Cryptocurrency flows in Africa
The use of cryptocurrencies in Africa is on the rise, as digital currencies offer a swift, convenient, and direct peer-to-peer channel for remittance payments, international commerce, and savings. To better understand the global landscape around cryptocurrency use, Chainalysis, a leading cryptocurrency market research firm, recently released a report examining key geographic trends around the financial tool, including in the nascent African crypto market.
Although Africa captures only 2 percent of the global value of all cryptocurrencies received and sent (Figure 1), making it the world’s smallest cryptocurrency economy, the rising prominence of this innovative form of money is altering traditional financial flows to and from the continent.
Figure 1. Summary of Africa’s cryptocurrency usage (July 2019-June 2020)
Source: “The 2020 Geography of Cryptocurrency Report,” Chainalysis, 2020.
Chainalysis finds that the largest crypto channel connects Africa to East Asia, although channels to Northern and Western Europe and then North America trail closely behind (Figure 2). According to the report, the particularly high volume of funds sent from Africa to East Asia stems from the magnitude of Chinese nationals working in Africa.
Figure 2. Africa’s cryptocurrency inflows and outflows by region (July 2019-June 2020)
Source: “The 2020 Geography of Cryptocurrency Report,” Chainalysis, 2020.
Importantly, access to these digital currencies is providing an alternative to both traditional intra-regional transfer payments and international remittance systems, as transferring funds via cryptocurrencies circumvents paying transfer fees that remain higher in Africa than in the rest of the world. While transferring money through cryptocurrencies does incur a fee, the authors suggest its lower fee structure and the easy, universal access to cryptocurrency networks via mobile phones make these digital assets more convenient than rigid traditional-banking and money-wiring services.
Given the data challenges stemming from the decentralized exchanges that mediate crypto transactions, the authors warn that, beyond identifying the market share of retail-sized transfers (transactions under $10,000) it is very difficult to estimate the share of African cryptocurrency transfers dedicated to remittance networks (Figure 3). Notably, compared to other regions, Africa engages in the highest rate of retail-sized crypto transfers in the world, which the report attributes to the digital currency’s rising popularity for remittance payments.
Figure 3. Market share of retail-sized (less than $10,000) transfers (July 2019-June 2020)
Source: “The 2020 Geography of Cryptocurrency Report,” Chainalysis, 2020.
Chainalysis speculates the simplification and cost-competitiveness of sending and receiving money with cryptocurrency will fuel continued growth of digital currency utilization in the region. Alongside the use of cryptocurrencies as a medium of exchange, stablecoins, a cryptocurrency variant whose value remains stable by pegging its price 1:1 with the U.S. dollar, offers Africans facing unstable currencies an alternative outlet in which to save money without the anxiety of devaluation. Based on the multitude of advantages over traditional financial systems, the authors suggest that the relatively small cryptocurrency market in Africa is generating significant value for the early adopters who utilize the novel tool.
For more on cryptocurrency and financial flows in Africa, read “Keep remittances flowing to Africa,” “How finance flows to Africa” and Brookings Senior Fellow Eswar Prasad’s new book “The Future of Money.“
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The game is not yet over, and vaccines still matter: Lessons from a study on Israel’s COVID-19 vaccination
Just a few months ago, we almost sang a song of triumph in the fight against the pandemic. The infection numbers drastically decreased in countries with high vaccination rates. The Tokyo Olympic Games ended without a big outbreak. Many sports leagues resumed their activities, like Major League Baseball and the English Premier League. We dreamed of a world that was back to normal.
And then the COVID-19 delta variant emerged and changed everything. Although there is still some debate around booster shots, distributing a booster shot and tackling vaccine hesitancy seem to be needed to end the pandemic. A recent Israeli study shows that the booster shot is 86 percent effective in preventing infection among the older population. The U.S. Centers for Disease Control and Prevention has also reported that while vaccines show declining effectiveness against infection in general, they still show strong protection against hospitalization despite the variant. Once the model for defeating COVID-19, Israel is now facing a new stage of the pandemic—the infection count hit 8,000 as of August 17 (a month prior there were only 27 new cases) due to the delta variant. The booster shot of the COVID-19 vaccine is more necessary than ever. The problem is encouraging people to get it.
In March and August 2021, the Social Policy Institute (SPI) at Washington University in St. Louis and the Interdisciplinary Center (IDC) in Herzliya launched two nationally representative surveys to understand vaccination trends in Israel. The second survey asked respondents’ intention to get a third booster shot if available. Through the survey we found:
Demographic and socioeconomic characteristics were significant predictors of vaccination behaviors of Israelis in March 2021, but less so in August 2021.
Throughout the pandemic, confidence in COVID-19 vaccines is a major factor in vaccine hesitancy.
Who are the unvaccinated Israelis?
To understand those who are vaccine hesitant, we investigated the demographic and socioeconomic correlates to vaccination in Israel. In March 2021, 61.5 percent of 1,517 respondents answered that they had received at least one dose of a COVID-19 vaccine. Notably, vaccination rates varied by demographic and socioeconomic characteristics. The logistic regression model estimated that males (65.7%), older adults (Generation X: 71.0%; baby boomers: 83.4%), parents with one child (66.8%), those with a bachelor’s degree (67.2%), those in higher-income groups (fourth quintile: 68.7%; fifth quintile: 72.4%), and employed respondents (64.5%) were more likely to get vaccinated than the average population (p
Greening the African Continental Free Trade Area
Trading under the African Continental Free Trade Area (AfCFTA) began earlier this year, with massive potential to boost inclusive economic growth and reduce inequality and poverty in Africa. Indeed, the World Bank predicts that 30 million Africans could be lifted out of extreme poverty, while incomes could rise by $450 billion by 2035. Exports could increase by $560 billion, while wages may increase by 10.3 percent and 9.8 percent for unskilled and skilled workers, respectively. The AfCFTA is not a panacea, though, and new complex challenges (e.g., COVID-19 and climate change) have exposed the vulnerability of social and economic systems across the world, highlighting their interconnectedness and emphasizing the need for collaboration around radical and sustainable solutions.
Thus, many experts believe that the AfCFTA can be an important tool as Africa looks to navigate these complex challenges. Indeed, in terms of addressing climate change-related challenges, the final negotiations over and implementation of the landmark trade agreement are creating opportunities to install and enforce new climate-friendly policies. For example, the AfCFTA can promote environmentally friendly protocols and e-commerce or advance the development of green value chains for minerals. Moreover, the momentum behind a climate-friendly AfCFTA can further bolster green industrialization and encourage investment in green infrastructure that will integrate climate risks and act as a buffer against current polluting infrastructure.
On September 20, the Brookings Africa Growth Initiative will co-host an event with the United Nations University Institute for Natural Resources in Africa in which panelists will explore the themes relevant to a “green” AfCFTA and debate whether the AfCFTA can be used as a tool to promote green strategies.
After the program, the panelists will take audience questions.
Viewers can submit questions for panelists by emailing events@brookings.edu or via Twitter @BrookingsGlobal by using #GreenAfCFTA.
Green trade under the AfCFTA: The role of AU-EU partnership
Trading under the African Continental Free Trade Area (AfCFTA) began earlier this year, with massive potential to boost inclusive economic growth and reduce inequality and poverty in Africa. Indeed, the World Bank predicts that 30 million Africans could be lifted out of extreme poverty, while incomes could rise by $450 billion by 2035. Exports could increase by $560 billion, while wages may increase by 10.3 percent and 9.8 percent for unskilled and skilled workers, respectively. The AfCFTA is not a panacea, though, and new complex challenges (e.g., COVID-19 and climate change) have exposed the vulnerability of social and economic systems across the world, highlighting their interconnectedness and emphasizing the need for collaboration around radical and sustainable solutions.
Thus, many experts believe that the AfCFTA can be an important tool as Africa looks to navigate these complex challenges. Indeed, in terms of addressing climate change-related challenges, the final negotiations over and implementation of the landmark trade agreement are creating opportunities to install and enforce new climate-friendly policies. For example, the AfCFTA can promote environmentally friendly protocols and e-commerce or advance the development of green value chains for minerals. Moreover, the momentum behind a climate-friendly AfCFTA can further bolster green industrialization and encourage investment in green infrastructure that will integrate climate risks and act as a buffer against current polluting infrastructure.
On September 20, the Brookings Africa Growth Initiative will co-host an event with the United Nations University Institute for Natural Resources in Africa (UNU-INRA) in which panelists will explore opportunities for green trade with Europe in the context of the AfCFTA and the new European Green Deal. The discussion will delve into contentious issues around the carbon border adjustment mechanism (CBAM) tax and trade laws, while looking at ways in which partnership with Europe can support green value chain development, green technology, and green investment in Africa toward green transformation.
After the program, the panelists will take audience questions.
Viewers can submit questions for panelists by emailing events@brookings.edu or via Twitter @BrookingsGlobal by using #GreenAfCFTA.
Developing a roadmap for USMCA success
Introduction
The passage of the United States-Mexico-Canada Agreement (USMCA) through the U.S. Congress with overwhelming bipartisan support, as well as with strong political backing in Canada and Mexico, underscored the importance of USMCA for North American trade and economic relations.1 It builds on the North American Free Trade Agreement (NAFTA) and largely retains NAFTA’s commitment to lowering trade barriers although it rolls back trade openness in the auto sector. USMCA also adds robust new and timely commitments, particularly on digital trade, labor, and the environment.
The importance of USMCA for regional economic relations is amplified by growing geopolitical competition with China and the COVID-19 pandemic. This competition is over whether China will develop the world’s largest and most innovative economy in this century with attendant military prowess, or whether the U.S., and the West more broadly, will retain its economic lead and dynamism. These tensions are leading to calls to reduce North America’s economic reliance on China. The pandemic has also underscored the importance of expanding and deepening resilient supply chains, of which reshoring activities within North America will be vital to the region’s economic health and sustainability.
USMCA presents an opportunity for the three countries—U.S., Mexico, and Canada—to “build back better” and leverage the region’s collective talents, capital, and expertise to develop a more competitive, sustainable, and inclusive North American economy, which can rival some of its fiercest competitors. Ideally, USMCA will also provide a sustainable framework for the region to work as key partners on important and forward-looking issues.
At this critical juncture, the Global Economy and Development program at Brookings established the USMCA project to research, monitor, and support the development of an ambitious but achievable USMCA agenda. This work includes a website that will house the interactive data on North American trade and investment flows, track USMCA committees and dispute settlement action, and follow compliance with USMCA commitments. It will also publish an annual report that will assess progress and identify opportunities.
Maximizing the opportunities that USMCA presents the region will require the three countries to see each other as true partners with a common cause. It would also be vital to develop a new narrative for the agreement that articulates both the economic and political importance of the USMCA for U.S., Mexico, and Canada relations. This view was widely shared by several participants at a recent Brookings roundtable—participants comprised of senior representatives from business, civil society, and former government officials from the three USMCA countries. The USMCA provides the framework for this robust partnership among the three countries.
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This paper will provide background on NAFTA and how it has evolved into present day USMCA. It will then focus on five priority areas where progress is still needed and where USMCA could have the most impact:
Building a more competitive North American economy, including by growing trade and investment;
Ensuring resilient supply chains;
Expanding digital trade;
Supporting improvements in wages and working conditions; and
Addressing climate change.
The conclusion provides recommendations on how USMCA can help the region advance on each of these priority areas.
Download the full policy brief
How will the rise of the global middle class affect trade and consumption?
Around the world, the middle class is expanding at a rate we have never seen before in history. Homi Kharas, a senior fellow in the Center for Sustainable Development at Brookings, joins David Dollar in this episode to discuss how that global middle class is defined and where growth is concentrated. Kharas also explains how preferences among the global middle class will affect production, trade, regional value chains, and efforts to address climate change for years to come.
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Africa in the news: Guinea, Côte d’Ivoire, and vaccine updates
Guinean special forces oust president and dissolve government
On Sunday, September 5, Guinean special forces led by Col. Mamady Doumboya announced on state television that they had removed President Alpha Condé from office and dissolved the current government. In the announcement, Doumboya indicated that military officials would rewrite Guinea’s constitution and also accused Condé of human rights abuses and corruption. Condé, who was elected to a third term in October following a controversial amendment to the constitution allowing him to extend his stay in power, remains in an undisclosed location, according to the country’s military. Social unrest in the country had been building in advance of the coup, particularly after Condé’s government oversaw violent crackdowns on those protesting the constitutional amendment that led to the deaths of 92 protestors over several months.
In response to the coup, leaders of the 15-country Economic Community of West African States (ECOWAS) suspended Guinea from the regional bloc on Wednesday and sent a delegation to meet with the junta behind the coup. The African Union (AU) followed ECOWAS in suspending Guinea from its decisionmaking bodies and related activities, stressing the importance of diplomatic efforts to guide Guinea toward a civilian-led, constitutional government.
In related news, the price of aluminum skyrocketed this week as buyers feared supply disruptions in Guinea, which has the world’s largest reserve of bauxite, an ore that’s the most common source of aluminum.
Côte d’Ivoire discovers new oil and gas reserves
Last week, Italian oil company Eni announced the discovery of a large oil and natural gas field off the coast of Côte d’Ivoire. A deepwater exploration detected the field at a depth of 3,445 meters (11,300 feet) and produced estimates that it contains as many as 2 billion barrels of oil and more than 50 million cubic meters of natural gas. In reaction to the news, the Ivorian Energy Ministry stated that the field would “greatly increase Ivory Coast’s proven reserves in coming years.” The discovery reveals yet another oil field off the Ivorian coast: In total, Côte d’Ivoire has identified 51 onshore and offshore oil fields, of which 21 are still untapped.
Also in Côte d’Ivoire, substantial rainfalls across most of the nation’s cocoa-growing regions bode well for crop yields this year, according to farmers in the region. The rains come weeks before Côte d’Ivoire, the world’s largest cocoa producer, will begin its primary harvest season. In 2019, cocoa and cocoa byproducts accounted for almost 40 percent of the country’s exports. This week, Ghana and Côte d’Ivoire agreed to cooperate on cocoa pricing after Ghana, the world’s second-largest cocoa producer, reported that last year’s cocoa bean harvest of 1.1 million metric tons was its largest on record.
Africa’s vaccination campaign hits hurdles as COVAX lowers vaccine delivery goals
On Thursday, September 9, World Health Organization (WHO) Africa Director Dr. Matshidiso Moeti, announced that, for various reasons, Africa will receive 25 percent fewer doses than originally anticipated for the year. This statement came after a declaration on Wednesday from COVAX that is was lowering its delivery goal to 1.425 billion doses instead of its previous goal of 2 billion. According to a joint statement by the WHO, the Coalition for Epidemic Preparedness, and other involved organizations, the decision to lower the COVAX target is due to export restrictions of the Serum Institute of India as well as manufacturing problems at Johnson & Johnson and AstraZeneca facilities.
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Criticisms of many developed countries’ vaccine policies are on the rise, as the U.S. recently announced it would make booster shots available to its population: In fact, on Thursday, September 9, Moeti stated, “in the past week, the COVAX Facility delivered over 5 million doses to African countries—while the United States has thrown away three times that amount of doses during the pandemic.” In addition, countries such as the United Kingdom and Germany have secured enough vaccines for five times their populations.
Experts predict that, at the current pace of vaccinations, Africa will remain far behind the rest of the world: In fact, forecasting by The Economist Intelligence Unit predicts that most countries in Africa will not achieve widespread vaccination until the year 2023 while others such as the Unites States will achieve the goal later this year. Indeed, the region is far behind the rest of the world in obtaining and distributing the vaccine due to a myriad of challenges, including supply, cost, poor infrastructure, few cold chain storage facilities, and patient hesitancy, among other constraints.
For more information on vaccine equity and strategies for accelerating the rollout in Africa, join the Brookings Africa Growth Initiative on September 15 for the event, “Accelerating COVID-19 vaccinations in Africa.”
Transforming education systems through family-school collaboration
After COVID-19 forced schools around the world to pivot and devise new outreach mechanisms, many school leaders had an “aha” moment when they saw family engagement in education rise. From Argentina to India to the United States, leaders realized that what they thought were “hard-to-reach” families turned out to be “hard-to-reach” schools; it was schools’ own approaches to engagement that had been getting in the way.
This new focus on ways to connect families with schools presents an opportunity to markedly shift broader approaches—and the overall vision—for long-term collaboration. With the ongoing support of 50 government, civil society, and private sector organizations in the Family Engagement in Education Network (FEEN), the Center for Universal Education (CUE) at Brookings has been researching how families and schools can work better together to improve and transform how education is delivered and what it can achieve. Successful engagement has far-reaching implications for everything from improving student learning outcomes to creating a shared vision between educators and families on the purpose of education.
On September 30, CUE will host a virtual event to launch its new playbook “Collaborating to transform and improve education systems: A playbook for family-school engagement.” After a short presentation on the playbook’s key findings, lead author and CUE Co-director Rebecca Winthrop will moderate intimate chats with members of FEEN and other education decisionmakers about the role of family-school engagement and why it is so urgently needed—showcasing both speakers’ on-the-ground experiences and other findings from the playbook. The discussions will focus on how effective family engagement approaches can transform education systems to address growing inequality and give all children the breadth of skills needed to thrive in the 21st century—and the practical strategies for doing so.
Viewers can submit questions via email to events@brookings.edu or via Twitter at #FamilyEngagement.