“Meetings like the World Economic Forum promote African growth and, as Africa rises, stronger states will be able to help failing states to build capacity,” Colin Coleman, MD of Goldman Sachs South Africa, said at the Brand South Africa breakfast forum. (Image: Shamin Chibba)
The good news of Africa’s continued economic rising from the World Economic Forum (WEF) in Abuja, Nigeria, was overshadowed by media reports of the shocking kidnapping of almost 300 schoolgirls by Boko Haram insurgents. As governments, industrial and strategic partners gathered to discuss the economic future of the continent, Western media focused on a story that harked back to Africa’s past of instability and violence.
That groups like Boko Haram are able to operate with relative ease across Africa is down to the failure of institutions meant to guard against incidents like this, said Colin Coleman, managing director of Goldman Sachs in South Africa. “Meetings like WEF promote African growth and, as Africa rises, stronger states will be able to help failing states to build capacity.”
Key to growth, strengthening democracy and the end of these kinds of criminal acts is more cooperation between governments, especially in the sphere of trade. Coleman made the point that trade in Africa between Africans amounted to just 12% of all trade on the continent.
The Brand South Africa breakfast forum was hosted by New York-based CNN International anchor and reporter Richard Quest. Other speakers included Brand South Africa CEO Miller Matola and Telkom South Africa chair Jabu Mabuza. (Image: Shamin Chibba)
Between 2007 and 2012 South African investment in other African states grew by 57%, making the country the largest foreign direct investor in the rest of Africa. Opportunities exist to grow Africa as an economic bloc to rival the European Union, but practical stumbling blocks remain.
“We need to develop seamless and effective frameworks between governments to encourage more trade between African countries,” Coleman said. Agreements exist, he pointed out, but there remain practical problems on the ground and a lack of follow-through has hampered trade growth.
Freight trucks held up at border posts because there are too few guards or the failure to embrace technology are issues that constrain cross-border trade. Returning accomplished expats and skilled foreigners still find it difficult to find employment in closed economies.
Private sector making strides
In 2011 intra-continental trade amounted to $54-billion, up from 2000’s $32-billion, but most of that trade was driven by the private sector, especially South African companies such as MTN, Shoprite and Standard Bank, whose investments have created 46 000 jobs since 2003.
The private sector has moved forward, despite obstacles, to make it easier for themselves to invest in sometimes-taxing environments. Policy makers should look to their example to build a common African market.
“Christo Wiese [the executive director of Shoprite] negotiates five work permits for every $1-million he invests,” Coleman said. “This gives him the confidence of knowing that he can bring in experienced and knowledgeable managers to help build a knowledge base where one may not exist.”
Economic growth across Africa is expected to hit 6.1% in 2014. The continent has the resources to power that growth and to feed itself. Entrepreneurship is flourishing, the middle class is growing and poverty rates have been falling since the 1990s.
What stands in the way of growing that percentage and making growth sustainable over the long term is the promotion of effective trade exchanges and, to a lesser degree, enough skilled people to drive development.
Africa’s reputation as a safe investment destination is growing, but this optimism is only sustainable if Africans continue to invest in Africa, Coleman said.
Legislation and trade agreements are one thing, and these are in place, but skilled people to implement them will become the biggest stranglehold as trade grows. Coleman pointed to local legislative framework to make his point. “I have spoken to some local [South African] municipal employees. Very accomplished people who find that legislation, especially to combat corruption, makes it impossible for them to do their jobs.”
The intent of conferences like the Abuja WEF is to encourage trade in and with Africa. As long as the continent is able to produce civil servants able to understand the objectives of trade agreements and then implement them, the continent will flourish. If governments are unable to build education systems to deliver these people Africa’s ability to trade with itself will be hamstrung, Coleman said, hinting at the biggest challenge faced by African governments – education.