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May 14, 2012 / Lisa & Stefano

Recognising the new role of Africa

GUEST BLOG– reprinted with kind permission from
Filed under: Development Blog
By Francesco Rampa*
Africa is a continent on the move. Recent trends in economic growth and social dynamics, the northern African uprisings, as well as basic facts about Africa’s endowments (land, other natural resources and labour force), show that the continent is on a path of structural change. Despite all remaining institutional and economic weaknesses and challenges for poverty reduction, Africa’s role on the world stage is rapidly changing. Many international and local investors, as well as the ‘new’ global players in international relations such as China or Brazil, have recognised this, but too many, especially in rich countries, still view Africa only as a ‘black hole’, a landscape of conflict, hunger and all sorts of problems. It is time for all to change attitude vis-à-vis Africa and its people. The governments, public opinion, private sector, and NGOs from OECD countries should recognise the new role of Africa, respect the choices African countries make with their respective paces and modalities, and stop being naïve and paternalistic about a continent for too long considered only as “recipient of aid”, “origin of illegal immigrants and political refugees”, a place where to “satisfy philanthropic instincts”.
Let alone the improvements in terms of democratic governance, with the recent fall of autocratic governments in North Africa and peaceful electoral transitions such as last week in Zambia, economic trends and factor endowments show that “it’s time for Africa” (1). The continent’s collective GDP grew 5 percent a year from 2000 to 2008 (only 24% of this growth came from natural resources), it is now roughly equal to Brazil’s or Russia’s and is projected to be $2.6 trillion in 2020. Africa has 60% of the world’s total amount of uncultivated arable land (with immense potential for agricultural productivity growth), much of the world’s reserves of oil, gold and other precious metals, and will have by 2040 the world’s largest working-age population and one-in-five of the planet’s young people. Since 2000, 316 million new customers subscribed to mobile phone services. Foreign investment increased from $9 billion in 2000 to $62 billion in 2008 (almost as China if measured relative to GDP) and its rate of return is higher in Africa than in any other developing region.
These overall trends of course should not hide the differences between African countries and their development prospects, nor pessimism should be replaced by dull optimism or the idea that external support and aid are now useless in Africa. However, governments, businesses and citizens in the ‘North’ should adapt their perceptions to the new realities and modernize their approach to Africa, as many have done in that ‘emerging South’ to which Africa now belongs. As the World Bank put it in March 2011, “Africa could be on the brink of an economic take-off, much like China was 30 years ago, and India 20 years ago”. And indeed ‘emerging economies’ are engaging Africa in multiple and often integrated ways, where aid is combined with investment and trade initiatives. They see these relations as being based on mutual benefit, rather than driven solely by the need to bring development to Africa, an approach still characterising much of the OECD countries’ engagement.
Significantly, new perceptions about Africa, now seen as one of the new frontiers of global growth, are led by Africans themselves. The local firms, small entrepreneurs, consumers and citizens are driving the growth in investment across the continent, and display an overwhelming optimism about the economic prospects and investment potential of Africa. As shown by recent surveys, this optimism and self-belief is underlined by a 21% growth rate in Africans investing in other African countries from 2003 to 2010 (and in a diverse range of sectors) (2). After all, there is no better indicator of confidence in a national or regional economy than when domestic investors believe in their own future. Moreover, these surveys also note an “interesting difference between developed and emerging economies investors, with emerging economies investors generally more positive about Africa’s attractiveness”; and that a key difference between developed and ‘emerging South’ investors was that the latter regarded Africa as critical to sustaining their own growth, whereas the former saw it as a potential future market that still needs to develop.
As we need to stop considering Africa only through the ‘old lenses’, the political processes, support instruments, policies and initiatives by OECD countries should also be modernized. China, Brazil and India for instance have developed processes through which to manage their relations with African states that are not based on aid only and that Africans perceive as built around political equity and respect. The ‘North’ should also move to a more equal partnership with Africa. This implies a holistic approach to engagement, focusing on development effectiveness rather than aid effectiveness, and taking into account not only ODA but all international financial flows, other relevant policies and the role of private sector and civil society. Forget about Bob Geldof and Bono, about ‘third world’ and selling rich countries’ products with small proportions of those profits financing charity projects in Africa (3). It’s time to invest seriously in the continent, with a ‘joint venture’ approach leading to enhanced production capacities of the African economies. Being credible partners means Northern governments, businesses and NGOs should address the structural economic and political imbalances that still keep many African economies in a disadvantaged position, that make those rich countries’ products much more competitive than the African ones. For instance, concluding once and for all a truly developmental ‘Doha Round’ at the WTO which allows ‘developing countries’ (i.e. Africa, not China) to pursue export-oriented growth but also support their manufacturing industries. Not more aid, but removal of those unfair imbalances, together with business-like partnerships (and corporate social responsibility of investors), is what many Africans are asking for.
Recognising the new role of Africa should also translate into two immediate shifts. Europe should look at the Mediterranean not as a barrier against migration; rather as a great opportunity for investment and economic integration, to make it one of the future growth poles in the world, exploiting obvious Africa-Europe synergies and interdependence in terms of infrastructure, labour force, natural resources sustainability, food security, political and cultural solidarity, to name but a few. And global governance bodies and processes should better reflect Africa’s voices and needs, starting with stronger African representation at the UN (one permanent seat at the Security Council) and the G20 (South Africa cannot remain the only member from the continent).
(1) For a summary of such trends see ‘Lions on the move’ (McKinsey Global Institute, 2010)
(2) ‘It’s Time for Africa: the Africa Attractiveness Survey 2011′ (Ernst & Young, 2011)
(3) For an interesting account of new fashionable approaches to aid in Africa, including ‘celebrity aid’, which fail to address the root causes of poverty, see ‘Brand Aid, shopping well to save the World’ (Richey and Ponte, 2011)
* Francesco Rampa is an economist. He works for the European Centre for Development Policy Management (ECDPM), where he leads work on ‘the role of emerging economies in Africa’, and on ‘African regional markets for food security’.


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