Kenda karibu na kumi  (a Swahili Proverb- Nine is closer to ten)

In May 2013, we will celebrate 50 years since the creation of the Organization of African Unity (OAU). In the past five years, we have joined a number of African countries as they have celebrated their fifty years since independence. We have also heard the familiar comparison of the Africa of fifty years ago to Asia during the same period, with evidence showing that a good number of the newly independent African states were at comparable levels of socio-economic development as their East Asian counterparts, for example Ghana had the same per-capita income as South Korea, and Nigeria as Malaysia’s (WDI, 2010).

While there was a build-up of a great divergence which developed between Africa and Asia despite a strong run of socio-economic development in Africa during the first decade of independence, we now see the reverse. Today, Africa is home to the seven fastest growing economies in the World and has recorded success in various spheres, as so aptly highlighted in the Manifesto of Africa 2.0.

Various explanations were put forth to explain Africa’s stagnation and its diversion from other regions of the World, for the past fifty years. The Manifesto 2.0 provides ample evidence against this pessimistic history of Africa’s development, by pointing out to the notable progress and emergence of areas where Africa is exhibiting leadership; making it a force for change and transformation in the coming years.

Many economic approaches and models have been applied in the early years of Africa's independence from the 1960’s to date. Earlier leaders on the continent opted for pan-African and socialist models that they believed would lend to more rapid development of the continent. Planned economies were introduced in those early years and were in force until the early 1970s when a series of external shocks hit the region particularly in the form of declining terms-of-trade for Africa’s primary commodity exports, and most dramatically the fuel price crisis. We are now living again through the reverse, we are seeing high commodity prices and an increase in demand for Africa's primary commodity exports. This time around, let us use the long beard of East Africa's Rip van Winkle "Kyewungula" not to sweep the Kabaka's compound, but to wrap it around the excluded and marginalized people of Africa as a protective shield that ensures they get benefits from the boom. (Kabaka is the King of Buganda in Uganda).

It is not uncommon to hear today, about the model for development and the role of the state in development. A lot of debate is taking place on the role of global and regional decision making.

Haba and Haba hujaza kibaba (Swahili Proverb- Little by little fills the container)

Views of Africanists and African Scholars on Africa's Endowments Africanists and African scholars have put forth various explanations for the continent’s stagnation which we now see as endowments, in the true meaning of the African Proverb "The best time to plant a tree is twenty years ago, the second best time is now." We can now turn the risks the scholars have highlighted-- which range from the legacy of history, constraints of geography, policy choices, investment priorities across sectors-- to opportunities Africa can tap to move forward boldly and speedily.

History: Let us take the example of historical legacy, where millions of Africans left the continent, contributing to what we have called "brain drain." Today, we see the positive effects of an African diaspora that is investing in Africa through remittances that outweigh private sector and Official Development Assistance flows. Today we talk about "diaspora bonds" and innovation and ideas exchange across borders.

Geography: Africa does have a difficult geography with difficult access for the majority of Africa’s population who leave on the highlands far from the coast. Geography is visible as a constraint in the 15 African countries that are landlocked (the highest number for any continent). But the same geography also gives Africa its rich mineral resources and abundant sun, making it the continent where we can evolve new forms of energy and agriculture, not to mention the boon it has provided to innovations in the use of mobile communications because travel across long distances is so difficult. Through regional integration, landlocked countries are getting access to markets, bringing much needed trade across countries previously locked out of opportunities.

Policies: On the policy front, scholars have lambasted Africa for misguided economic policies, particularly lack of openness to international trade, especially the labor-intensive manufactures (textiles and apparel) that Africa’s Asian comparators started off with before moving up the export value chain, using the organizational facility of free-trade zones to ration critical public services and other incentives toward promoting labor intensive industrial manufactures and exports.

Mauritius has been quoted as the only exception that took a leaf from 1960s Taiwan, to succeed in a balanced approach to development that is the envy of many today. Unlike Asia, scholars have cited Africa’s lack of sound economic planning for rapid growth and structural transformation, which manifests itself in the region’s inability to prioritize rapid agricultural transformation (productivity growth) as a key strategy for guaranteeing low food prices thereby guaranteeing cheap labor supply and international competitiveness for industrial manufacturing. We see today an African Union Summit focused on intra-African trade, which is ready to be exploited precisely because the other developments in trade have been weak and a set of commitments for transforming agriculture embedded in the processes like CAADP.

Infrastructure: Inadequate infrastructure, poor public service delivery and weak institutions which depress returns to investment contribute not only to low foreign direct investment (FDI), but domestic capital flight which is estimated to the tune of 40 percent for Africa in widely quoted studies. Many countries WHICH invested in the last few years in infrastructure are seeking innovations to get the financing. The Manisfesto of Africa 2.0 has a number of examples on how to do it.

Instability: A cold-war legacy of political instability and endemic corruption, in common parlance, poor governance and weak leadership, have also been raised as challenges for the continent. The community of elders and the African Union are playing important roles in bringing remain pockets of instability under control.

Dalili ya mvua, mawingu (Swahili Proverb: Clouds are the sign of rain)

Sources of Economic Growth

The strong performance of Africa in the wake of the current global financial crisis comes down to sound macroeconomic management, a dynamic outcome of previous structural economic reforms. This has enabled many central banks and treasuries to strengthen their fiscal positions and build reserves, thereby conferring a greater ability to manage external shocks than previously. African countries have been among the top reformers on the World Bank Doing Business Index, with post-conflict Rwanda claiming to sporting in 2007 as the world’s best reformer (World Bank, 2010). There is wider acceptance of the crucial role of the private-sector by African leaders, and the importance of integration into the global economy through trade.

The dynamism in mobile telecoms has provided a vibrant source of growth for many countries. Modernizing banking systems have also provided further sources of growth, with a broadening product offering (such as mortgages) to cater for an emerging middle class.

A number of factors enabled Africa to recover quickly from the global financial crisis, not least strong macroeconomic fundamentals including a larger fiscal space and quick recovery in international commodity prices, the Continent’s erstwhile lack of deep integration with the global financial system, and the substitution of Western FDI flows with South-South flows from the emerging markets. The World Bank reports that even in oil-exporting countries, the temporary loss of momentum in oil exports was made-up for by growth in non-oil sectors.

Political governance has been steadily improving across Africa, if fitfully. At least two thirds of African countries now have presidential term limits, leading to at least 14 leaders obliging to step down from office in the last decade. Multiparty political systems and the discourse of political accountability are gaining wider acceptability among the key stakeholders, and the media has become more open a fortiori with the rapid spread of the internet and mobile phones. The Mo Ibrahim Foundation that tracks an index of African governance, offered a prize for exemplary African leadership to the President Pires of Cape Verde last year (Mo Ibrahim Foundation, 2011).

There is little doubt much of the economic growth and FDI inflows is accounted for by the extractive industry that has been enjoying firm international commodity prices due to strong economic fundamentals in the emerging markets notably China and India.

Recent studies have shown that provided there is continued commitment to sound economic management - which includes investment in infrastructure for development, economic diversification, and the establishment of natural resource funds - as well as transparency and accountability for natural resource windfalls, the curse of natural resources can be averted (Lin, 2011).

Beyond the Extractive Industries, While mining accounts for a third of Africa’s GDP growth (WDI, 2010), the region is also producing a growing number of world-class companies outside the extractive industry, as so aptly demonstrated in the Africa 2.0 Manifesto.

Non-extractive foreign firms are pouring into Africa in anticipation of continuing increase in per capita incomes and a growing working age population due to the region’s high fertility rate, thereby raising the specter that Africa may yet become the next workshop of the world given rising labor costs in India and China.

Atangaye na jua, hujua ( Swahili Proverb- He who wanders a lot by day, learns a lot)

Pro-Poor Innovation

In conjunction with India and Bangladesh, Africa has been leading in pro-poor innovation, particularly in mobile telecoms that have seen the emergence of pro-poor business models that have phenomenally improved the penetration rate of mobile phones beyond cities and transport corridors to rural areas particularly for those countries that have opened up to competition in the mobile phone sector. The rapid adoption of mobile phones across rural Africa owes largely to its property as a perfect leapfrogging technology that mitigates Africa’s severe underinvestment in 20th century infrastructure such as roads, electricity, and fixed landlines.

The increased convergence between mobile telephony, computing and internet technology is being harnessed for the provision of public services, such as the provision of agricultural extension and marketing information across remote agricultural regions, the provision of public healthcare and disease surveillance (mobile health) in Kenya, Rwanda, Uganda and other countries across the region. Many examples can be found in the illustrations of the Africa 2.0 Manifesto.

Culture and Development

Africa has been growing in international cultural influence particularly in the movie industry, as captured by the increasing international prominence of the FESPACO, which is the largest international African film festival in the world. A biennial event based in Ouagadougou, Burkina Faso, FESPACO has been in existence since 1962 and is dedicated to showcasing productions from the more established francophone film producing countries in West Africa as well as new entrants from Tunisia and Ethiopia.

Similarly, from humble beginnings in the 1960s, the advent of affordable digital filming and editing (as opposed to the previous analog production) has led to the rapid growth of the Nigerian film industry between 1990 and 2000, into the second largest in the world coming after India’s and ahead of the United States. The industry churns about 200 movies a month for the home market and, estimated at $250 million in revenues, is the third largest earner in the world and is second-largest employer in Nigeria (Economist, 2010). Although much of the production is for the home video market, Nigerian Film Industry (Nollywood) has come to international prominence with major box office hits.

Regional Integration

Regional integration is an integral part of Africa’s development efforts, and with the impasse on the Doha Round of Trade Talks, north-south and south-south bilateral trade agreements provide a second-best option to multilateral trade access under the WTO. Many African countries have been incapable of exploiting the opportunity of bilateral trade agreements---such as the United State’s Africa Growth and Opportunity Act (AGOA), the European Union’s Economic Partnership Agreements (EPAs)---due to weak supply-side capacity to meet the stringent sanitary and phytosanitary requirements. Regional integration offers a much more comfortable platform for African countries to learn how to export pending trading with more demanding partners.

There has been notable progress with COMESA, SADC, and EAC moving to common-market status. These regions are tackling trade facilitation through such measures as, one-stop border posts like the case between Zambia and Zimbabwe.

ECOWAS in West Africa has been lauded at doing more, either alone or in strategic partnerships with external players, to stem the region’s historical vulnerability to military coups and political instability. The sub-region was lauded for moving swiftly to resolve the Guinea and Niger crises. There is still more to be done to catch up with other regions of the world in terms of regional integration and to develop capacity for managing inter-country conflicts. This is an evolving challenge that impacts regions other than Africa. Consider that Europe is still struggling today to fix the Euro crisis. So Africa should take heart and take lessons on how to do integration differently.

Capital Markets and Investment Potential

In the years since Ghana’s independence, there has been a changing attitude towards the role of the private sector in the development of African economies that has facilitated the development of capital markets. Currently Africa has close to 20 securities exchanges, eleven of which began operations in the 1990’s. Africa has seen a remarkable growth in market capitalization from 5.5 billion USD in 1988 to nearly 70 billion USD in the 2000’s. Yet, in the 2010 rating of Global Financial Centers, only two African centers made it--Johannesburg, an established player, which rated number 54 and Mauritius, a local node, which rated number 61 (London City Corporation, 2007-2010). Not a single African center was considered an emerging global or transnational contender, or an evolving center. Nevertheless, African stock markets are advancing. Since 1995 there have been at least one African equity market among the top 10 best performing markets in the World. In 2006 it was Malawi, which posted a 125% gain in USD terms.

The growth has not only been in market capitalization but also in innovation such as the integration of regional markets in the francophone countries of West Africa under UEMOA, namely Benin, Burkina Faso, Cote d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo, which created the first Regional Stock Exchange—Bourse Regionale des Valeurs Mobilieres (BRVM). The BRVM has used innovative approaches such as electronic and satellite communications equipment to leapfrog the bottlenecks in underdeveloped telecommunications infrastructure in member countries making up the exchange (Aka, 2008).

A sector to watch in Africa is the intra-African FDI, which is currently at USD2 Billion annually, but expected to grow in the coming years from the current 13% of FDI to approach the more than 30% of FDI seen in other economies such as Asia (AEO, 2010). The source of intra-African FDI is also expected to grow beyond the few countries of South Africa, Libya, Tunisia and Egypt and to diversify beyond concentration to the extractive industries, going also to telecommunications, retail sectors, and agri-businesses. African transnational corporations are expected to grow due to innovations in the use of domestic savings to finance expansion beyond single country borders and beyond small companies and the informal sector.

Africa has made tremendous progress in the area of regional integration, as seen by the expansion of the East African Common Market to five countries of Kenya, Rwanda, Tanzania, Uganda and Burundi. However, there is room to go in terms of integrating its financial markets and attracting investment from domestic sources.

There is growing interest to invest in Africa, as shown by the number of positive reports on opportunities on the continent.

Remaining Challenges

Legitimate concerns subsist regarding the sustainability of Africa’s recent run of macroeconomic management and transition to a truly emerging market. Already, Africa’s macroeconomic performance has been variegated, with much of the gains accruing to a few countries.

Among the key challenges facing Africa are the needed infrastructure investments to stitch together the economies and societies and expand the transport and communication network connectivity to become the foundation for opportunities for the growing youth demographic. In this area of challenge, Africa remains sadly quite behind.

Analysis by the Economic Commission for Africa concludes that Africa is particularly lagging with respect to the poverty (food security and hunger), health and environment related MDGs (UNECA, 2009). The major missing link has been the region’s underinvestment in smallholder-based agricultural productivity growth, given that sector’s special characteristics as a major provider of food, labor intensiveness and ability to harness the participation of the poor in the very production process, most of whom reside in rural areas and directly involved in Agriculture. In other words, agriculture plays a direct role for the achievement of the hunger, poverty and environment related MDGs and also is the potential source for much of Africa’s innovation.

There has also been growing stability in Africa. But there is a growing concern with pre and post-election violence and instability within countries that were previously deemed stable. There is also concern with the low level of governance particularly in the area of accountability and transparency for the management of natural resource rents, as well as the region’s inadequate capacity for national stakeholders to successfully analyze, formulate, plan, budget resources, implement and monitor– and-evaluate development policies and programs. The youth bulge facing the continent is experiencing is a source of potential in the ability of new ideas to come to fruition but also a source of risk if the investment in this generation of young is not appropriate, and the economies unable to provide employment and opportunities for gainful advancement.

The importance of national capacity as a key requirement for successful development management is enshrined in the Busan Outcome Document. Capacity featured prominently in all the speeches at that conference, and was recognized as a key component for effective implementation.

The African Capacity Building Foundation (ACBF) was formed in 1991 in response to the severity of Africa’s capacity needs. ACBF is dedicated to the development, utilization and sustenance of indigenous human and institutional capacity for development management in Africa. Founded against the backdrop of the structural adjustment programs, the Foundation’s Mandate was later expanded in 1999 to include other core competency areas, namely, public administration and management, financial management and accountability, parliaments and parliamentary institutions, strengthening voices of the private-sector and non-state actors, and building national statistics. To-date the Foundation has committed millions of dollars in technical and financial support to capacity development interventions across Africa.

Africa will need to seriously seek ways to address and/or negotiate its emerging challenges. The Continent will be required to demonstrate its democratic credentials, embrace transformative leaders and privilege good governance. Recent relatively peaceful elections were key in this regard such as in Benin, Cameroon, Cape Verde, Central African Republic, Chad, Liberia, Nigeria, Uganda, Tanzania and Zambia. The continent’s new/emerging oil economies – Ghana, Uganda, South Sudan, and Tanzania, as well as the rest of Africa, will need effective and accountable institutions to ensure the resources deliver development results, and to go beyond primary resource extraction to transformation. Africa must be more than just a commodity play! To achieve this, capacity needs to be enhanced, knowledge assets harnessed and shared/disseminated more strategically, and more creative solutions encouraged.

Kinga na Kinga ndipo moto uwakapo (Swahili Proverb- One fire brand after another keeps the fire burning)

Conclusion and the way forward

Africa is rich. It is endowed in natural resources. It has a young vibrant society with creative and innovative people. But it is poor in capacity and we need to address the many gaps I have cited so far. Innovation will be key, first and foremost in agriculture where we need to look at the whole supply chain to once and for all deal with the issue of famine and food security, to use agriculture to go beyond subsistence and into development.

Capacity development remains critical for the innovations needed to solve past and emerging problems. Handling uncertainty from external shocks will remain important. Capability to adapt in face of climate change and innovate towards green solutions will gain added importance where we can go from pilot and experiment to large scale solutions for energy and transport. Taking cue from the innovations in technology, banking, and finance, we can push ahead in these critical areas. We can evolve sustainable solutions for the myriad of problems remaining to be tackled and those emerging on the horizon.

By Dr. Frannie Léautier

Executive Secretary, African Capacity Building Foundation (ACBF).

Excerpted from Opening Remarks during the Launching Africa 2.0 Manifesto.