Wednesday 26 January, 13.30 – 14.45
 

What are the economic changes, political priorities and business issues shaping Africa?

 

The following dimensions will be addressed:

– Regional development opportunities
– Business climate
– Governance priorities

 

Key Points

• Africa presents great opportunities for economic growth and investment in the coming decade.
• One of the biggest constraints to poverty reduction and economic growth in Africa is a lack of necessary infrastructure, particularly electrical power and transportation.
• China’s demand for commodities presents a decisive change for Africa.
• The impact of development aid remains controversial. Some see it as restraining African economic growth and fuelling corruption; others see it as necessary and just.
• Universal education, particularly secondary education for girls, is critical to realizing Africa’s potential.

 

Synopsis

The winds of change are blowing across the African continent. Africa weathered the economic crisis well and now has returned to nearly pre-crisis growth rates. However, economic growth has not produced needed job growth. The coming decade presents enormous opportunities for economic growth, poverty reduction and investment. African investments have the highest rate of return in the world today. Economic trends are encouraging; foreign direct investment has increased significantly over the last decade. However, many serious challenges remain to be addressed.

Sub-Saharan Africa is the poorest part of the world. One of the biggest constraints to poverty reduction and economic growth is a lack of needed infrastructure, particularly in energy and transportation. The need for infrastructure presents great opportunities for investment in sectors such as telecom, energy and transport (particularly roads and ports). Regional infrastructure projects are needed, particularly to help landlocked countries access the energy and transportation necessary to reach markets. One promising example of a major regional infrastructure project is the proposed Grand Inga Dam hydroelectric project in the Democratic Republic of Congo. However, creative ways of financing such massive projects, involving both public and private funding, need to be found.

The rapid rise in demand for commodities in China is a decisive change for Africa. Chinese demand is raising the price of the commodities that Africa has to sell. This demand presents great opportunities for African agriculture and natural resources.

What is the role of development aid for Africa? Participants disagreed. Some argued that development aid hurts African progress by fuelling corruption and undermining the confidence and capacity of African nations to effectively negotiate fair trade agreements with developed countries in the north. Emphasis should be placed on trade development not development aid.

In their dealings with developed countries, African nations should learn from India and China, which stood up to the West. Africa needs to fight for a fair trading arrangement with the US and Europe against domestic subsidies that limit African access to markets.

Development aid has created image problems for Africa that are exacerbated by the focus of the Northern media and philanthropists on malnutrition, disease, conflict and corruption. The Northern media largely ignores the growing African middle class and the progress many African countries have made, focusing largely on only the poor and the corrupt rich.

Other participants took issue with this view. In their own economic development, Europe and the US benefited greatly by exploiting Africa. Development aid to Africa from the north, in this light, is only just. Moreover, European countries such as Poland and Spain have benefited from aid from the EU, without suffering image problems. It makes sense for the North to provide development aid for needed infrastructure in Africa.

Sweeping generalizations about corruption and bad governance in Africa should be avoided. Africa is a continent of 52 nations, many of which have little in common with the others. Many nations have made great improvements in governance and transparency. However, these improvements tend to be overshadowed by events such as the current election crisis in the Côte d’Ivoire. The people of Africa must put pressure on corrupt, incompetent and unrepresentative governments, as the people of Tunisia are currently doing. The African Union can play an important role in improving governance in African countries. Young African business leaders should be encouraged to go into public service.

A vital key to African progress is education. Nearly 50% of the one billion Africans are under 30. By 2040, Africa will have the largest working age population in the world. The economic opportunity presented by these demographic trends will become an explosive challenge unless African youth are provided the education, in particular secondary education for girls and young women. Universal secondary education should be funded publicly and through philanthropy. Education systems should work with the business sector to ensure that young Africans have the training and skills they will need for good paying jobs in the 21st century.

 

Koos Bekker, Chief Executive Officer, Naspers, South Africa
Achankeng Leke, Director, McKinsey & Company, South Africa; Young Global Leader; Regional Agenda Council on Africa
Phuthuma F. Nhleko, Group President and Chief Executive Officer, MTN Group, South Africa
Ngozi Okonjo-Iweala, Managing Director, World Bank, Washington DC; Global Agenda Council on Anti-Corruption
Jeffrey D. Sachs, Director, The Earth Institute, Columbia University and Special Adviser to the UN Secretary-General on the Millennium Development Goals, USA

Moderated by
Julie Gichuru, Group Digital Business Manager and TV Host, Royal Media Services, Kenya; Young Global Leader

 

Disclosures

This summary was prepared by David Watkiss. The views expressed are those of certain participants in the discussion and do not necessarily reflect the views of all participants or of the World Economic Forum.

Copyright 2011 World Economic Forum

No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of the World Economic Forum.

Keywords: Africa, economic development, governance, natural resources, Foreign Direct Investment, education.