African Trade Hub in China Brings Mutual Profits

South-South trade is the great economic success story of the past decade. World Trade Organization (WTO) (www.wto.org) figures show South-South trade accounted for 16.4 percent of the US $14 trillion in total world exports in 2007, up from 11.5 percent of the total in 2000. While the global economic crisis has slowed things down, the overall trend is firmly established.

Trade between China and Africa has surged over the past decade since China joined the WTO in 2001, from around US $10 billion in 2000 to US $73.3 billion in 2007, registering a year-on-year increase of 32.2 percent. In 2008, it soared by 44.1 percent to reach a record high of US $106.84 billion, registering a year-on-year increase of 45.1 percent, according to Zhang Yongpeng of the Institute for West Asian and African Studies (IWAAS).

In the southern Chinese city of Guangzhou (http://en.wikipedia.org/wiki/Guangzhou) , a trading hub nicknamed “Africa Town” has emerged since 1998. A conglomeration of buildings around the Xiaobei road in Yuexiu district of the city, it has been equated to the famous Chungking Mansions of Hong Kong (http://en.wikipedia.org/wiki/Chungking_Mansions) . There are officially 20,000 African traders and entrepreneurs in the city of 18 million, but unofficial estimates put the number at more than 100,000. This African trading hub has emerged to the benefit of both the Chinese and Africans. It is a coming together of small traders matching Africa’s strong demand for consumer goods with China’s manufacturing powerhouse.

The traders export generators, toys, mopeds, construction equipment and other products back to Africa. The traders act as go-betweens, bringing their local knowledge of African market demands to the Chinese manufacturers.

Citizens from over 19 African countries are represented, the majority from Nigeria.

“Almost 90 per cent of goods in African markets come from China, Thailand and Indonesia,” Sultane Barry, president of Guangzhou’s Guinean community, told the Globe and Mail newspaper.

Barry has an entire floor for business in a 35-storey building packed with shops, offices, freight-forwarding companies, African restaurants, hairdressers and furnished apartments for rent by the week.

“We’re not here for fun,” said Ibrahim Kader Traore, an entrepreneur from Ivory Coast. “We work hard and do well. In Abidjan, people still swear by France, where you might be able to save US $13,000 over 25 years; in China, you can have US $130,000 in just five years.”

A trading success story, the hub has run into problems over visas and the upcoming November Asian Games in Guangzhou, which is increasing identity checks.

“I sell more than 50 per cent of the output of my brother-in-law’s TV factory to Africans,” one saleswoman told the Globe and Mail. “We need them and I’m worried there are going to be fewer of them.”

Brought together by trade and mutual interest, both communities still have much to learn about each other. Relations have had their ups and downs and Africans can face discrimination.

But the trading relationship is teaching both sides important lessons. “The arrival of the Africans taught the Chinese how to look for business opportunities,” said Barry. “The secretaries we had here didn’t speak a word of English. Our presence started a craze for learning languages: English and French. The Chinese didn’t know the basic rules of international trade. They knew nothing about documentary credit. They paid for everything cash in hand.

“The Chinese people will soon realize that it’s better for business to deal directly with ordinary Africans.”

And the pressure is on to see who will keep trading relations with Africa positive. “The door to the Chinese market has only opened a crack, mostly because visa requirements are so tough,” said Zango, a trader from Mali.

By David South, Development Challenges, South-South Solutions

Published: July 2010

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Innovation in Growing Cities to Prevent Social Exclusion

As of 2007, the world became a majority urban place. The largest movements of people in human history are occurring right now, as vast populations relocate to urban and semi-urban areas in pursuit of a better quality of life, or because life has become intolerable where they currently live.

A new book launched during this year’s World Urban Forum in Rio de Janeiro, Brazil highlights ways in which people across the South are shaping how their cities evolve, insisting that they will not accept social exclusion and demanding a “right to the city.”

“A lot of social initiatives based on the right to the city are coming from these ‘new cities of the South,’ said one of the book’s editors, Charlotte Mathivet of Habitat International Coalition in Santiago, Chile. “The book highlights original social initiatives: protests and organizing of the urban poor, such as the pavement dwellers’ movements in Mumbai, India where people with nothing, living on the pavements of a very big city, organize themselves to struggle for their collective rights, just as the park dwellers did in Osaka, Japan.”

This first edition of Cities for All: Proposals and Experiences towards the Right to the City, comes in three languages – English (http://www.hic-net.org/document.php?pid=3399) , Spanish ( http://www.hic-net.org/document.php?pid=3400) and Portuguese (http://www.hic-net.org/document.php?pid=3401) – is intended to inspire people to tackle positively this fast-changing urban world.

The book’s chapters span an eclectic mix of topics, from democracy in the world’s future cities to experiences in Africa’s cities, to how the 2008 Beijing Olympics affected the metropolis, to ways of involving children in urban planning.

One innovative case study included in the book is the children’s workshops in Santiago, Chile, which aim to make a more child-friendly city by including children in the planning process.

One example of the success of a child-friendly approach has been the work of the former mayor of Bogotá, Colombia, Enrique Peñalosa (http://www.pps.org/epenalosa-2/) . As mayor of the city of over 6.6 million people from 1998 to 2001, he put children to the fore in planning.

“In Bogotá, our goal was to make a city for all the children,” he told Yes! magazine. “The measure of a good city is one where a child on a tricycle or bicycle can safely go anywhere. If a city is good for children, it will be good for everybody else. Over the last 80 years we have been making cities much more for cars’ mobility than for children’s happiness.”

His term in office saw the establishment or refurbishing of 1,200 parks and playgrounds, the building of three large and 10 neighbourhood libraries and the opening of 100 nurseries for children under five. He also oversaw the creation of 300 kilometres of bike lanes, the largest such network in the developing world, created the world’s longest pedestrian street, at 17 kilometres, and turned land earmarked for an eight-lane highway into a 45 kilometre green belt path.

Cities for All’s publisher, Habitat International Coalition (HIC) (www.hic-net.org) , says it focuses on the link between “human habitat, human rights, and dignity, together with people’s demands, capabilities, and aspirations for freedom and solidarity.”

The group works towards the creation of a theoretical and practical framework for what it calls a “right to the city.”

The cities of Africa and Asia are growing by a million people a week. If current trends continue, megacities and sprawling slums will be the hallmarks of this majority urban world. Currently in sub-Saharan Africa, 72 percent of the population lives in slum conditions. And by 2015, there will be 332 million slum-dwellers in Africa, with slums growing at twice the speed of cities.

“The consequences have produced a deeper gap between the city and countryside and also within the city between the rich and poor,” said Mathivet.

“We must think of the right to the city as a lively alternative proposal,” Mathivet said, “a banner under which social movements, academics, and social organizations are struggling against the perverse effects of neo-liberalism in cities such as the privatization of land, public spaces and services, land speculation, gentrification, forced evictions, segregation, and exclusion.”

Cities for All, recently published by Habitat International Coalition, draws together thinkers and innovators in a compilation of case studies addressing the challenges of inclusive cities in the global South. The book seeks to articulate experiences of South-South cooperation and enhance the links between different regions. David South interviews the co-editor, Charlotte Mathivet.

By David South, Development Challenges, South-South Solutions

Published: July 2010

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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South Gets Reading Bug with more Festivals

 

There is no better indicator of significant economic progress than the rise and rise of book festivals across the South. These symbols of intellectually curious and globally aware middle classes are also boosting economies and contributing to a bigger, more sophisticated creative economy – something that will drive future growth across many sectors.

The trend is most advanced in Asia, where according to the OECD, “large numbers of Asians are expected to become middle class in the next 10 years” (OECD Working Paper No. 285). But the rising middle class can also be found across the South – and so can the new book festivals.

According to Sanjoy Roy, managing director of New Delhi-based festival producer Teamwork Productions (www.teamworkfilms.com) ,” India’s rising economic growth has ensured that the great middle class is happy to travel and to spend.”

“More and more Indians are taking to tourism both local and international. India’s large middle-aged upper middle class and wealthy sector feeds occasions like the literature festival, ensuring attendance, making it a word of mouth must-be-seen, must-attend occasion on the social season calendar.”

Recognition of the importance of this trend can be seen in the recent growth in book festivals associated with the Hay Festival (www.hayfestival.com) based in Hay-on-Wye, Wales. There are now Hay festivals in Beirut, Lebanon; Bogota and Cartagena, Colombia; Zacatecas, Mexico; Nairobi, Kenya; the Maldives; and the Indian state of Kerala.

The festivals are part of the powerful global creative economy, which is seen as the “interface between creativity, culture, economics and technology in a contemporary world dominated by images, sounds, texts and symbols” (UNCTAD). The cultural sector has been shown to be an effective way for emerging economies to leapfrog into high-growth areas in the 21st century world economy.

Roy also confirms the economic impact of book festivals. He produces India’s Jaipur Literature Festival (www.jaipurliteraturefestival.org) , which attracted over 32,000 visitors this year. The hard numbers show the economic impact of the event: “Approximately 3,000 room nights were booked by visitors during this period at an average of US $100 per night,” Roy said. “Our own spend in Jaipur during this period was approximately US $500,000. Shopping, meals and transport spend I would peg at between US $200,000 and US $300,000.”

The OECD defines the global middle class as those living in households with daily per capita incomes of between US$10 and US$100. It calculates that Asia accounts for less than one-quarter of today’s middle class, but says that share could double by 2020. Within a decade, “more than half of the world’s middle class could be in Asia and Asian consumers could account for over 40 per cent of global middle class consumption.”

The World Bank takes an even more optimistic view, seeing this burgeoning middle class’ spending power as being triggered once people get out of the desperation of a subsistence existence. This means the “developing world’s middle class is defined as those who are not poor when judged by the median poverty line of developing countries, but are still poor by US standards. The “Western middle class” is defined as those who are not poor by US standards.” Although barely 80 million people in the developing world entered the Western middle class over 1990-2002, it found an extra 1.2 billion people joined the developing world’s middle class. Four-fifths came from Asia, and half from China (World Bank).

With the rise of the creative sector, significant innovation will come from the global South, according to the director of the Hay Festival, Peter Florence.

“The digital revolution will be absolutely essential to developing countries,” he told the Associated Press. “They are going to skip two levels of publishing industry tradition. The mobile phone is more important for writers in those societies than pen and paper is. That is a very interesting continuation of oral culture. At the same time the West has decided to start moving from audio editions to digital downloads, oral culture is just moving straight into digital culture in many places around the world.”

The impact of a growing middle class can be seen in fast-growing India, which is forecast to become the largest market for English language books within a decade.

A survey by Tehelka (www.tehelka.com) found Indians favour stories about local conditions and set in the places where they live.

India’s most popular current writer is Chetan Bhagat, a former investment banker. He has sold more than 3 million books in the last five years. His latest, Two States, sold a million copies in four months.

Bhagat writes about the country’s aspiring middle class. His publisher, Rupa (www.rupapublications.com/Client/home.aspx) , believes he appeals to a “pan-Indian, pan-age group.”

For Roy, it is still too early to tell how the new Hay Kerala festival in the state capital, Thiruvananthapuram, will affect the economy of the area (the first one is from November 12 to 14, 2010).

“In the long term we hope this too becomes like Jaipur, attracting an international and national audience from outside the state,” he said. “Kerala has a robust economy. What it may do is increase the total tourist influx into the city and divert some of the annual Goa traffic to its own benefit.”

Roy says the Hay Festival Kerala will follow the programming pattern of other Hay festivals, combining international authors with a strong local flavour.

“India is celebrating its golden age in the creative arts and literature not just in English but across all official and subsidiary Indian languages,” he said. “The depth, scope, extent and range of writing in both fiction and non-fiction is incredible.”

Drawing on his success with the festival in Jaipur, Roy has advice for others in the South looking for creative economy success.

“It’s all about location, location, location,” he said. “A festival city like that of Cannes, Venice, Edinburgh, Avignon, Hay are special. Choose the right location, be inclusive and bring the local community on board and have the power to sustain – and in due course with a strong programming base, the festival will grow.

“Every festival will have its own learning (curve) and those who take these on board will find it easier to be successful.”

By David South, Development Challenges, South-South Solutions

Published: June 2010

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Housing Innovation in South’s Urban Areas

 

As urban populations around the South increase, the quality of city housing will be critical to the quality of life and sustainability of improvements to living standards.

Living in crowded and chaotic urban and semi-urban areas does not have to mean suffering poor quality housing. A variety of Southern architects are showing how new perspectives on common problems like cramped spaces, traffic noise, minimal green spaces and tight budgets can be addressed with clever thinking and new concepts.

The bustling and crowded Brazilian city of Sao Paulo has evolved in a chaotic fashion over the years. As Brazilian photographer Reinaldo Coser admitted to design and architecture magazine Dwell (www.dwell.com) , in many places it is “very ugly.”

Sao Paulo suffers from the downside of rapid urban and semi-urban development familiar to cities across the South: traffic gridlock, pollution, noise. It’s a toxic combination of factors that turns even simple tasks like buying groceries into depressingly long, stressful ordeals.

Coser’s family home sits a couple hundred metres from the congested Avenida Brigadeiro Faria Lima (http://en.wikipedia.org/wiki/Avenida_Brigadeiro_Faria_Lima) , the city’s unofficial main street. Yet the dwelling has been cleverly designed to make living in the centre of this modern urban hurly burly a peaceful and calming oasis. Designed by Brazilian architects Studio MK27 (http://www.marciokogan.com.br) – and in keeping with the rich Brazilian modernist tradition pioneered by Oscar Niemeyer in the country’s capital, Brasilia (http://en.wikipedia.org/wiki/Bras%C3%ADlia) – the home uses clever techniques to build calm into chaos.

The front and back gardens are level with the living room, creating an enormous living space that seamlessly flows from indoor to outdoor space. By using a large overhang over the gardens, even on rainy days the home can be lived in almost without walls.

Furniture in the home draws on Brazilian designers like Sergio Rodrigues (http://www.sergiorodrigues.com.br).

One of several innovative Brazilian firms, Studio MK27 was founded in the 1980s by Marcio Kogan. It has 12 architects from around the world collaborating on projects.

With a metropolitan population of around 20 million, Sao Paulo (http://en.wikipedia.org/wiki/S%C3%A3o_Paulo) is the most populous city in the Americas, and in the Southern hemisphere.

While it is easy to point out the downsides of rapid and chaotic urban development, Coser, a professional photographer, lives and loves Sao Paulo nonetheless because, like so many cities across the South, it is a vibrant and dynamic place to be.

And by choosing a design for his home that is calming, he has been able to introduce balance into his family’s life while benefiting from the economic opportunities of the city.

“This house has actually changed the rhythm of our lives,” he told Dwell. “We eat at home more. We go to bed earlier. We wake up earlier. We sleep more.”

And how has the calm helped his two daughters? One is able to play without disturbing the neighbours, and the other can quietly study her books, which was difficult when the family lived in the noise and buzz of a small two-bedroom apartment.

And – something often overlooked in development plans cooked up by economists and urban planners – the aesthetics of the house are very appealing. “Our house is so pretty,” says his wife, Sophia. “Sometimes I like to just look at it for a long time.”

This calm home was created out of basic need. The family needed more space with a second daughter on the way, and had become frustrated with the congestion of the city and the lack of green space. Architect Marcio Kogan was consulted for a solution.

“We wanted a place where we could just shut the door and travel,” says Reinaldo.

The house is made from raw concrete and a cheap-but-tough local wood called cumaru (http://tinyurl.com/3y8kh8v) . By using inexpensive and low maintenance materials, the home is able to weather the environmental stresses of a polluted, tropical city with harsh sunshine.

Kogan deployed his previous experience as a filmmaker to make the home feel and look more spacious and open than it is. He calls it “looking at the world through a wide-screen lens.” The design of the home is seen as a “narrative”, leading the occupant from the garden to the living room, up the stairs, past bedrooms to a rooftop deck with panoramic views of the city.

Another innovative solution in Sao Paulo is USINA (http://www.usinactah.org.br) – a finalist for the World Habitat Awards (http://www.worldhabitatawards.org/about/?lang=00) – which brings people together to build high-density urban housing. It has aided more than 5,000 people to build with their own labour multi-storey buildings. These new apartments are not isolated from other services, but come with community facilities, childcare facilities, professional training courses and other employment-generating activities.

It is estimated up to 15 percent of the city’s population live in slums. This community organising approach is in contrast to the existing ad-hoc building of homes in the slums – often with no technical assistance – or public housing projects built by developers looking for quick profits while ignoring quality and services. USINA’s approach has led to Sao Paulo being a pioneer in participatory housing policies.

USINA provides the technical assistance to social movements looking to build housing for the poor. The cost for the buildings is borne by a combination of public funding and the labour of the residents (working 16 hours per week per household). The cost per housing unit tends to be between US $12,000 and US $15,000 (with land usually donated free by public authorities).

Architectural innovation is also underway in Indonesia, another country that has experienced spurts of rapid economic growth and urbanization, and where a growing middle class is demanding a higher quality of life.

The country’s capital, Jakarta (http://en.wikipedia.org/wiki/Jakarta) , with a population over 8 million, is a mixed bag of modern skyscrapers, crumbling colonial architecture, suburbs and slums.

In the Jakarta suburb of Bekasi (population more than 2 million), Nugrohu Wisnu was looking for a little more space for his family.

At first, the family encountered the downside of poorly designed housing. They bought a house which was infested with termites and was uncomfortable to live in. Frustrated, they began shopping around for something better. And they turned to Indonesian architects Djuhara + Djuhara (http://djuhara.com/home.html).

“We thought that an all-steel house like the one that Mr. Djuhara had built just down the road would be termite resistant,” Wisnu told Dwell.

Djuhara is a high-profile architect and chair of the Jakarta chapter of the Indonesian Institute of Architects (http://www.iai.or.id) and helped to modernize the city’s planning regulations.

The stereotype of young Indonesian architects is that they only work on luxury hotels. But Djuhara was designing and building suburban homes and this grabbed Wisnu’s attention.

Also against stereotype, Djuhara was actually attracted by a tight budget and the small space for the house. In a crowded city, using every bit of space efficiently is critical. The existing house was torn down and Djuhara set about building a new home. The majority of the building materials were sourced within the immediate area: an easy thing to do in Jakarta since there are many vendors selling building supplies on the streets.

By buying local like this, shipping costs were eliminated from the cost of the house. The home’s cost, US $20,000, is just 2/3 of what a more conventional Indonesian home would cost.

Djuhara revelled in the job: “Ad-hocism is my religion,” he told Dwell.

The split-level design of the home uses the space well. The kitchen opens up into the garden.

“Family breakfasts are great in here,” says Wisnu. “And the open kitchen encourages the kids to head out into the garden and run and play.”

There is also a strong environmental component to the design. Airflow cavities in the ceiling are used in the bedrooms to cool them. The house also uses heavy wooden shutters to keep the house cool during the day: “The shutters are unusual, but they are thick and sturdy,” Wisnu explains.

“They really shade the master bedroom to the extent that it feels mellow and cool. They let us reduce our air-conditioning consumption, even during the height of the day.”

And Djuhara also has another difference from many other architects: he refuses to patent his design.

“My friends have asked me why I don’t patent my low-cost houses,” he explains, “but they completely miss the point. I actually want my designs to be copied. I want Indonesian society to rethink its attitudes towards urban architecture.”

By David South, Development Challenges, South-South Solutions

Published: June 2010

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Indonesian Middle Class Recycle Wealth Back into Domestic Economy

The global downturn and economic crisis is now into its third year. Economic growth has dropped across the South, as the knock-on effect of shrinking credit and slowing global markets took its toll.

One solution to re-starting growth and building up domestic industries is to target local products at the existing middle class, which in turn grows the middle class by creating better paying jobs.

Globally, 2009 saw 70 million people join the emerging-market middle class, with incomes between $6,000 and $30,000. And 1 billion people are expected to join the middle class by 2020. It has been called “the story of the decade,” by Goldman Sachs’s chief economist Jim O’Neill, who forecasts their global spending power will outstrip the developed world in two decades.

Indonesia’s middle class first began to grow in the 1980s. But rising prosperity took a heavy blow with the Asian economic crisis of the late 1990s, when the currency was devalued, pitching millions of people back into poverty.

Even so, Indonesia’s middle class is estimated to be between 35 and 40 million people (out of a population of 230 million) and they pay out roughly US $750-1000 on monthly household spending.

They are a mix of people, including professionals in management, banking, accounts, specialized law, bio-technology, engineering and other areas – all skills needed to run the market economy.

Like members of the middle class around the world, increasingly affluent Indonesians forge their identity through consumerism and lifestyle. This desire for goods and services represents a huge business opportunity. Often, this is captured by large multinational companies with long experience of selling branded goods and services.

Indonesia, however, is having great success growing its middle class despite the global economic downturn by building up the domestic market. Millie Stephanie, the director of Indonesia Tatler Magazine, told the BBC that two-thirds of the country’s economy runs on domestic consumption.

New middle class housing is springing up around the capital Jakarta. Home ownership for many, unthinkable a decade go, is now possible as banks make more loans possible. This in turn feeds into more consumption.

By turning to local products – something the Indonesian government is encouraging by increasing its own spending on local goods and services in 2010 by US $21.32 billion, according to Industry Minister MS Hidayat – a cycle is created where middle class wealth creates middle class jobs in local companies.

The department store chain of Matahari (http://www.matahari.co.id/) – the largest local department store in Indonesia – is a good example. Eighty percent of the goods it sells are made in Indonesia. The store targets the middle class with products like jeans that Indonesians can afford. And this strategy has helped Indonesia to get through the downturn.

According to Widia Augustinia, who runs the PT Inti Garmindo Persada jeans factory, the company was able to triple production despite the downturn.

“In the last few years we kept getting calls from our clients saying they had sold all our jeans and they wanted more, so we had to expand our business and had to hire more people,” she told the BBC.

One of the factory’s workers, 37-year-old Miriam, has seen her salary increase annually over the last four years while she has worked in the factory. The increasing wealth means she can now educate her children and buy a TV and a motorcycle.

This matters when half the population are living on less than two dollars a day. This recycling of middle class wealth into the Indonesian economy is making more workers become part of the emerging middle class with the jobs created.

In Africa, the Aureos Advisers (http://www.aureos.com/) private equity firm specializes in investing in African small and medium size enterprises, and is having great success with it despite the downturn. Its niche is finding and investing in companies that sell quality local products.

Run by Sri Lankan-born Sev Vettivetpillai, it raised US $150 million in 2009 to invest in Africa, much of it from pension funds.

“That’s a large sum of money in a market where raising capital is tough,” he told The Guardian newspaper.

Leverage was a game when cheap debt was around,” he says of the old private equity market that went up in flames in 2008. “Today a large chunk of growth is in emerging markets and we have proved you can invest responsibly in these markets and achieve attractive returns while paying attention to building sustainable businesses.”

And the faith in small and medium-sized African businesses has been paying off despite the economic turmoil: since most of the companies have little debt, they have not suffered in the downturn. And since many do not export much to Europe or the United States, they have not suffered from the consumer slump.

“When markets crashed 60 percent, good management teams were making sure they had cash, not much debt,” said Vettivetpillai. “Most banks don’t lend to these SMEs. And that has saved a number of those businesses. So we had an upward lift in earning growth in 2008 when many people showed a drop.”

By David South, Development Challenges, South-South Solutions

Published: March 2010

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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