How Africa can boost world economy

From left: Presidents Uhuru Kenyatta (Kenya), Paul Kagame (Rwanda) and Yoweri Museveni after the trilateral talks in Entebbe, Uganda. President Jakaya Kikwete of Tanzania and Pierre Nkurunziza of Burundi stayed out of the loop of the third infrastructure summit in Kigali, Rwanda on Monday. Photo/PPS 

By Carlos Lopes and Tony O. Elumelu

The economic performance of Africa in the last few years has been remarkable. The continent has consistently defied the global trend.

Five years after the global financial system came perilously close to collapse, the global economic outlook is still uncertain.

In Europe, GDP is still below pre-crisis levels and unemployment is at a record high. Recovery in the United States, although stronger, remains weak by historic standards, and even China, which has done so much to drive global growth, is slowing down.

Yet, in what some might call an unexpected twist, average growth in Africa over the last decade has been more than five per cent. Of the ten fastest-growing global economies, seven are in sub-Saharan Africa. But how will this economic spike be sustained? How do we ensure we continue along this trajectory?

It is the world’s appetite for Africa’s rich natural resources which, up to now, has been the major driver of this stellar record. And it is this same appetite that will provide both the opportunity and the solution for Africa to sustain these economic achievements

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While not all African countries are commodity rich, the continent has 12 per cent of the world’s oil reserves, 40 per cent of its gold, and 80-90 per cent of its chromium and platinum.

Africa is also home to 60 per cent of the world’s underutilised arable land and has vast timber resources. The idea that these abundant natural resources can be the driver for an industrial revolution across the continent is growing.

The latest edition of the Economic Report on Africa (ERA 2013) sets out how the continent’s future will be determined by how policies that promote commodity-based industrialization are designed and implemented.

It is clear that governments, both individually and collectively, have an important role. A supportive policy and investment framework is essential to attract long-term investors.

Policies to build local capacity and address inequality are essential. Moreover, developing skills through training and incentives will ensure that local economies are able to grow and diversify.

However, a barrier to Africa’s industrialization that is not often talked about is the mind-set of private sector leaders – both in and outside Africa. Many are still indulging in the same historical rent-seeking attitudes that have resulted in the short-terms gains of crude, cocoa and gold sales.

More business leaders need to change their thinking and understand that short-term revenue gains – as opposed to long-term value addition – offer little or no contribution to sustainable economic growth.

We are now seeing a new style of African business leader emerging – leaders who are building, investing, growing for Africa’s future. It is their efforts which will provide the jobs and income which will have the biggest impact on tackling poverty and driving wider social progress.

Africa’s private sector must take the lead in improving coordination between farmers, growers, processors, and exporters; in increasing competitiveness in the value chain; and ensuring the price, quality, and standards that market demands are met.

We need to see national and regional champions created and supported, and help foster effective collaboration between public and private sector and the development world.