Africans can take control of their natural resources
Africa’s industrial potential had been stifled by the legacies of colonialism which left behind weak institutions and an infrastructure
designed to enhance extraction of the continent’s resources. Structural
adjustment programmes had particularly negative effects on
technological accumulation, human capital development and export
performance. However, Africa’s resources wealth accounts for
approximately three-quarters of the world’s platinum supply, half of its
diamonds and chromium, one fifth of gold and uranium supplies, just
over half of the world’s uncultivated arable land, with the potential to
become the breadbasket for the world, and has gas and oil
production in over 30 countries. With the abundance of resources and
the rising global demand for them, Africa must manage its resources
carefully.
Currently, there are far too many economies in Africa that are
dependent on the production and export of primary commodities. These are
generating prosperity and development in other regions instead of in
Africa, exporting jobs and opportunities. The continent runs the risk of
marginalising its own role in international trade if it does not add
value to its commodities. Commodity-based industrialisation therefore
offers the scope for value addition as well as forward and backward
linkages. Ethiopia’s leather industry and Nigeria’s
oil supply industry provide good yet random examples of linkages that
are not only developing, but also deepening into high value-added
activities. Such initiatives must become the norm.
Africa’s economic future will be determined by how it designs and
implements effective policies to promote industrialisation. There is an
urgent need to address infrastructure constraints and bottlenecks,
facilitate the development of the commodity sector and linkages, boost
availability of unskilled and semi-skilled jobs, provide job training in
higher artisanal skills and deploy data driven evidence to inform
planning. These all present opportunities for Africa and its partners to
better collaborate without depriving Africa of the benefits of its
resource boom.
Africa’s demographic dividend
Africa’s population is projected to double attaining close to 2.3bn
people over the next 40 years. This will represent about half of the
globe’s total population growth. Africa is also the only continent with a
significantly growing youth population. Projections suggest that in
less than three generations, 41% of the world’s youth will be African.
By 2050, Africa’s youth will constitute over a quarter of the world’s
labour force. By the end of the century, the continent will have the
lowest dependency ratio in the world.
In addition, Africa is experiencing an unprecedented rate of urban
growth. Projections indicate that between 2010 and 2025, some African
cities will account for up to 85% of the population. This will mean a
transition from a rural to a predominantly urban society, with the
largest cities on the continent, Lagos and Kinshasa, growing to 15m people by 2025, and others such as Dar es Salaam reaching
7m. Cities in Africa generate approximately 55% of the continent’s
total GDP relative to cities in developed countries that generate
approximately 90% of their GDP. Being cognisant of the related
challenges, such as the need to ensure essential services to cater for
this phenomenon, the opportunities for economic growth, poverty
reduction and human development are profound.
Approximately 54% of Africa’s youth is currently unemployed and more
than three-quarters live on less than $2 a day. A correlation and
lessons to be learnt can be drawn from Asian emerging markets, where 40%
of its rapid economic growth between 1965 and 1990 was attributed to an
increase in the working age population.
However, a youth population of such magnitude also indicates that the
real challenge of the 21st century is the ability to address this
demographic imbalance in a manner that will preserve the interests of
future generations. A demographic dividend is needed. Inspired by
Jean-Jacques Rousseau’s seminal work The Social Contract, there
is need for a new intergenerational social contract that is driven by
the necessity to balance the needs of the current and future
generations; between a young Africa and an aging population elsewhere in
the world.
African partnerships with new emerging economies
The once dominant influence of the West is diminishing and it will
have to metamorphose a new relationship with Africa. India, China and
new players have increased their engagement in Africa in rather dramatic
ways, transforming Africa’s traditional trade and investment relations.
The largest increases in FDI to Africa in recent years have come from
the BRICS, targeting Africa’s natural resources, from oil in Angola, Algeria, Nigeria and Sudan to mining in Niger, Mauritania, Zambia and Liberia.
It is however, a very partial view of what is going on. There is
significant diversification of investments. For example, India is
investing in social services, textiles and medium-sized enterprises, as
well as technology and China is investing heavily in Africa’s
infrastructure and services. Ways of doing business have been
revolutionised, accompanied by advances in technology.
This new paradigm of engagement reflects cooperation in which
partners see themselves as peers in mutually beneficial relationships.
Interest in Africa from a larger pool of partners is favourable to the
continent and is creating choice. Africa in turn, is well positioned to
be a more assertive player in the global arena and to capitalise on the
different development models and comparative advantages offered by the
array of partners. To benefit fully, Africa must strengthen its
institutions, take the lead in negotiating, designing and implementing
strategies with partners to leverage its comparative advantages as well
as broker good deals. Africa must transform from being perceived as a
price taker to a price maker.
The Africa-EU future
Europe and Africa have historical and geographical relationships.
Europe has been more of a trade, development and investment partner
while Africa has been a crucial source of hard and soft commodities for
Europe, such as strategic metals and minerals
and captive market. Having said this, perhaps the most successful area
in its long partnership has been in the thematic area of peace and
security.
The EU-Africa partnership over the last decade has evolved under the
framework of the Joint Africa-EU Strategy from one that was criticised
for being an unbalanced donor-recipient relationship to one that
promised a profound change in its approach to Africa. In 2007, the Joint
Africa-EU Strategy was premised on principles of equal participation
and representation, as well as to treat Africa as one.
However, development and political cooperation between the two
continents has not resulted in any fundamental transformation; instead
the gap has only become wider. This can be attributed to factors such as
dwindling development budgets that have been affected by the euro
zone’s sovereign debt crisis; in turn, the financial expectations under
the Joint Strategy have not been delivered. The emergence of new
economies rival Europe’s historic role and style of development aid
cooperation in Africa. Several partnership agreements have since
mushroomed, such as the Cotonou Agreement, fragmenting the strategy.
The fourth Africa-EU summit therefore comes at an opportune time for
both continents to develop consensus on what they want and how to
transform the Africa-EU relationship. In the new landscape of
multi-polar partnerships, Africa needs a coherent strategy so that its
development is not compromised by competition among potential partners.
In doing so, mutual accountability, mechanisms of enforcement,
mechanisms that foster compliance of multinational firms to
international norms and standards should be indispensable features for
the future partnerships. It is time for Africa to capitalise on the
geopolitical changes but by driving and owning the process.
Culled from Carlos Lopes's blog
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