Drugs in Africa: Imports are the problem

by Developed Africa 28. June 2013 09:00

The issue of drug imports to African countries from China was highlighted in an excellent article over on Think Africa Press recently.

Chinese manufacturing dominates much of the imports into Africa and has become the largest trade partner for the continent with deals totalling more than $160 billion in 2011. With many goods, poorly regulated production leads to faults and substandard products. This is usually an annoyance, with drugs it is much more serious than that. As the Think Africa Press article puts it:

Substandard drugs are usually impossible to distinguish from good drugs. They look the same, come in identical packaging, and are manufactured by the same companies that make the good quality drugs. In fact, in the same way we might come across a few shirts with minor defects amidst a pile of perfectly-made clothes, substandard drugs can often be found in and amidst supplies of otherwise good drugs."

 The big pharmaceutical industry in Africa has been somewhat beleaguered following high profile copyright cases that saw many of the world's largest drugs manufacturers losing emerging markets to cheaper or knock-off drugs. While this has made the cost of life saving treatments fall substantially, it has also allowed a far greater fluctuation in quality. A long running dispute surrounding the import of antiretrovirals (commonly known as ARVs) - used for the treatment of HIV/AIDS - is a good example of the difficult and often broken relationship between 'big pharma' and African governments.

With China filling this gap, the poor quality of drugs now coming into the continent is simply the latest downside to an on-going problem. The problem is the lack of pharmaceutical manufacturing within Africa.

In 2010, a factory in Uganda became the first in a 'least developed country' to be regarded as world class. Rather than import for either incredibly high prices or at the risk of flooding the market with substandard of defective drugs, African countries would be better served seeking investment for nascent drug manufacturing. In January 2013 saw the creation of a new body, the Federation of African Pharmaceutical Manufacturers Association (FAPMA), to lobby more strongly for a domestic alternative to imports. Tsingi Moyo, the spokesperson for FAPMA, stated:

Self-sufficiency in healthcare is important for economic growth, for that reason it is dangerous to be dependent on others. Hence the infrastructure problems of Africa should be addressed. This can only be done by directly confronting them rather than giving up and abdicating our future to others."

To move forward, investment in infrastructure in the continent should be sought, promoting mutually beneficial partnerships rather than repeating the pattern of trade and recrimination that seems to have dominated this issue for the last ten to fifteen years.

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Categories: Investment

Obama in Africa: An opportunity overlooked too long

by Developed Africa 26. June 2013 09:00

Obama's upcoming trip to Senegal, Tanzaia and South Africa has garnered a fair amount of criticim in the USA due to its projected costs of $60 to $100 million. But this high cost has masked the massive potential both in terms of international relations and, more importantly, in the vast potential commercial returns of the continent. Obama has received a fair amount of criticism for lack of engagement with Africa in the last 5 years - as highlighted by the video above - which has allowed China to make huge political and commercial gains in their absence.

Harvard Business Review published an article on the trip highlighting these benefits:

Africa ranks second—behind emerging Asia—as the fastest growing region of the world. The IMF forecasts thatSub-Saharan Africa will grow at a rate of 5.4% this year, about 50% faster than Latin America, and infinitely more than Europe, which is currently expected to grow not at all or even contract. Also, Africa's growth is not from a small base. Africa today is a $2 trillion economy, roughly the same as Brazil or India (where few would say a presidential visit is wasted)"

An article on Bloomberg Businessweek  further stressed the potential for growth in economic cooperation with fast growing African states:

U.S. foreign direct investment to the whole region in 2011 amounted to just $3.1 billion, less than 10 percent of total FDI to Africa that year. The latest U.S. Trade Representative statistics suggest the stock of U.S. FDI in Tanzania was a pathetic $21 million. U.S. trade with the region as a whole was worth $94 billion—compared with $127 billion in China-Africa trade. America’s comparatively low economic engagement means the U.S. is missing out on trade and investment opportunities in a small but dynamic part of the global economy."

Clearly there is pressure from inside the USA and from African states for new ventures that Obama has so far largely ignored - he has previously made just one 24 hour visit to Ghana in 2009. This trip was low on any real substance and saw his administration lose favour for refusing to engage properly. This trip is Obama's chance to remedy that.

For more on potential trade opportunities between the USA and Africa take a look at this brief by the Center for Global Development.

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Categories: Foreign Direct Investment

G8 Highlights Importance of Trade for Africa

by Developed Africa 20. June 2013 09:00

The recent G8 summit held in the UK saw Prime Minister David Cameron directly address the importance of industry in Africa.

Cameron announced new G8 partnerships with developing countries that would focus on ensuring that African states get the full benefit from commodity trading, notably from extractive industries, with hopes that new commitments will encourage much greater profits than the traditional aid model currently in place. A huge part of this project centres on transparency and the importance of clear information in business deals. Cameron wrote in a letter to other G8 leaders,

Too many developing countries are held back by corruption – and this can be reinforced or even encouraged by poor business practice and a lack of transparency from those that trade with them."

[Read the full letter here]

This is an encouraging signal as it clearly emphasises a business-led development strategy. It is particularly worthy as it comes from the Prime Minister of Britain, traditionally an aid focused country. We urge other G8 members to take up this new call for investment and partnership, not just handouts.

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Categories: Business | Industry | Investment | Trade | Transparency