Africa Trade Magazine

Several warning signs should have been heeded along the “trade routes” between the People’s Republic and the African continent.

As far as the analysts go, Standard & Poor's was clear in its report (published in May): "China in Africa: the benefits and risks." Interviewed by Le Monde, author Ravi Bhatia, indicated that "from a strictly business point of view, Africa may be overexposed to China. The recent slowdown in Chinese growth led to the fall of commodity prices, which has strongly affected several African countries, including Nigeria, Angola, Gabon and Congo-Brazzaville.” Africa also may suffer the burden of debt. Financing for many projects was arranged in relatively favorable conditions and a large debt load was taken on in many instances. The decline in market prices of raw materials, followed by lower GDP, lower tax revenues, falling exports and currency depreciation, could reduce revenues for debt service he says.

African governments that are strongly attached to Chinese expertise, are no longer certain to be able to ensure the pace of growth of infrastructural improvements through Beijing.

Bhatia says from Beijing’s perspective, the nature of its relationship with Sub-Saharan Africa is threefold. First, it provides access to raw materials to feed its rapid growth dominated by heavy industries. Second, many Chinese loans to Sub-Saharan Africa are subject to the conclusion of contracts with Chinese companies, which contributes directly to the Chinese economy. Loans, in theory, are designed to make a profit via the interest on the loan itself, or for the Chinese contractor carrying out the project. The third aspect of the relationship involves strategic considerations. China uses loans and its financial strength to expand its influence in Africa and to gain allies. From Standard & Poor's view, managing the three elements is tricky because it can lead Chinese lenders and public enterprises to underestimate the risks.

The current poor health of the Chinese economy is mainly due to overestimated growth. Several African countries have also been swayed by this illusion. It is now a matter of seeing how the collapse of several sectors can be offset. In a word, the slowdown in China could not have come at a worse time.

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Africa is not the only place where authorities are struggling with the contentious issue of financing health care. Most industrialized countries and many emerging nations are wincing as well. Most health care systems in Africa are under financed and under equipped. Analysts agree that good will and a good sense of prioritization would go a long way in "remedying" the situation.

Dr. Luis Gomes Sambo, Regional Director of the World Health Organization (WHO) for Africa, says "The challenge for African governments and their partners is to better coordinate the delivery of care and to ensure that funds are used responsibly for the benefit of Africans." Given the state of public finances in Africa, it is clear that states should rely a little more on the contribution of the private sector and nongovernmental organizations. They are partners in many cases, but they should seek to review their practices.

Most African countries have been struggling to make reforms to improve the delivery of health services. Despite these efforts, health systems are weak and dysfunctional. The main constraints are financial and human resource penuries. That is why authorities welcome the support of the international community. Some "vertical" programs, focused on diseases, have had dramatic results, but they neglect an important underlying cause of morbidity: weak health care systems.

These systems must be able to perform service delivery, resource generation - investing in people, infrastructure and equipment - financing and general administration which ensures control and to provide guidance from the perspective of health. When these elements are perfectly coordinated, the result is a longer life expectancy. Given the inability of governments to provide basic health care to a population that, in the absence of state funded care, has no other choice but to look for other solutions, the private sector plays a very important role, intervening where the state does not provide essential services.

Initiatives such as one by the World Bank via the International Finance Corporation (IFC) have great potential. At the IFC, it is estimated that "the health problems of Africa are immense but not insoluble. Tremendous opportunities exist to use the private sector to improve access to better products and better services. In a region where public resources are limited, the private sector already plays a very active role. In Africa, about 60% of health funding comes from private sources and about 50% of total health expenditures go to private providers."

But the slope is steep. Sub-Saharan Africa, which has 11% of the world's population, supports 24% of the global disease burden and commands less than 1% of world health expenditures. It also suffers from a severe shortage of qualified medical personnel, with only 3% of the world's health workers.

Fifteen years ago, it was estimated by the World Bank that between 25 and 30 billion US dollars were necessary for new investments to improve African health systems - by 2016. This translates to between 550,000 and 650,000 hospital beds, 90,000 physicians, about 500,000 nurses and 300,000 community health workers. This does not take into account expenses for distribution and production channels for drugs and other medical supplies.

Once again, the ball is in the court of policymakers. A big price to pay, but it will grow larger with delay.


Africa should be wary of China’s woes

Wednesday, 26 August 2015

The price of health

Wednesday, 05 August 2015

Weighing the BRICS

Wednesday, 15 July 2015




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