Perspective and Challenges on Financing Water Interventions. Presentation at the Infrastructure Consortium Meeting on “Financing Water for growth in Africa. Dakar: AWF
DBSA. 2006. Knowledge to Address Africa’s Development Challenges - Edited Proceedings of the Inaugural Knowledge Management Africa Conference. Midrand: DBSA.
DUMOL, Mark. 2000. The Manila Water Concession – A key Government Official’s Diary of the World’s Largest Water Privatisation. Washington, D.C.: The World Bank
International Policy Centre for Inclusive Growth. 2007. Privatising Basic Utilities in Sub-Saharan Africa: The MDG Impact. Policy Research Brief No. 3. [Brochure]. Bayliss, K & McKinley, T: Authors.
International Policy Centre for Inclusive Growth. 2008. Reforming Without Resourcing: The Case of the Urban Water Supply in Zambia. Policy Research Brief No. 8. [Brochure]. Dagdeviren, H & Robertson, SA: Authors.
Ivo, A.M. 2008. Privatisation: A Burden or Strategy for Sub-Saharan Africa? Focussing on Access to Water in Wovia Village, Cameroon. Limbe: African Centre for Community Development
Manu, K.S. 2009. Bridging Divides in Africa’s Water Security: An Agenda to Implement Existing Political Commitments. Istanbul: 5th World Water Forum.
Mwanza, D. 2005. The challenges of Urban Water Supply in Africa. 2005. (In DBSA, 2006. Midrand: DBSA)
Mwiinga, G. 2008. A Report on the DBSA’s Internal Water & Sanitation Dialogue (Theme - Water & Governance). Midrand: Unpublished???
Pegram, G., Mazibuko, G., Hollingworth, B. and Anderson, E. 2006. Strategic Review of Current and Emerging Governance Systems Related to Water in the Environment in South Africa. Pretoria: Water Research Commission.
Prasad, N. 2006. Privatisation Results: Private Sector Participation in Water Services After 15 Years. Development Policy Review, 24(6): 669-692, November.
Public-Private Infrastructure Advisory Facility (PPIAF). 2002. New Designs for Water and Sanitation Transactions. Washington, DC: World Bank
Rogers, P. & Hall, A. 2002. Effective Water Governance. Sweden: Global Water Partnership.
UNDP, GWP, & ICLEI. 2002. Dialogue on Effective Water Governance. Pamphlet
UNESCO. 2006. World Water Sanitation Report. Chapter 15: Stewardship and Governance. P373
Winpenny, J. 2003. Financing Water for All. A Report of the World Water Panel on Financing Water Infrastructure. WWC, GWP and ADB.
Winpenny, J. 2008. Finance Instruments – status and trends. A Keynote paper presented at the Infrastructure Consortium for Africa Meeting on “Financing water for Growth in Africa. Dakar: Wychwood Economic Consulting, Ltd.
World Bank, 1997. Toolkits for Private Sector Participation in Water and Sanitation. Washington, DC: The World Bank
World Bank, 2004. Public and Private Sector Roles in Water Supply and Sanitation Services. Washington, DC: The World Bank ( In Prasad, 2006)

Footnotes

1. The Public Sector term is used as an all embracing term covering various levels of government, agencies and possibly state owned enterprises.

KM & Economic Challenges

How much is a Billion, really?

KMAadmin — Fri, 31 Jul 2009 01:46:37 -0600

Here is an interesting fact: In America, a billion is a thousand million written thus 1,000,000,000

However, in England, the British define a billion as a million million. That is 1,000,000 times 1,000,000 which would be written thus 1,000,000,000,000

Once you get past eight zeroes, the British names do not match the American names. For example, a number followed by 9 zeroes is in the British "milliards" but the American "trillions". In other words, the British Numbering System is completely different from the American Numbering System after the thousands and millions. Thousand and Million are the same, but then you see Milliard, Billion, Billiard, Trillion, Trilliard, etc.

American / British / No of Zeros

Thousand / Thousand / 3 / 000

Million / Million / 6 / 000000

Billion / Milliard / 9 / 000000000

Trillion / Billion / 12 / 000000000000

Quadrillion / Thousand Billion / 15 / 000000000000000

Quintillion / Trillion / 18 / 000000000000000000

This is important not only for economics but also for science - when you hear Billion and Trillions being bandied about, we need to be clear about whether we are talking about the British or American system. So, is that the American one thousand million equals a billion world, or the British one million million equals a billion world? This is important as it is the difference between 2,000,000,000,000,000 degrees C and 2,000,000,000,000,000,000,000 degrees C.

You can find out more about the British and American numbering systems at Numbering Systems and Place Value Website Additionally, the site looks at other naming systems for large numbers such as the Googols and Googolplexes.

Fireside Chat

4 steps to exploring social media

KMAadmin — Sat, 13 Jun 2009 00:09:05 -0600

If you are new to social media and are still exploring the area, here are 4 steps to help you get the best out of it:

Step 1: Explore - search & browse for content that interests you. Find out where your friends, colleagues and peers spend their time on the web. Particularly look for notable commentators and figures in the area in which you are interested, subscribe to their personal blogs and follow the comments and conversations.
Step 2: Understand the space. The social media space has its own set of informal rules often termed 'netiquette' (the etiquette of the 'net). The fundamental idea is to treat others in the way that you would like to be treated - be polite, firm, honour your commitments and be consistent across all the networks that you choose to belong to. Also, commit to prompt feedback-there is nothing stranger in an electronic world than people who takes weeks to respond to an email. Also remind yourself anything you do on the 'net that can be directly traced back to you will speak volumes about 'who you are'; this image will either attract of repel potential contacts.
Step 3: Ask intelligent knowledge creation questions and give prompt feedback - you can do this by voting on content and by adding your own comments or even feeding back on other comments thus further stimulating a conversation. Also, while you can explore ideas, never attack (or 'flame' in internet language) people or groups.
Step 4: Contribute - start creating, editing and enhancing the KMAfrica.com knowledgebase. All our content is fed to a variety of knowledge-related sites and newsfeeds and so it creates awareness and interest. Use your personal blog and the SIGS to highlight your projects and interests and get feedback from other members. Find ways to tell your own story in creative ways using diverse media.

Fireside Chat

Challenges of increasing sugar productivity in a depressed economy - the Kenyan experience - Eng. Okumu Ngwalla M.F

KMAadmin — Fri, 24 Apr 2009 02:44:06 -0600

By: Eng. Okumu Ngwalla M.F (Formerly – Process Engineer – South Nyanza Sugar Co. Ltd, Kenya.)

ABSTRACT
The art of producing sugar is a very challenging exercise. This is because it involves extensive use of sophisticated machines/management of human resource and materials into a finished product i.e. sugar.

The raw materials are sugar beet and sugar cane and other corrective materials like lime sulphur and alcohol depending on seeding process.

In Kenya sugar processing involves use of steam power generated from the boilers using bagasse, a by product of sugar cane to drive the mill turbines for crushing cane and turbo alternator to generate electricity used in the factory.
In Kenya two processes are in use to extract juice from sugar cane: diffusion and crushing. Mumias Sugar Company uses diffusion.

As can be seen none of the above processes is simple. Each presents a technological challenge ordinarily- sugar is a principal factor in the development of any country.

In this paper we shall look briefly at the principles and history of economic depression with emphasis on the American scenario. We shall try to establish whether the Kenyan economy is depressed.

Since the sugar industry operates within the economy it is reasonable to believe that the state of affairs of the economy would exert a significant influence on sugar production and consumption and this industry like other process industry is affected by economic changes in the society. For this reason a significant portion of this paper has to look at various effects and consequences of economic depression.

In this paper we shall highlight major challenges and problems involved in increasing sugar productivity in Kenya with emphasis on the history of the sector, policy framework, sugar imports and high duties, sugar development and supply factors, expansion and modernization programmes, high power bills, inefficient methods of production including maintenance and manpower resources.

We shall attempt to look at ways of mitigating some of these challenges. A specific focus will be on why Kenyan sugar is more expensive than imported one. From the Kenyan experience the paper will give practical solutions and how this knowledge can be replicated in African and global economies.

KM & Economic Challenges

Knowledge to Reposition Africa in the Global Economy by use of Technology - Dorothy Wacuka Mbogo

KMAadmin — Fri, 24 Apr 2009 01:20:37 -0600

Author: Dorothy Wacuka Mbogo - Jomo Kenyatta University of Agriculture and Technology
P.O Box 62000-00200 NAIROBI, KENYA
Email:dorothykonji@yahoo.com
Phone Number: 0734857311

Sub-Themes: Knowledge Management and Economic Challenges

Abstract for Knowledge to Reposition Africa in the Global Economy by use of Technology:

When we focus on global Economy It is clear that ICTs now form the basis for manpower development in a knowledge economy and there is the exigency to reposition Africa for the unfolding challenge for rapid growth in the global economy. From East to West, North to South Africa, the growing inseparable link between ICT and the marketplace is captured by the rapid deployment of Economic Resources Planning (ERP) in the corporate world. The emerging knowledge economy demands that co-operate organizations make conscious and concerted efforts to upgrade the knowledge base as well as re-skill their human capital base with requisite ICT capabilities and capacities. Africa has a bright future if it takes the right Human Resource (HR) decisions and implements the use of ICTS in all fields since technology has made the whole world a global village hence here in Africa we should not trail behind. It needs to exploit cautiously finite Human Resource and the appropriate technology which is an asset that can grow and appreciate in value, as more knowledge and skills are acquired. We need to de-emphasize partisan political differences, encourage industry, government, and academia to work together. There should be establishment of clear national vision, develop the capacity to assemble team to make the global vision work, unite Africans for attainment of common goals. There should also a committee set aside for ensuring earliest access to ICT and electronic literacy, overhaul of the content of the educational system, increase distance and life-long learning, promote e-Government, tale-medicine and rural connectivity and construct and develop a global network of African professionals. African leaders should adopt the courage to take very difficult decisions based on integrity, transparency and accountability as well as knowledge to negotiate in Africa’s interest.