Southern Africa: Building on Africa’s progress

Being an optimist about Africa’s economic prospects was once a pretty lonely cause. But I am thrilled to presently find myself in a very crowded field.

The continent’s strong and sustained increase – evolution amount the additional remarkable given the severe problems in the world economy– has been one of the success stories of the last decade.

The world appetite for Africa’s natural wealth has, of course, been a powerful driver of this evolution. But nations with few natural resources are part the continent’s best performers. Rwanda and Ethiopia, for example, both recorded increase figures of over 7 % in 2011. There is, in fact, no single reason for this transformation. Rising domestic request, propelled by a young and energetic people, is certainly a major ingredient in Africa’s success. So, too, has been the solid development in the standards of governance.

We have seen, for example, a new determination by governments across the continent to create conditions where the private sector can grow and investment is encouraged.

Regulations have been streamlined, taxes simplified and legal protections improved. The new edition of the World Economic Forum’s World Competitiveness Statement shows that on average the competitiveness of sub-Saharan African nations has risen since 2006. As governance in the region has improved, so has competitiveness and economic increase. This is not to say that the improvements have been even across the continent.

While the Ibrahim Index of African Governance (IIAG) has measured a marked in general development in standards since 2000, the picture has as well been uneven. In the key area of the policy of law and democracy, evolution has been disappointing. In some nations, completed improvements in this area are under threat. There is a real risk that these developments could undermine economic prosperity in the long-term.

This is not the only obstacle which could slow Africa’s next economic increase. Improving regional economic integration is rightly at the top of the stated political schedule but we presently need to see words turned into evolution on the ground. Only around 12 % of Africa’s registered trade happens within the continent, compared to internal trade of 40 % in North America and 63 % between the nations of Western Europe.

Action so far to remove barriers to the free movement of goods, people and capital between neighbouring nations has been haphazard and piecemeal, hampering the increase of trade within regions and Africa’s ability to compete in world markets. Trade restrictions must be lifted to encourage the creation of larger markets. There is a need for investment in cross-border infrastructure inclunding transport, energy and communication links.

 Africa must as well be careful to guard against growing inequality. This is a problem by no means restricted to our continent but the extraordinary demographics give it a particular importance. Africa has the luck to reap an enormous dividend if it can harness the talent and potential of its young people. But if they find themselves excluded from rising prosperity and opportunity again the strains on the social fabric will be immense.

It is governments who have the major responsibility for overcoming these challenges. But business must be ready to share responsibility in these tasks and, if necessary, to rock the boat to make sure action is taken. We cannot allow a strong economy to blind us to lack of evolution on political participation or extending freedoms. Business must play its full role in helping drive employment. This means supporting development which goes beyond extracting and exporting raw commodities. Increased private sector investment is crucial to improve regional infrastructure.

Education is an extra issue which is too significant to be left in the sole hands of the public sector, no matter how well-intentioned. Evidence showing that additional schooling can make it harder for young people to find a job should prompt a review of the education system and curriculum. There needs to be an urgent conversation between the private sector and government about what our children are being taught and whether it matches the needs of employers. At the same time, firms must put a better emphasis on training and building partnerships to improve skills.

We as well need businesses, large and small, to lead by example. It is amount too easy to request improvements in the way governments operate, or complain about corruption, without insisting on the same standards within your own organisation. Too often companies press for government transparency while resisting it themselves. Too a lot of multinationals avoid paying tax in the nations where they do business. We will not see better governance without evolution on corporate governance. It is up to businesses to set an example by putting their own home in order.

Mo Ibrahim is chair of the Mo Ibrahim Foundation