Rwakakamba: PPPs are vital

The African Union Private Sector Forum convenes on 22nd July, 2010 as a strategic curtain raiser and fodder to the Investors Round Table and the Summit of 53 African Heads of State scheduled for 25th July 2010.

Uganda National Chamber of Commerce and Industry (UNCCI) and African Union Commission (AUC) are joint conveners of the forum, structured in a kind of fireplace dialogue style to allow freer and deeper business interactions.

Over 200 business magnates from the continent and beyond have been enlisted and are already jetting in. The Forum is expected to engage in honest conversations about creating new business opportunities in the aftermath of the global economic and financial crisis while cognisant of the fact that the continent is still grappling with infrastructure deficiencies, energy malnourishment, obsolete human capital, fragile governance systems and food insecurity. Correcting the above scenarios creates key prerequisite benchmarks necessary if African nation states are to stamp their indelible footprints in books of transformed and prosperous nations.

A shared understanding that governments cannot do everything is now a settled matter. The role of the private sector in wider social economic transformation has been elevated and appreciated. We now know that enduring investments in railways, energy, roads, ICTs and agriculture for example, can be easily leveraged through joint ventures between Africa’s Private and Public Sectors. This is what Public Private Partnerships (PPPs) is all about.

The fierce urgency of the above investments necessary to guarantee jobs, create an efficient and competitive private sector and dramatically transform the African continent need no emphasis. In this article, I focus on energy and food security.

Energy security

Africa’s population growth is at 2.4 percent per annum, meaning that every day; there are more energy needs. According to International Energy Agency, the average electricity consumption per capita for Africa in 2007 was estimated at a paltry 578 kWh. The foregoing is merely a quarter of the world average estimated at 2752 kWh per capita and a fourteenth of the OECD average estimated at 8477kWh per capita. Needless to say, the African Average is not equally distributed as countries like South Africa have a high consumption rate estimated at 5013kWh per capita.

For African countries to reach middle level country classification (like Malaysia), on average Africa should increase its electricity consumption per capita by over 3000kWh which translates into 900,000MW. It is imperative to note that countries with higher electricity consumption per capita also have higher GDP per capita and resultant population welfare. Africa must also diversify the current energy sources to meet the required demand, with the cleanest source being hydro power. 

The hydro power potential is estimated at 300,000 MW. The geothermal potential is estimated to be 14000 MW.  The Afrec Report of 2008 estimates natural gas reserves at 14.4 trillion cubic metres. This leaves a deficit of about 600,000 MW to be met from other sources such as wind, solar energy and nuclear energy.

From the foregoing, a successful Pre-AU Summit private sector forum, Investors round table and the Summit (meeting of heads of State) must move away from mere cosmetic declarations and come up with a clear roadmap and financing mechanism for the energy sector. Uganda’s dedicated Energy fund can be a good benchmark for creating a deep energy pool on the continent.

Food Security

Geometric increase in Africa’s population means more mouths to feed every day. Is Africa producing enough? The World Food Programme estimates that 80 million people in Africa go to bed hungry and six million children die from malnutrition before their 5th birthday!

Food security has three aspects: food availability, food access and food adequacy.  Achieving food security in totality remains a major challenge for the African continent. 95% of the food in Sub-Saharan Africa is grown under rain-fed agriculture (call it nature based) and on average, 70% of Sub-Sahara Africans are employed by agriculture. To contain food insecurity and create strong agriculture led economies, African governments and the private sector must direct financing to the following strategic areas:

Productivity

To raise factors of  productivity (land, labor, and capital), financing should be directed towards eight core areas; Technology Development/Research; Advisory Services and Technology Delivery; Disease, Pest and Vector Control; Sustainable Management of Land and Water Resources; Water for Agricultural Production/ irrigation ( financing should be scaled up from current $11 billion to $100 billion); Development and Promotion of Labor Saving Technologies including Appropriate Mechanization; Improved Access to High Quality Inputs and Stocking Materials; and Accelerated Production of Selected Strategic Enterprises (including food security crops).

Access to and Sustainability of Markets

Productivity growth without significant improvements in marketing is an opportunity lost. Farmers on the continent need to be assisted to participate in higher value-added market chains.  Africa must finance major public works like - roads, railways, and telecommunications. 

To harness markets, new investments must be directed towards to three core areas:

1) Increased Value-addition/ standards in agriculture, with the emphasising Strategic Commodities, involving the promotion of Public Private Partnerships (out grower models, the warehouse receipt system, contract farming), 

2) Improving post harvest handling, storage and rural market infrastructure, and

3) Increased capacity of Chambers of commerce and industry and Farmers’ organizations on the African continent to manage information systems and build up skills in management, entrepreneurship, and group dynamics so they can engage in higher-level value-chain activities including collective marketing.

I appeal to Private Sector gurus and Heads of State to marshal the necessary will and seize the opportunity to put the continent on a transformational path. The 18th Century Norwegian legendary playwright Henrik Ibsen said that “where there is a will, there is a way.” This is indeed true for our continent. African peoples covet the inherent right to shape a prosperous destiny. The successful hosting of the World Cup in South Africa this year once again reaffirmed that everything good can happen in Africa. Africa has indispensable organizational capacity and tenacity to manage multibillion dollar projects. We should not lose the momentum. When African business talks,  the world should listen. The hope of the African continent must never be liquidated.

By Rwakakamba Morrison
Secretary General, Uganda National Chamber of Commerce and Industry.
[email protected]