IT RELATES :
Why Africa Will Succeed
Open to all
RUSI, Whitehall, London, SW1A 2ET
Link to map: multimap
Listen to the lecture in Windows Media >
The audio begins at 00:19 seconds, with Admiral Cobbold’s introduction.
Mr Nicky Oppenheimer begins speaking at 02:54.
Your Excellencies, distinguished guests, ladies and gentlemen.
To talk about ‘Why Africa will succeed’ is a challenge and I am certainly not so foolish as to suggest that all 53 countries that make up the continent are on the road to success. However I do believe that the foundation has been laid for more to succeed than will fail. Then again I am a proud South African and a proud African whose family motto is ‘Spero Optima’, so you will want more than just the statement!
In the 21st century, things in Africa have changed and we are on roll.
Last year continental economic growth was 5.8 percent, the third year it has averaged more than five percent, what a change from the dismal 1980s and 1990s when growth averaged little over 2 percent. Looking at the top half of African countries the growth figure was closer to 7%.
An exact corollary of the better economics has been the decline in conflict within Africa which is so relevant to RUSI. Indeed the number of conflicts in Africa has declined by two thirds from the bad late 1990s.
Is this due to the more than US$320 billion the developed world has pumped into Africa as aid since 1970?
Sadly I doubt it. In 2005 Africa dominated the international agenda at the Gleneagles G8 summit and many fine sounding words were spoken. Two years later the world has a different agenda – Afghanistan, Iraq, and Global Warming are now the catch phrases.
As a result, extra aid has been flowing this decade, but it has been slower in coming and with more strings than expected. And much of this is not new money – it is money saved on debt relief. Moreover, in 2006 there was actually a dip in overall development spending for the first time since 2001. And then all too often aid creates as many problems as it is intended to solve.
But all this does not matter as much as what is happening within Africa.
Africa is succeeding – not in spite of the international community’s apathy or unreliability, but because of it. Successful African countries have had to become more self-reliant and take greater responsibility and these attributes mark out the reformers from the laggards, and the performers from the spectators.
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Ladies and gentlemen, today I would like to address what I believe are the central challenges still facing Africa, as well as the key components of its recent success.
The foundations of this success matter for unemployment, poverty, education and governance are fundamental to the continent’s security. When states are weak, people are vulnerable. And in Africa as elsewhere, poor governance and fragile economies are the true fuel of war, rebellion and human suffering.
Take Rwanda. It is hard to imagine a more desperate situation than that which Rwanda found itself thirteen years ago, in the immediate aftermath of one of the worst genocides in human history. More than 10 percent of its population had been killed in communal violence – an average of 10,000 people a day for 100 days, while the ‘caring’ West stood virtually silent.
But look at Rwanda now. The country has gone from being the continent’s greatest source of insecurity to a provider of security, as a key part of the African Union’s peacekeeping mission in Darfur.
Rwanda’s President, Paul Kagame, has stood before you at RUSI and described how his government managed to stabilize the country and then translate that political stability into innovative policy reform – so much so that Rwanda is now poised to benefit from globalization and build sustainable economic and political security for its citizens.
Liberia is another, powerful example. Nearly 20 years of civil war had brought the country to its knees. Even three years ago, the collapse seemed irrecoverable. Liberia was a classic failed state. Yet today, the country boasts the continent’s first democratically-elected women president, Ellen Johnson-Sirleaf. She is doing more than just putting the country back together again. She is putting Liberia firmly on the international map.
And of course there is my own country, South Africa, where a ‘revolutionary party’ came to power in 1994 with an economic template dating back to the 1950s. One could so easily have feared the worst for Africa’s greatest economy but quite the opposite has been the case. Under the wise leadership of first Nelson Mandela and now Thabo Mbeki, the government has shown that social change can co-habit with economic growth and, indeed, that the one cannot happen without the other.
But as I said at the start the African continent houses more than 50 very different countries and sceptics will point to Zimbabwe, or to problematic elections in Nigeria or Ethiopia to confirm their thesis of African hopelessness.
And I would never underestimate the challenges that we face in Africa.
The continent remains one of the most food insecure parts of the world. Urbanisation has had some dire consequences. 250 million Africans live in urban slums today, a figure expected to double by 2020. The effects of this phenomenon are compounded by the level of HIV-Aids infection, where the urban centres are the main spread of infection. Africa today accounts for nearly two-thirds of global HIV-Aids cases.
Under one-quarter of those living in sub-Saharan Africa has access to electricity. A combination of weak governments, the stifling of entrepreneurial initiative, misguided public policy, and high levels of instability and corruption have seen a twofold rise in continental poverty in Africa over just the past three decades.
Then we face an extraordinary youth bulge. Half of Africans are under the age of 20 and just ten percent are older than 50. As a result, the number of people seeking employment in Africa will increase at a rate of above seven percent over the next ten years – requiring 15 million jobs annually. Unemployment, it must be recognised, has a direct effect on the continent’s security and stability.
These facts are compelling but they can, and are being, solved in many parts of Africa and there are a number of key reasons for this.
First, there have been two largely unheralded governance shifts in Africa over the past 15 years: democracy and liberal economic reform. Twenty-five years ago, there were just three African democracies, Botswana, Senegal and Mauritius. Today more than 40 African countries have held multi-party elections. While some of these democracies and elections are flawed, this never the less represents extraordinary progress. Each election represents an important victory for African activists in the fight against political complacency and despotism.
The reasons for these shifts are complex and various – the end of the Cold War where loyalty excused excess; a new reform-minded generation of leadership; the end of apartheid and the consequent sidetracking of development effort to that end; and an awareness that Africa had fallen far behind its Asian and Latin American counterparts in the quest for development. Africa’s commitment to good, democratic governance can be seen clearly in the formulation of NEPAD (New Partnership for Africa’s Development) and its embryonic governance counterpart, the African Peer Review Mechanism.
Another reason concerns the emergence of China and other new players including India, Russia and Brazil as forces for economic change on the continent.
China’s rising profile in Africa is perhaps the most significant development for the continent since the end of the Cold War. It has sparked new interest in Africa’s economic potential. China’s involvement has ended European and American complacency that Africa would always belong to their sphere of influence, a continent for assuaging guilt rather than building growth.
There are of course downsides. Given China’s (and Asia’s) industrial pre-eminence, some avenues for African development such as high-volume manufacturing have been curtailed. A combination of natural resource exploitation, agricultural self-sufficiency and high-value agro-exports, and the expansion of its unique range of service industries, including tourism, would seem to be the most likely and rewarding growth path for many African states.
A further reason relates to the end of apartheid. South Africa’s democracy liberated its citizens and businesses alike. As one measure, since 1994 South African annual trade with Africa has increased fivefold to over US$7 billion. Partly offsetting this three-to-one trade advantage, the investment stake of South African firms in Africa has increased by an estimated US$1 billion per year since 1994. South Africa has become in just a short period a most important – if not the most important – source of foreign direct investment for the rest of the continent.
A further ‘success factor’ concerns the greater willingness of Africans to take responsibility for creating peace. No longer does Africa wait on external sponsors to mediate an end to conflicts. This mould was broken with South Africa’s own transition fifteen years ago, and the insistence of all protagonists on local brokerage. Regionally-sponsored peace agreements are today the African norm. Many of these are supported by regional, African peacekeeping and peace-building mechanisms. As a South African I am proud of the involvement of President Mbeki in so many of these initiatives and the fact that South African peacekeepers are on the ground in the Congo, Burundi and Darfur.
Finally, and perhaps most importantly, Africa is catching up on globalisation. Africa’s share of global capital flows declined fivefold during the post-independence years to a level of just one percent at the start of this decade. The continent comprises less than two percent of world trade, down from three percent in the 1950s. But there is positive change. Foreign capital flows to Africa have recently doubled to US$19 billion while remittance flows from Africa’s disapora have steadily increased to approximately US$8 billion annually, up from around US$1 billion fifteen years ago.
The technology of globalization has several upsides for Africa. For example, the spread of cellular communications not only supports entrepreneurial activity, but together with the Internet underpins democracy by allowing the spread of information even when politicians try to pull their old bad governance tricks. The direction towards increased global interaction is definitely a good thing for a continent starved for long of the attributes and advantages of globalisation.
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Ladies and gentlemen, I would like to use the remainder of my time to look to the future – and outline for you my TEN RULES for accelerating development in Africa.
The Commission for Africa advocated increased aid as a silver bullet to develop Africa. But crude solutions will not work for Africa, just as crude stereotypes do not tell the full story of today’s Africa, where addressing complex development problems calls for understanding and dealing with complexity.
With this in mind, there are a number of components – or ‘rules of the fast development road’ – to further foster continued African success, rules which need to apply to Governments and investors alike.
First, beware of those bearing gifts: The business of aid has become just that, a business. From NGOs professing to speak for Africans to consultants bearing high-altitude plans which seldom survive contact with the ground, their interests are as much in themselves as their professed target, their constituents more often the fee-paying donors than the African recipients. Civil society and NGOs, both local and international, have an important role to play both in development and as a political check and balance in Africa’s democracies. But they are not the political opposition, and should neither see themselves as such nor be thrust into that role. We must also recognize that NGOs have an interest in the aid business. For many their funding depends on the existence of African crises. I will give greater credence to those willing to speak with and not at African partners.
A second ‘rule’ is to use aid as a growth catalyst: Aid can be a valuable tool for development, as the recent economic history of Asia illustrates. Changing its poor record in Africa, however, depends on Africa changing its mindset. Instead of seeing aid as a form of assistance, Africa needs to view and use it as an investment catalyst, steering much of it towards infrastructure. New ways should be sought and developed to use aid in partnership with the private sector, leveraging it to attract greater funds and in practical ways through reducing risk in infrastructure ventures. Overall, external aid conditionality has to be replaced by internal policy clarity.
There is, third, the need to ensure market access: I have said before that Africa needs a ‘hand up’ not a ‘hand out’ in being granted free and unfettered access to trade markets. This is not just about removing tariffs but non-tariff barriers too, including agriculture subsidies. Openness to the international economy is a sine qua non for growth.
Outsiders must, fourth, develop a differentiated view of Africa. Today’s Africa should increasingly be viewed by those who want to do business there as a differentiated continent. No longer is the continent uniformly ‘hopeless’ as the Economist magazine infamously put it on its cover at the start of this decade. Like Asia and Latin America, it has its success stories and its failures. We should learn to celebrate the former while identifying the latter and never conflate the two.
Of course, fifth, Africa should avoid bad policy choices. So long as countries succeed by making and selling things, government alone can lower the cost of doing business through policy. They can ensure transparency and the rule of law, and improve regulatory oversight. After all, capital is not the key problem, competitiveness is. But successful countries are not good at everything; there is an imperative to prioritise, another area where governments have a key role. And success presumes government capacity, efficiency and insight in key areas just as it presumes the absence (or removal) of onerous and inefficient bureaucracy, cumbersome and costly overregulation, and barriers to trade and investment.
There is, sixth, a need to deal with conflict: War and conflict are bad for growth. It follows that ending conflict is generally good for development. Reform, thus, involves more than just economics, but also post-conflict peace-building and economic diversification. Dealing with conflict involves more than putting the fires out; enough resources must be supplied to get the job done, and not just to prevent defeat and collapse. It demands providing for the challenges of peacekeeping: at a tactical level, this means ensuring multinational and civilian and military agencies can work together and finding the money to deploy from local and international sources; and, at the strategic level, it demands linking military actions to mediation efforts and sustainable political settlements.
It also calls for improving peace-building capacity, and the ability to predict conflicts. The success of state- and peace-building initiatives will partly be determined by the methods of co-operation between the various international and local actors, removing the anarchy of vested interests that frequently blights such otherwise noble initiatives. Ultimately the success of peacekeeping and peace-building is in giving Africans the tools to do the job themselves; and for Africans to take responsibility.
I am pleased that, along with its work in devising growth-oriented policies with African governments, that my family’s Brenthurst Foundation is working closely with institutions such as RUSI in identifying and applying best practice in peace-building missions from situations as disparate as Afghanistan to Liberia.
Climate change is a new threat to security. There is thus, seventh, an imperative for future generations to care for the environment: There is no doubt that rampant growth can hurt the environment. Nineteenth-century Europe and North America and today’s China and India are cases in point. But the development of better environmental management standards will, since they are directly in the national interest, have to come from within. Any call from the relatively affluent West for better standards has a hollow ring when it essentially attempts to show to billions of Indians and Chinese or 750 million Africans that growth hurts them.
Enlightened self-interest demands that, eighth, business in Africa acts as a good corporate citizen. A difficult history and operating environment has given many African companies an enviable and wide-ranging skill-set for not only operating efficiently in technology-driven first world but also in the third world settings where the challenge is no less daunting and complex, where diplomacy, sensitivity and knowledge of local conditions are most often critical. My industry, the diamond industry is often criticized as a bad corporate citizen, an image promoted by those selling movie tickets. The reality is quite different. The industry has stepped up to the governance plate through the Kimberly Process, an extraordinary collaboration of what governments, businesses and NGOs can achieve through partnership. We talk in the diamond industry about ‘living up to diamonds’; in Africa we need to meet the challenge of living up to Africa.
Our environmental management standards and corporate social investment policies from issues as diverse as HIV-Aids to promoting stronger African economies illustrate our commitment to human development and our role in defining a social contract with the communities in which we operate. Of course we do not have all – or even many – of the answers, but we are engaged and plan to be around for a long-time to the benefit of these communities. Long-term investment horizons help to ensure good corporate citizenship, including helping to stamp out corruption. For, to paraphrase Prime Minister Tony Blair, in the words of the Nigerian anti-corruption official Nuhu Ribadu, ‘If you want to make poverty history you have to make corruption history’. Other sectors, from energy to fixed infrastructure, might do well to join the diamond business and contribute to such endeavour in the search for business practices which are not only ethical but put people first.
Africa has a special interest in, ninth, managing its natural resources prudently and there is no better example of this than Botswana. The emergence of Asia as a manufacturing force raises key questions about economic policy choices for those communities lacking the skills base or productivity to compete against cheaper (and more productive) labour markets especially in China and East Asia. Does China block off the manufactured-exports development route for African countries, for example? Prudent natural resource management is an effective source of growth, as examples as diverse as Botswana and Malaysia show. Good policy includes investment in the management of the endowment itself, as well as its extraction and the proceeds thereof.
And, finally, none of this is possible without attracting skills. Contrary to those wanting to give more money more quickly for African development, money is never the key problem – governance, government capacity, skills, and the right policy set are more important. Hence growth is more than mercantilism, but is also about human and political values and resources. It matters not whether these are from the diaspora or from other groups – either way, Africa needs to attract skills. Foreign investment attraction is key, not simply for the sake of money, but because it brings with it skills and technology.
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I would like to end by asking: What is the ‘right stuff’ for Africa’s development?
Without a healthy, growing economy, there can be no security in Africa. Economic growth requires the necessary institutions, skills, and governance. It places a premium on vision and leadership. It demands the right policies are put in place.
Fifty years ago, at independence, Ghana was richer than South Korea. At the time, the Asian country was depicted as a hopeless mess. It was argued then that culture – termed ‘oriental fatalism’ – would keep it that way. We all know now that this argument was spurious and racist. Korea’s record – and Ghana’s recovery from no fewer than five military coups – shows that a good education and work ethic and a sound business environment can dramatically alter a country’s fortunes for the better. I recognize, too, that there is no single answer to economic growth, development and political stability, no elixir. The need for reform, reinvention and innovation never cease.
But overall the news from Africa is good. Today, for every African failure, there is a steady stream of successes; and for every African autocrat, many more democrats. Sound domestic policy, which counts more than external assistance in creating the conditions for growth, stability and prosperity, is more and more the African norm. Failure is the deviation.
We have shown we have that right development stuff in abundance.
Thank you very much.
