We need an ‘Africapitalism’ revolution with a human face

The real challenge is not simply involving foreign investors, but nurturing our own entrepreneurs and enterprises — or “Africapitalism” — whereby African nationals are at the forefront of efforts to develop our economy through business.  

By ANTONIO PEDRO
inShare

The Eastern Africa region is currently enjoying an economic boom that has not been seen since the 1970s. Economic growth has been strong in most countries in the region for over a decade.

But this strong performance has been accompanied by growing concerns over the quality of growth — particularly in terms of poverty reduction and employment creation.

States are confronting a number of economic and social challenges resulting from accelerating urbanisation, population pressures and high degrees of income inequality.

Put simply, despite an improved economic performance in the 2000s after two decades of economic stagnation, across the region, a lot of social and economic aspirations have not been fulfilled. Social cohesion — a term about which we will hear more of during this meeting — is still fragile in some parts of our region.

One revealing manifestation of all this, cited in the UNECA’s publication, Tracking Progress Report 2013 — Towards High Quality Growth and Structural Transformation in the Eastern Africa Region, is that, although poverty has been reduced in relative terms in the region (from 65 per cent of the population in 2000 to 54 per cent in 2011), the absolute number of citizens living below the international poverty line ($1.25 a day) has actually increased from 155 million to 166 million.

This paradox — growing wealth, but more poor people — is a testimony that more needs to be done to make sure that the proceeds of growth are invested well for the future development of the region.

We need to speed up “structural transformation” of our economies, shift of economic activities out of low-return, low productivity sectors like subsistence agriculture, and into hi-tech, high productivity sectors like manufacturing, telecommunications, services and the like.

For the Economic Commission for Africa (ECA), this is our number one agenda: To help countries catalyse “structural transformation.”

The emphasis on the need to prioritise manufacturing and industrialisation in Africa is undoubtedly right. Our conference of Ministers of Finance in Abuja discussed how to accelerate the pace of industrialisation on the continent.

Nevertheless, the real challenge is not simply involving foreign investors, but nurturing our own entrepreneurs and enterprises — or “Africapitalism” — whereby African nationals are at the forefront of efforts to develop our economy through business.

The region has an impressive list of firms that are competing. Firms like Ethiopian Airlines, or Equity Bank. In the DRC, the mining company Gecamines, has adopted an ambitious plan to restore its international competitiveness.

In Jonathan Berman’s book Success in Africa, we find compelling personal accounts of 20 top risk-taking and successful business leaders who are benefiting from the growth opportunities arising from Africa’s improving risk profile and investor-friendly business climate, expanding purchasing power, rich natural resources and unmet developmental needs and aspirations.

But to trigger Africa’s structural transformation we will need to replicate these success cases across the continent.

We need an “Africapitalism” revolution with a human face in a massive scale — a contradiction in terms, you would say.

“National champions” — large-scale state or private national lead firms which are deemed competitive nationally, regionally and globally — are key to Africa’s transformation.