WEF’s message: Yo Africa! You snooze, you lose, baby!

By J Brooks Spector 10 May 2013

Day one of the World Economic Forum on Africa was a day for “C” words – from cross-border trade to call centres, competitiveness, commodities, commuters, common markets, consumer loans, capitalisation, Cape Town-to-Cairo, current demographics, conurbations, community commissions and communism – all of which combined appeared to cast conferees onto a wave of currently uncommon confidence in the continent. China and corruption were the conspicuous elephants in the room. By J BROOKS SPECTOR.

After a whole day of hard-edged economic and business language at the World Economic Forum on Africa meeting in Cape Town, there is, finally, a modest epiphany in the day’s final session, “New solutions: arts, culture and media”. In that discussion, Swedish author Henning Mankell describes an experience he had some years ago in trying to explain who he was and where he was from to the inhabitants of an isolated village in rural East Africa. As he tried to find the words to put Sweden on the villagers’ mental map, they tell him instead, “No, no words; dance the story to us.” The interconnected world is thereby described metaphorically through an impromptu dance of distance.

By contrast, for the rest of the day, the WEF’s dances are, instead, the languages of investment risk analysis, public private partnerships, and positioning infrastructure spending to maximise economic growth. Aside from that final first day’s session that Mankell had shared with singer Yvonne Chaka Chaka, and cultural entrepreneurs Tara Fela-Duroyoya, Ternesgen Gebru and Garth Japhet, the prime focus for the hundreds of people assembled in Cape Town could well have been reminiscent of the discussions that would have taken place in Europe in years gone by when the financing of the Suez Canal was proposed back in the 1860s, or those competing imperial visions of Cape to Cairo and Berlin to Baghdad rail lines were being advocated at the turn of the 20th century.

Right at the beginning of its first day, this WEF meeting has hosted the release of the eagerly awaited African Competitiveness Report. This report speaks of the continent’s real comparative disadvantages in trade and human capital. It looks at the issue of shipping goods, for example, in terms of cost and time (and thus implicitly in terms of pilferage and spoilage as well). And in addition, there is the region’s further, major trade imbalance. The trifling trade between African states stands in stark contrast to the continent’s trade with countries outside the region. This is in addition to the fact that Africa’s cross-border trade as a percentage of its total trade is far lower than the equivalent ratios between countries in other global regions.

Representatives of the international consortium of sponsors of this report begin the discussion noting that in order to be competitive in the increasingly fierce, globally dog-eat-dog world of world trade and investment, the continent’s growing economies – those African lions that stand in contrast to the more famous Asian tigers – still need to move up the value chains of their economic activities – primarily by investing in infrastructure, energy development, education and an increasingly skilled labour force. Otherwise they risk becoming the equivalent of global economic road kill. This is especially true since the African nations’ focus for exports still rests largely with primary commodities, unlike the historical success stories of those Asian tigers.

At the report’s launch, Mthuli Ncube, the African Development Bank’s chief economist, startles some when he tells his audience that a country like South Africa shouldn’t be building any more Gautrains. Rather African nations should spend their resources on less gold-plated efforts like cable cars through the continent’s metropoles to carry multitudes of commuters to and from work. (A comment like that makes this writer think about the unsexy but vital nature of how soft drink and beer companies keep up their distribution networks throughout Africa, even in the midst of a civil war or two.) The question seems to be that if one can cut the distribution cost in half, efficiency and economic growth shoot up – even if it isn’t via fancy stuff like space age maglev trains. Of course that, in turn, makes one think about the efficiency aspects of what South Africans like to call the “lack of service delivery” crisis – but then that’s a whole other story for another time.

Gaiv Tata of the World Bank then takes the discussion down a slightly different path when he does a kind of “this is the house that Jack built” monologue. He argues sustained growth creates more jobs, but that depends on competitiveness, and that in turn requires better infrastructure, and that requires growth poles or nodes, and that means creating the whole infrastructural network such that it is made to the broadest possible benefit to the widest number of people possible. If one puts the question that way, the whole problem seems now to be dependent on cracking the mystery of getting enough funding into the hands of competent engineers.

In this formulation, curiously, there is more than just a tinge of that old political-economic movement from the 1930s of the virtues of “technocracy”. That argument went that all a country needs to do is let the technocrats (the engineers and economists) handle things as they find the optimal solutions and equations for such problems. If we let them do it correctly and get out of their way, they will soon set things right. It is just those messy things like people, societies and politics that get in the way of working it all out properly.

The problem, of course, is that people don’t all agree. Moreover, politicians have a way of churning things this way and that on ideological grounds, or for personal gain, or on behalf of (or to the detriment of) one or another social, racial, religious or regional group. And then the penny drops – one of the things we’re not hearing much about as a part of this conversation on “delivering on Africa’s promise” is the problem of endemic and extensive corruption. Yes, it is true that in the session dedicated to open, transparent governance the discussion turned to a consideration of the problem of corruption; but it is also true that this topic seems essentially AWOL in most of the other sessions.

One fascinating topic is briefly mentioned and then disappears – the impact of the various modern African disaporas on economic growth in their respective homelands. For a brief moment, the Ethiopian disapora community’s role in being providers of foreign capital to their ancestral land is noted. It is a reminder of the importance of similar behaviour historically by Jewish, Chinese and South Asian communities – and that there is a huge underground flow of such capital back to homelands that can, and should, be tapped for economic growth. Here’s grounds for a whole conference all on its own, but the WEF moves on.

As the co-chairs of this conference get to do their turn at the microphones, talk turns to another one of those ever-receding evergreens: creating an ever-larger, unified African common market – opening up vast hinterlands to tariff-less trade and better economies of scale. Suddenly it seems we are back at the dreams of a single community, bound together by that railroad from Cape Town to Cairo again. Telecoms entrepreneur/philanthropist Mo Ibrahim argues, for example, that regional economic integration is so obvious, yet it continues to proceed at a snail’s pace – what’s the problem, he asks. There is no immediate answer to this challenge.

Ibrahim also raises another theme that will echo throughout the day – the fact that Africa is demographically a young continent with half its population under 19 years of age – something quite the opposite of every other region in the world, save the Middle East. Ibrahim argues that, at least in terms of employment and training, the consequences of this population explosion are too important to be left in the hands of government bureaucrats. They have little or no idea of what businesses will need in the future in the way of employees, skills and positions. This is properly the role of business too.

Other speakers throughout the day will continue to point to the fact that Africa’s young population will eventually mean a labour force that is a billion strong – more than China’s or India’s, the current demographic big boys on the block. Of course this particular demographic fact can cut two ways, a vibrant work force eager to experiment and innovate – or a sullen population angry about the lack of productive work or income as a result of government incompetence or worse.

As the WEF meeting moves to its first plenary session, the overflow crowd and many journalists watch from video feeds around the Cape Town International Convention Centre. Just as the session begins, zap! video viewers are forced to listen only as the picture disappears from the screens. Maybe it’s just as well – one now has to concentrate more on the words than the image. South African President Jacob Zuma has picked up the talisman of regional integration as the universal elixir, the virtues of the coming Brics bank, even if neither arrangements for its capitalisation or its corporeal existence are decided yet.

The IMF’s David Lipton, meanwhile, insists that any future Brics bank will be complementary to the role of the globe’s already extant multilateral lenders. Given the slow growth in the OECD economies, there is a real role for Chinese and other Brics nation capital to help fund the great infrastructure build that Africa is poised to engage in, in the near future. (Are we somehow listening to an international banker speak about the crisis of international capitalism and the dangers of its surplus capital? It seems a slightly weird moment of Marxian déjà vu.)

Then Nkosazanz Dlamini- Zuma, formerly South Africa’s foreign minister and now head of the AU Commission, joins the fray, pointing to the fact that 60% of Africa’s arable land remains unfarmed, that there are great opportunities to move up the value chain and increase employment in agriculture. Getting wound up now, she advocates a great continental network of high-speed trains linking the capitals of every African nation, and the goal of using the Internet for a continent’s worth of high quality education.

She adds that this is the 50th anniversary of the OAU/AU and that she wants to challenge Africans to envision what the continent should look like a half century hence. Her former husband, the current South African president, answers that at that point, the continent should be connected, at peace with itself, and have a population empowered by education. Sadly, there is no discussion of what restrains such laudatory goals and objectives from becoming realities.

Curiously, at a session explicitly tagged for a discussion about building Africa via the Brics community, there is virtually no mention of China. Along with corruption, here, it seems, is a second unspoken-about elephant in the room.

At another discussion session, this time on restructuring the financial environment, panellists speak to how to bring in the majority of the continent’s population that remains unbanked, even as traditional bricks and mortar banks are increasingly expensive to operate. Africa is not the place to launch new gold-plated banking and financial products they argue, even as there is a great need for the expansion of consumer loans, especially for people who have not previously been in the formal financial system. One banker argues that the real mantra for successful bankers should be “think local, act global”, rather than the more popular other way around. Of course finance institutions should sell insurance, for example, but life insurance is not the ticket for people who really want death expenses and funeral insurance to be sorted.

Another banker explains the reality of Africa’s place in global finance by noting that it is, in many ways, simply that “Africa wants the money and investors want the yield”. But, because some $73 trillion of the $85 trillion worth of capital is in the OECD nations, the basic truth is that a nation cannot raise capital unless one accepts the fact that one has to go where the money is, rather than hoping for some mythical funding mechanism elsewhere. In the US, for example, if one wishes to raise big capital, one goes to the bond market. End of story. That is the wave of the future for Africa too, if it wants the big bucks.

Then it is time to attend the launch of a Rockefeller Foundation initiative aimed at directing jobless, undereducated African youth into the IT sector. Given the fact that 85% of Africa’s population will be in cities by 2025, and given the ongoing digitalisation of the world, the foundation has determined this is the appropriate moment to set in motion a $100 million fund for six nations – South Africa, Ghana, Morocco, Egypt, Nigeria and Kenya – to create a million jobs (and increasingly skilled youth) in the next seven years in the countries’ urban conurbations. (Actually the programme is already ongoing, but this is the formal rollout.) The concept seems to be that training young people to work in call centres and similar ventures will generate both an interest in such work generally and then the initiative to move beyond such jobs – up the value chain.
No, this is not an effort to train employees for the jobs at the bottom of heap, Dr Judith Rodin, the foundation’s president, insists. Rather, picked properly, the young people will be part of a new upwelling of aspirant middle class, technologically empowered young people for a world that is coming together in Africa. The audience is presented with a bright young woman who dropped out of university for financial and personal reasons but who is now a highly valued call centre employee – a young woman whom the head of the foundation insists will move quickly up that value chain – and well beyond the call centre. It’s a likely bet that she will, but one has to at least wonder if Africa’s high tech future will be to serve as an endless reservoir of call centre employees for people disputing their credit card bills in the global north.

Still, Strive Masiyiwa, a member of the foundation’s board of trustees and the chair of Econet Wireless, notes that 20 years ago, 70% of all Africans had never heard a telephone ring, while a generation later, that same percentage now owns a cellphone. Masiyiwa argues that a key task is to re-imagine business to reach youth as new workers will soon enough enter into jobs that have not yet even been imagined. It is possible, he says, that one can re-imagine an Africa that is more than the sum of the minerals in the DRC (and the strife that goes with them).

He insists that the continent’s greatest resource is, instead, its vast and growing pool of young people. Optimism is truly the order of the day at the World Economic Forum on Africa. Rockefeller’s Rodin adds that the goal is to leverage its $100 million contribution with 10 times that much money from corporations operating in Africa who recognise the value of such a motivated, increasingly trained youthful workforce.
Friday’s sessions – the second and final day – include a variety of discussions for conferees to attempt to envision the likely future of the continent’s economic circumstances. According to the schedule, at the end of the conference, amid all that previous optimism, discussants will now have to tackle the impediments to Africa’s better future – from unemployment, to unstable commodity prices, to growing inequality – that still stand in the way of realising “Africa’s promise”. DM


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