African renaissance is real

Current trends across Africa show that the continent has chosen the path of sustainable development based on genuine partnerships in trade and value-adding investment, not AID or conventional hand-outs.

Yet, the litany of statistics about the continent has been unremittingly negative, but they mask the fact that a real African Renaissance is now underway. For example:

1)  It has been estimated that nearly half of the continent's nearly 1 billion population are “profoundly poor” surviving on less than US $1 a day.

2)  Despite encouraging signs in some parts of Africa, average real GDP fell in 1997 to 3.7% from 5% in the previous year.

3)  Africa's recovery is still fragile, and it attracted only about 1.5% of the world's foreign investment with 32% of this going to Nigeria, largely because of petroleum.

These figures veil the genuine progress that is happening everywhere, from the grassroots to the corridors of power throughout Africa. No wonder; seven of the ten fastest growing economies are in Africa, as are some of the most innovative business models, such as Equity Bank and the Safaricom/M-pesa mobile money transfer, to mention but two examples.

Such entities have forged mutually beneficial and lasting linkages between the public sector and private entrepreneurs. The linkages have spurred policy reforms and lowering of trade, investment, taxation and other policy barriers. This suggests a receptivity, focused re-examination and reform-mindedness that is not reflected in dismal statistics and reports about the continent. It also suggests that dynamic engines for policy reform, economic development and opening of new markets exist everywhere across the continent. They are only waiting for recognition and viable partnerships for change.

As the scramble for resources intensify, powerful Western nations, including the United States are reaching out, like never before, in pursuit of viable investment possibilities. During his visit to Kenya and Ethiopia in July, US President, Barak Obama commended the countries development achievements and announced plans for equal partnership with friendly African nations, based on Trade and Investment, which of course, implies expectations in terms of ready access to resources as well as planned development projects.

He also declared support for measures to tackle corruption and other challenges, but was quick to emphasize that solutions to Africa's problems must come from within, which is as it should be. With the memory of failed schemes, such as the Structural Adjustment Program that brought “third world” economies to their knees still fresh, Africans are, for sure, mindful of again becoming passive recipients of what others think is best for them and would scrutinize development options in order to confirm real intensions.

For now, China leads the way in strategic mega-size infrastructural investments in Africa and is likely to deepen ties as a major continental player and partner. However, with the apparent  change of mind and strategy on the part of traditional partners, prospective investors are likely to position for large-scale investments in key priority sectors, such as Modern Agriculture, Food Security, Special Economic Zones, Roads, Seaports/Airports, Clean Energy, Water, ICT and, last but not least, Mining. This is the sector where substantial private financing is likely to be available, although extreme care must be taken to ensure that as much as possible of the up-side on investment is captured for the benefit of countries, with value-adding partnerships that span the lifetime of depleting assets. Given the steady fall in prices of oil and gas, countries would, do well to pay great attention to movements in global markets.

 

Diaspora remittance from Africans leaving and working abroad is now the second largest source of external funding in sub Saharan Africa that needs to be nurtured. According to the United Nations Office of the Special Advisor on Africa, between 2000 and 2003, total remittances from Africans abroad averaged nearly US$ 17 billion per annum against $16 billion Foreign Direct Investment (FDI) per annum. Clearly, sub-Saharan Africa's share of global FDIs has decreased, thus giving added importance to private remittances. Although much of the money transferred is used for consumption (food, household goods, health, education), the number of professional Africans abroad and sheer volume of transfers speaks to the potential for harnessing Diaspora resources, including know-how, technology and skills for inward investment in key productive sectors.

Valuable lessons can be drawn from for example lndia. Over the past fifteen years, aggregate remittances from more than 20 million, including over 200,000 millionaires in the United States alone, totalled US$154 billion. According to World Bank Report, government facilitation include, setting-up a Ministry of Overseas Indian Affaires to address specific concerns of the Diaspora throughout the year, survey of just who are out there, their skills and what they do, special investment incentives, promotion of a Non Resident Indian (NRI) City that meets Diaspora needs. Similar impressive support systems can be found in China, Singapore and The Phillippines.

Africa is at crossroads and poised to become the next frontier for socio-economic transformation. However, if countries are to survive current and future economic turbulence, they would do well to embrace imperatives of globalization, such as regional cooperation and integration that encourage countries to forge mutually beneficial relationships based on shared goals mutual respect and trust