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Changing course in Africa

The continent is experiencing rising rates of growth. But will growth be translated into development?

Written by Sanjaya Baru |
April 12, 2013 2:20:55 am

The continent is experiencing rising rates of growth. But will growth be translated into development?

Africans know a thing or two about herd instinct. Like wildebeest and zebra migration across the Serengeti,investment managers and consultants too have a habit of running together and,every now and then,changing direction. Right now,herd instinct is taking every investment,fund and private equity manager on an African safari.

If,a decade ago,The Economist ran a cover story dubbing Africa “The hopeless continent”,it caught up with a changing reality by the end of 2011 with a cover on “Africa rising.” More recently,it acknowledged the emergence of an “Aspiring Africa”. What has fuelled this journey of the so-called dark continent into the bright new world of economic growth and political stability? What are the new business opportunities and political risks? How diverse is the experience of different regions of this vast continent? To what extent is this new growth process driven by enduring change,rather than fleeting opportunity? Do countries blessed by oil and gas have the capacity to use their new-found wealth to fuel long-term growth and development,or will they fall victim to the infamous “resource curse”? Does Africa have the political leadership it requires to resolve intra-country and inter-country conflict and deal with new security challenges like drug and arms trafficking,terrorism and Islamic radicalism?

Such were the questions that an international conference on the geo-economics of resources and conflict in Africa sought to address earlier this week at the Bahrain Centre of the International Institute for Strategic Studies (IISS). The verdict was clear. The “rising” and “aspiring” Africa story is well founded. However,not all of the 54 countries of the continent are rising at the same pace and,worryingly,there are still many pockets of “hopelessness” and sources of potential conflict that require urgent attention.

Fred Swaniker,founder and CEO of the Africa Leadership Academy,identified five long-term trends that are driving the African growth story,and the four risks it faces. The five drivers are: improving political governance,young and better-educated population,urbanisation,skilled workforce and a more hospitable global geopolitical environment. With access to education and urbanisation,several pre-requisites for sustained growth are now in place,like physical,social and financial infrastructure. The rise of China,followed by India and other emerging economies,has had beneficial geo-economic consequences for the continent. Africans are pleased to find themselves being courted by erstwhile colonisers even as they exude confidence in being able to deal with rising powers.

So what are the risks? As in India,the so-called demographic dividend can only be a driver of growth if the young are educated and better skilled. If not,a restive youth would become a liability. Africa is experiencing rising rates of growth,but will growth get translated into development? Urbanisation is a positive force,but the lack of rural opportunities? Does Africa not require a green revolution that enriches the peasantry,creates a bigger home market and ensures food security? Unplanned urbanisation can create urban chaos and trigger urban violence. With rapid growth comes social and regional inequality. This,too,needs managing. Finally,Africa’s new political leadership has to manage the fluid geopolitics of an increasingly multi-polar world,benefiting from the global race for resources,rather than getting unduly exploited.

Emmanuel Kwesi Aning of the Kofi Annan International Peacekeeping Training Centre drew attention to another downside risk — the debilitating impact of the dangerous cocktail of drugs and arms trafficking,al-Qaeda,terrorism and Islamic radicalism both on Africa’s west coast and along the northeastern coast,the Horn of Africa. Economic growth alone cannot address the demands of an aspiring Africa. Many countries need modern institutions that are accountable,transparent,just and efficient. Africa’s security challenge was brought out starkly by the fact that if the single biggest employer in China is Sinopec,a petrochemical company,and in India it is the railways,across Africa it is G4S,a private security firm.

The continent’s major powers,like South Africa,Nigeria and Kenya,will be required to provide leadership in their respective regions to ensure regional peace and security. If not,outside powers will step in,as France has done in Mali. With new oil and gas discoveries,Africa’s energy exporters will have to invest in defence capability and work with other Indian Ocean powers to ensure security of sea lanes.

As in the case of any continental entity,Africa is also characterised by wide diversity. While negatives dominate western Africa and the Sahel region,many positives define eastern and east coastal Africa,led by Kenya,and southern Africa,led by South Africa. New oil and gas discoveries in Kenya and Mozambique are attracting global oil majors,including from China and India. How these resources are utilised is key. Will they be afflicted by the resource curse — falling victim to a combination of cronyism,authoritarianism,inequality and lack of incentives for growth of manufacturing — or will they be able to use these resources wisely to build the foundations for sustainable development? The key to Africa’s rise lies in the answer to these questions.

Today’s youth see new hope in the new opportunities that a new world offers. What was striking,however,was the contrast between the confident optimism of younger Africans and the more cautious,even worried,outlook of the older generation. As in India so in Africa,the older generation has lived through an earlier phase of optimism fuelled by the promise of decolonisation. That hope never materialised. This time,Africa is determined to succeed.

The writer is director for geo-economics and strategy,International Institute for Strategic Studies and honorary senior fellow,Centre for Policy Research,Delhi

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