‘Africa cannot be defined just by conflict zones’
The continent has three priorities if it is to halt its slide to the global margins
● When the World Bank declares that the world is on fire, this is not hyperbole. The war between Israel and Hamas feels like a tipping point, and the brutality of it, I fear, will have an unprecedented and irreversible impact on the human condition. The war was preceded by a cascade of global conflicts, most notably in Ukraine and many of them in Africa — in the Sahel, in Sudan, in the eastern Democratic Republic of Congo, Somalia and in Ethiopia.
Not since the Cold War has the world been so polarised and fragmented. And not since the 1930s has it been beset with so many civil and interstate conflicts. We cannot pretend that it is business as usual. It is apparent that warmongers are pushing the planet off its axis in pursuit of power and wealth with no regard for human life and suffering. Some of the major conflicts are billed as fights for sovereign rights but innocents are being slaughtered while the military establishment booms.
This year, more voters than ever in history will head to the polls. At least 64 countries, representing about 49% of the world’s people, are to hold national elections. Many of the outcomes, including the possible rematch between Joe Biden and Donald Trump in the US, and the seventh democratic national elections here in South Africa, will have consequences for years to come.
The unease we all feel is therefore not misplaced. It speaks to a global crisis in the rules-based order. The United Nations is more necessary than ever, but it appears increasingly impotent. We are seeing peacekeeping missions kicked out or rendered irrelevant, and we see the failure of an outdated UN Security Council to overcome the vetoes of its permanent members. The post-World War 2 global security architecture has broken down and needs fixing urgently.
Africa usually gets singled out as a place of irreducible conflict, but the worst hotspots are in Ukraine, Gaza and the Middle East, Myanmar and the
South China Sea.
Africa cannot be defined just by conflict zones. But perceptions matter as they affect investment decisions and make it harder for African countries to make our business case to the world. We in Africa must resist being crushed in the geopolitical maelstrom and we must redefine our place in the world.
In a provocative article in the Financial Times in December, Ruchir Sharma, the chair of Rockefeller International, warned that Africa is failing and that it is a problem for the entire world. How can a continent that makes up just 3% of global trade and 2% of global production be a problem for everyone else?
Sharma writes: “Over the next three decades, the world’s working-age population will increase by 2billion, and almost 80% of those workers will be coming of age in Africa. That means in effect that the vast continent is the last, best hope for economic miracles.”
But, he says, Africa is failing to employ its workers productively. Over the past five years not a single African economy has seen a gain in per capita income, and half have seen a decline, including three of the continent’s big five countries — Nigeria, South Africa and Algeria.
Sharma says corrupt African strongmen, unlike their Asian counterparts of yesteryear, are intent only on self-enrichment. Investors look for countries where they can trust the economic authorities, but officials are not appointed to key regulatory agencies based on competence. This is certainly valid — that weak governance and institutions underlie Africa’s low levels of investment and growth.
Sharma neglects to mention that the main reasons so many African countries have declined over the past five years are the devastating impact of Covid; the accompanying cost-of-living increases; high interest rates; food shortages due to the Russian invasion of Ukraine; and the effects of climate change in the form of drought, floods and other extreme events.
African countries were heavily impacted by events in the rest of the world but lacked the means to spend their way out of recession, or the fiscal tools to navigate through the ensuing inflation crisis.
But Sharma shares one truth that should underpin everything: if the world wants a prosperous future, everybody needs Africa to work.
Africa’s economic weaknesses are deep and structural. Between 1991 and 2019, manufacturing’s share of formal employment across the continent had declined from 7.6% to 6.6%. Over the past three decades, Africa has effectively deindustrialised, including in the 24 countries that rely heavily on mining as their core source of GDP and foreign exchange earnings.
According to Bloomberg, African GDP per capita peaked in 2014 and has fallen more than 10% since then, while global GDP has risen nearly 15% over the same time.
When we talk about resurgence and recovery, we are not talking about a return to what was there before. It means charting a new course — to restructure the continent’s economies and its relationship with the world. We need to think, talk and act structural transformation.
There are three broad areas of practical actions that will put the continent on a path of structural transformation and sustainable growth.
First, the continent needs to navigate the increasingly volatile geopolitics. Africa is greatly impacted by the global tumult and our leaders are at variance on how to respond and position ourselves.
The US and China are competing for critical minerals, technological dominance and influence on the continent. The Middle Eastern powers are engaged in a scramble for African assets, with the UAE and Turkey leading the way.
Military coups are back in the news; Russia’s Wagner mercenaries have moved into the vacuum left by a decaying French neocolonial empire, inflaming conflict and infesting themselves among the political elites. Jihadis have metastasised and turned the Sahel into the global epicentre of violent extremism.
African governments must not become pawns in the bigger global power struggles, which may become difficult if trade and investment is increasingly tied to political loyalty. In an era leaning towards “friend shoring”, where trade relations favour those countries that align to the agendas of the global powers, there is a danger of weaponisation of tariffs and trade controls, protectionism, restrictions on foreign investment, as well as primary and secondary sanctions, and disruption of value chains.
Our priority ought to be the wellbeing and development of our nations, our continent and the vulnerable peoples of the world. Underlying that should be the preservation of the legal and moral foundations on which the future of humanity rests. We must work to shatter the propensity for different rules to apply to people, based on where in the world they are, the colour of their skin, their gender, sexual orientation, and historical prejudices.
We in Africa are not children of a lesser God.
So, our relationship with the rest of the world — whether political, social or trade-related — needs to achieve parity.
The second area of practical action to place the continent on a new growth path is our investment value proposition.
We need to push back against this tendency to generalise and dump the whole of Africa in one basket. People compare Africa unfavourably with Asian economic success stories that have pulled themselves up from poverty such as South Korea, Taiwan and Singapore; but the Philippines, Myanmar, Pakistan and Afghanistan are also in Asia.
This perception no doubt underlies Africa’s capital deficit. Africa has 18% of the world’s population, 30% of the world’s minerals, but only 2% of global capital stock.
More capital is leaving Africa now than coming in, especially with China having effectively turned off the tap. The positive news is that the current global high inflation/low investment cycle seems to have bottomed out, which should see greater flows of foreign direct investment to the developing world.
Many African economies are still shackled by sovereign debt of almost $2-trillion (R38-trillion), which constrains their ability to leverage foreign direct investment. Africa’s debt repayments surged to $62bn last year, up 35% from 2022, and are set to rise further.
Countries are spending more on servicing the debt than on basic needs such as education and health. In South Africa, debt servicing is the fastest growing budget item. Some countries such as Ghana and Zambia are in default. Kenyan president William Ruto has called for a “comprehensive and systemic response” to the debt crisis outside default frameworks. Ruto and African Development Bank president Akinwumi Adesina have proposed a pause on servicing debt payments for a decade to allow African economies to get up to speed.
There is also the idea, originally put forward by Michael Spence and more recently Dani Rodrik, of a global liquidity fund for concessional funding to address Africa’s capital deficit. This needs a big push as part of the broader restructuring of the global multilateral architecture. Africa needs capital for infrastructure, for reliable power, for education and to meet the challenges of climate change. Nearly half-abillion people need to be brought out of extreme poverty.
African governments must play their part. We must acknowledge that the past decade has seen a generalised governance regression across the continent. We must design and implement homegrown reform strategies, rather than waiting for onesize-fits-all type packages to be imposed on us. African governments should learn from each other. Kenya, South Africa and Uganda, for example, have done well in keeping inflation within central bank target bands.
Others have done well in improving tax administration and digitalising government. It is in our interests as the private sector, and the mining sector in particular, to have strong governments with strong tax regimes.
Governments, however, cannot navigate these issues on their own. Business cannot stand on the sidelines but should use its knowledge of capital markets and debt to help governments in strategy and implementation.
The yoke of corruption is one of our greatest burdens. There is a prevailing perception that you cannot do business in Africa without greasing someone’s palm. Unfortunately, this perception is not ungrounded.
The latest Transparency International corruption perception index shows that most African countries experienced stagnation, particularly in Sub-Saharan Africa where extreme poverty affects about 462million people. This relegates some of our countries to the category of “flawed democracies”.
Corruption networks are embedded in the political and business ecosystem, feeding off government budgets and distorting decision-making. This is selfsabotage at its worst, as it ramps up the risk of doing business and hampers investment — let alone looting budgets for development and services.
The third area of action we must collectively push is new models for state and private sector collaboration.
It is the private sector that has deep understanding of market and supply chain dynamics and needs to be central to the continent’s industrialisation ambitions. This will require new forms of collaboration between mining and manufacturing capital to create processing for higher value goods, which in turn creates parallel industries and connects Africa to global supply chains. The Chinese model of piloting new policy in special economic zones is something
At least 64 countries, representing about 49% of the world’s people, are to hold national elections.
We must act boldly as equals in the global order as Africa’s time is indeed coming.
we should consider strongly. And like in China, the SEZs must have enabling policy instruments and infrastructure.
There is also the question of skills. A recent World Bank report states that Africa’s growth over the past 30 years has not become skills intensive like in the rest of the world. This is worrying. The skilled share of formal employment was 10% in 1991. It is still 10%, suggesting the continent has not shifted into higher productivity activities.
Digitalisation will be a game changer, and I am pleased to see several African countries promulgating start-up legislation, including skilled worker visas.
The global energy transition is another area of opportunity, especially for beneficiation and global value chain participation. Africa has significant endowments of critical and rare-earth minerals, including 70% of the world’s cobalt resources. The African Minerals Development Centre, established to drive the AU’s African mining vision, has developed a green minerals strategy for the continent. This could open new innovative and practical partnerships for green value chain beneficiation.
The global energy transition also presents risks which should not be overlooked, including the netzero commitments. These are fast becoming the new trade barriers.
Partnerships between the public sector and private sector are not theoretical. The Lobito Atlantic corridor linking Angola, DRC and Zambia, and projects in Tanzania, Kenya and elsewhere, are examples of productive investment spurring economic development along the corridor, as well as connecting Africa’s farmers bringing produce to market. The Dangote refinery in Nigeria will elevate that country’s petrochemical industry and provide low-cost fertiliser to grow the country’s enormous agricultural potential.
But despite the overall trend of deindustrialisation over the past 30 years, and the more recent trend of governance regression and conflict escalation, there is reason for optimism. The World Bank projects growth in Africa will outperform global and even other emerging market averages — rising from the relatively low baseline of 2.5% in 2023 to 3.7% in 2024 and 4.1% in 2025. This is a rapid incline – the steepest across the various regions of the globe.
But nobody will look out for Africa if Africa does not look out for itself. The people are more than ready, and entrepreneurship thrives in the marketplaces of our continent. African music, design and movies reflect a youth-based cultural renaissance that is sweeping the world.
We must act boldly as equals in the global order as Africa’s time is indeed coming.