Africa – An Economic Giant? Part IV

Dear reader,

a few weeks ago  I published an article, reflecting in brief statements which haven been made by popstar and Africa-activist Bob Geldof. Some of you might have read the article via our newsletter (subscribe here).

During the month of August I present you a few more in-depth thoughts on the topic “Africa – an economic giant?”, reflecting another three statements. Today I continue with the fourth of a total of five statements.

Statement 4

Investments lead to economic growth and to a better infrastructure. Africa does not primarily need help. It needs investments. China, however, is not tolerating unions. Europe’s biggest mistake is that they see Africa as a “case”, not as an opportunity.

Where, do you think, are the biggest opportunities for African countries in trading goods with Europe?

And here is my answer:

Raw materials represent perhaps the biggest opportunity – oil, minerals and agricultural products.

With the population explosion in our world, and with a strong economic growth in developing countries such as China, India and Brazil, the raw materials shortage is becoming more and more acute, also for Europe and the US. Rapidly increasing prices is the result. This leads to great opportunities for Africa!

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2 thoughts on “Africa – An Economic Giant? Part IV

  1. Both from an economic and human perspective I share your desire that Africa can develop prosperity but your ‘statements’ omit some critical analysis that might offer indications on how this potential might be unlocked rather than remain editorial stargazing. Anyone who has spent significant amounts of time working in Africa (as I have) over the last 25 years will despair that the potential of Africa’s prosperity is trumpeted as a revelation when it has always been self evident. In addition to minerals and agriculture, I would ad energy through hydroelectric resources and wind / tidal energy capture through its uniquely long continental west coast. (Can you imagine the output of a line of wind turbines stretching from Dakar to Cape Town?)
    What is required is an understanding of why the continent has remained economically paralyzed and moribund? Hitherto, corporations from western economies have been hampered by the baggage of their colonial past which has prevented them making expedient arrangements with corrupt regimes or employing local labour on what would be perceived as oppressive terms.
    Liberal idealism in the form of an omnipotent and captious western media which demands impractical levels of corporate governance or commercial opportunism through barratry by the legal profession / illinformed lobbyists based on perverse distortions of racial rights all contribute to making it too difficult for companies to operate effectively in Africa if they are to meet the expectations of their pious western shareholders. CEO’s are (understandably) too self preserving to state the truth which is the appalling inability of African countries to self govern in their current guise , and the endemic levels of corruption which have to be overcome.
    What has changed is two things:
    1. The burgeoning world population means that sub Saharan Africa can no longer be left unproductive.
    2. The arrival of the Chinese ( now colonising the continent) who are not held to account by political correctness or by the same standards as the West. Whether this is fortunate for Africa, time will tell. Momentum may at least materialise.There are now some 5 million Chinese in Africa. They do deals with corrupt regimes and take a hard line if the agreement is not upheld. They employ local labour under any terms that suit them (understanding with characteristic Chinese pragmatism / indifference that prosperity starts with work, any work at any level of reward). They also send in their own labour – a blend of technical experts and forced labour from their criminal classes. This is true.

    I further put it to you that Africa proposers best in smaller examples of governance. Sub Saharan Africa would better prosper as 100 different provinces than +/- 20 large countries.

    The West must first accept that Africa can and must gain economic traction through investment by a different set of operating standards – initially. None of this equates to rapacious governance or a lack of humanity.

  2. By way of addendum to my earlier posting, I would add that I am not suggesting that the Chinese represent any sort of investment model for Africa. There are learnings but there are also enormous threats by their presence and modus operandi. Threats to both the West as the Chinese monopolise control of Africa’s resources and, more critically, threats to Africa as the opportunity for its people to emerge from their poverty is forgone – again.
    I have also spent significant amounts of time living and working in the Far East (as well as the Middle East and South America). The Chinese do not have any empathy for the concept of investment that leads to collective wealth enhancement. Their definition of ‘collective’ extends no further than their own people and in reality a privileged few within their numbers.
    Shell produced a report in 1994 ( I think) that unequivocally demonstrated in objective capitalist terms the more favourable earnings ( for investors ) and extrapolated ‘collective’ GDP outcome (for the global economy) of investment in Africa .This too all within the mid to long term (15 to 20 years). This is not to suggest an early 20th century industrial philanthropy which has been tried and failed but it reaffirms that inbound investment on a large industrial scale is the only catalyst that will achieve the optimum outcome. The key is to allow investors to operate in more pragmatic ways. This must require a short term release of control and considerable operating freedoms to investor companies in return for commitment to accelerated skill development and a redistribution of profit within the local economy. I would advocate alliances with small co-operative territories and within specific industrial categories where success can quickly be demonstrated and upheld as a model to be followed.

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