C Gopinath

How the world has started to realise Africa’s potential

C Gopinath | Updated on February 09, 2020

Comprising 54 countries and about 1.2 billion people, Africa promises to be the next growth region   -  istock/fkdkondmi

After being ignored for many decades as a lost continent, perhaps what woke up Africa is digital connectivity with the rest of the world

The meeting of the African Academy of Management, hosted in January by Lagos Business School, displayed research into many areas of progress across the continent. I joined my colleagues on a field trip to an ultra-modern factory, a joint venture between the Tolaram Group and US food giant Kellogg in Lagos, Nigeria. Unfortunately, the factory was not functioning, as the required imported inputs had been held up due to congestion at the local Apapa port. Earlier that week, I had seen the backdraft of the port’s problems — a very long line of trucks parked on the Third Mainland bridge awaiting entry into the port. Hurt by the constraints of the port’s capacity, the same Tolaram Group sensed an opportunity. It is now engaged in a new multi-billion-dollar deep-sea port project that will increase capacity and modernise port operations.

This captures the Africa mood today – opportunities that can be extracted from the challenges faced on a daily basis. The continent, comprising 54 countries and about 1.2 billion people, promises to be the next growth region. Many countries already record a GDP growth rate of 6 per cent and more and, combined with healthy demographic growth rates and rapid urbanisation, promise sustained growth. After being ignored for many decades as a lost continent, perhaps what woke up Africa is digital connectivity with the rest of the world, which awakened aspirations. My Uber driver in Johannesburg listens to American rap on the radio because he likes their message, compared with the love themes of the local bands.

Private capital flows are now said to exceed aid flows into Africa. Many countries are rolling out their welcome mat. There is a race to improve ‘ease of doing business’ rankings. Rwanda, which climbed from 150 in 2008 to 32 in 2014, has a ‘One Stop Center’ to help investors go through all the regulatory requirements.

Joel Kotkin, in his 1992 book Tribes, identified Indians as one group which has spread far and wide. A number of Indians, like the Tolaram Group, have made deep inroads into Africa. For many, the growth was organic, starting as individual traders and then slowly bringing along their family and friends. More recent arrivals are the Chinese, another of Kotkin’s global tribes, although their presence has come with the powerful political and financial backing of the Chinese state, and the are mostly engaged in large-scale mining and infrastructure projects across the continent. In Zambia, many Chinese have married locally and are raising families; they are now referred to as the ‘Zambinese’!

Some businesses, though, are intriguing. The private security business, serving residences and commercial establishments in South Africa, is one of the largest in the world. Growing unemployment, leading to high crime rates, makes for extra-high walls and signs that warn of ‘armed response.’

Nearly every coastal country in Africa has found oil, but Nigeria, with the second largest reserves in the continent, suffers from power cuts.

Africa, with a well-earned reputation for autocratic leaders who overstay their welcome, continues to hit the headlines for poor governance. The most recent corrupt collaboration between former South African President Jacob Zuma and the Gupta brothers has contributed a new term in public policy, namely ‘state capture.’ But we also have the example of Ghana and the Ivory Coast collaborating to rescue their cocoa farmers from low commodity prices. These farmers produce 65 per cent of the world’s cocoa, and seeing all profits go to processors and middle-men in the West, have now formed a cartel and are levying a fee of $400 (about ₹28,400) per metric tonne for a fund to help poor farmers.

Many of the early African leaders post-independence had learned all the wrong lessons on resource extraction from their colonial masters. But the more recent leaders are looking to collaborate. Already, 22 countries have ratified the African Continental Free Trade Area, expected to grow to cover the entire continent.

The writer is a professor at Suffolk University, Boston

Published on February 09, 2020

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