The Africa rising narrative is far from over, according to Akinwunmi Adesina, President of the African Development Bank (AfDB), and other experts at the Third Financial Times Africa Summit in London .
However, there were also calls on countries in the continent like Nigeria to do simple things like fixing their foreign exchange market.
Adesina, who gave the opening keynote address at the summit which brings together expert speakers and panellists from around the region, however admits that a number of challenges still hamper the continent’s’s growth, including infrastructure, industrialisation and agriculture.
“We will be investing $24 billion in agriculture over the next ten years, an increase of 440 percent over current investments,” Adesina said.
He said African economies will have to diversify faster, to reduce reliance on commodities, and forecasts that agriculture and Information Communication Technology (ICT) will be the biggest drivers of jobs for them in the future.
After a period of strong growth, underpinned by better policies and a favourable external environment, conditions for most African economies are changing, as commodity prices have fallen and investors fall out of love with emerging markets.
This has negatively affected Africa’s major economies, including the two largest, Nigeria and South Africa, which account for about half of sub-Saharan Africa’s economic output.
Razia Khan, Chief Economist, Africa, at Standard Chartered Bank, said at the summit that as the major economies underperform, the Africa narrative will change and that this will affect all of the continent.
“High growth should never be confused with actual structural transformation,” Khan said.
Going forward, Khan however sees the demographic dividend, along with urbanisation and technology uptake, as being strong growth drivers for African countries.
South Africa’s economy is forecast by the International Monetary Fund (IMF), to grow by only 0.1 percent in 2016, while Nigeria is currently mired in recession after two consecutive quarters of negative growth.
“Nigeria is oversold,” said Tope Lawani, co-founder and managing partner, Helios Investment Partners, LLP, a private equity and venture capital firm.
“Despite the short term bumps, we have never invested so much in Africa,” Lawani said.
The firm recently acquired 49 percent of the voting rights in the midstream business subsidiary of Nigerian oil and gas firm, Oando Plc.
The continent’s reality must inform Africa rising narrative according to,Yaw Nsarkoh, managing director, Unilever Nigeria Plc.
“Democracy is a journey to creating development. It is only the person not rowing that can rock the boat,” Nsarkoh said.
Mo Ibrahim, founder and chair, Mo Ibrahim Foundation, noted that Governance has been stagnating in some African countries, such as Burundi, South Sudan and Democratic Republic of Congo, which affects economic growth and leads to conflict.
Nigeria’s minister of Industry Trade and Investment, Okechukwu Enelamah, who delivered the keynote speech for the industrial policy panel, said Nigeria’s National Industrial Revolution Plan (NIRP) will be driven by a new enabling environment advisory council the Federal Government is setting up.
According to the minister, good governance and implementation of policy are vital for industrialisation to succeed.
Africa’s industrial output is currently valued at $500 billion per annum, of which 75 percent is for local consumption.
“This can be easilly doubled,” said Acha Leke, director, Africa, McKinsey & Company.
“Cheap labour alone ,is not enough for for industrialisation. Labour productivity is key,” Leke said.
African oil exporters ‘squandered’ economic opportunity
African oil exporting countries, including Angola, Nigeria and Sudan, have squandered a decade’s worth of economic opportunity by failing to diversify or reinvest windfall profits into sustainable growth, according to research by the Mo Ibrahim Foundation.
Over the decade that the foundation has been collecting data for its comprehensive “governance” index, Africa’s 14 oil exporters have gone backwards in several measures, including overall governance and diversification.
Of a possible score of 100, oil exporters manage just 2.9 for economic diversification, showing how little progress they have made in weaning their fortunes off oil. None of the 14 countries scores well in the “sustainable economic opportunity” category, which measures criteria such as transparency of state-owned companies, ease of doing business and the quality of infrastructure.
“They are really ill prepared and they haven’t made use of these high revenues,” said Sif Heide-Ottosen, an analyst at the foundation.
By contrast, non-oil exporters have generally had a much better decade, improving in several categories from participation and human rights to human development. Non-oil exporters have opened up a nearly 10-point gap over their oil-exporting counterparts in the overall governance index, scoring 52.3 out of 100 against just 43.5 for oil exporters. Strong overall performers include Mauritius, Botswana, Ghana, Rwanda and Senegal, all of which are in the top 10.
In the decade since 2007, corruption and bureaucracy have got worse, with 33 of the continent’s 54 countries going backwards. The most improved indicator is digital and IT infrastructure, partly reflecting an explosion in access to mobile phones as well as a proliferation of related services for households and business.
Of the top performers, Rwanda is the most improved, reflecting the development priorities of Paul Kagame, the president, whose authoritarian, results-oriented administration has won strong backing from international donors. South Africa remains in the top 10, but has fallen back in several categories, reflecting the erosion of institutional independence under the presidency of Jacob Zuma. Ghana, one of Africa’s better-run economies, has also slipped down the rankings.
The research lends weight to those who talk about Africa’s “resource curse”, in which countries most endowed with natural wealth are more prone to corruption and mismanagement. Dimeji Bankole, a former speaker of the house in Nigeria, said: “We are on a type of drugs in Nigeria called oil.”
Mo Ibrahim, a Sudanese telecoms billionaire who has ploughed part of his fortune into encouraging better governance on the continent, has frequently played down the hype of the “Africa rising” story, urging instead what he has called “Afro-realism”.
Nevertheless, researchers at his foundation see cause for mild optimism, with improvements in overall governance, measured by the index over the past decade, in 37 of Africa’s 54 countries. That means that 70 per cent of African citizens have seen an overall improvement in the way their countries are governed and the opportunities they can expect, the foundation says in its report.
The index has served to turn the spotlight on important aspects of development, including the effectiveness of administration and the quality of data. The index has gradually added criteria as more reliable data have become available. This year it includes 95 indicators, up from 58 in 2007, and has supplemented results with findings from Afrobarometer, a pan-African research network that measures public attitudes to democracy, governance and economic conditions.
“If you have sound robust data, then you can have sound robust public policies,” said Nathalie Delapalme, executive director of the Mo Ibrahim Foundation.
PATRICK ATUANYA
