Opinions Thu, 11 Nov 2010

Is Africa Emerging? (Part I)

A couple of years ago I participated in a Mckinsey PhD Discovery Weekend in Chicago. It was a pre-recruitment clinic for potential black recruits for the leading global management consulting group. About two weeks before the programme participants were emailed a sample client brief for study. I was excited to receive something on Africa, but intrigued by the nature of the task: developing an effective strategy for the Bill & Melinda Gates Foundation’s work on HIV/AIDS in southern Africa. This was by all means an important subject. But I thought to myself: Why not something on some aspect of Africa’s business environment- infrastructure, technology, growth prospects, et cetera? After all, is business not the focus of a management consulting firm? Well, not always, but most of the time. And however well-intentioned is relief, and God bless the Gates for their efforts in Africa and elsewhere, might Africa not be better off if it grew wealthy enough to solve its own problems? Could Africa grow wealthy if its major external partners are relief workers come to save rather than entrepreneurs come to invest?

My mind drifted to an earlier experience. In 2004, I attended a lecture on global investments at a business school in London. The speaker touched on all regions of the world, save one: Africa. Question time, a Nigerian student wanted to know how Africa stood in the rapid growth in global investments and what could be its future prospects. The speaker’s answer was blunt and unapologetic: Africa did not matter. His evidence: the turnover of the typical multinational from the Global Triad (North America, Europe and Japan) was bigger than the gross national product of most African countries. The answer, backed by fanciful power point slides so beloved in business schools, drew approving applause, never mind that it was a misleading comparison: he was comparing oranges and apples, the sales revenues of a multinational earned from around the world with mostly domestic output. The answer, nonetheless, was a telling evidence of the widespread view of Africa as a basket case rather than an economic prospect, a continent to save rather than one in which to invest. For global investors Africa had for long been “terra incognita”. What good cases could business schools learn from Africa?

But it was not only in business schools that Africa was being neglected. In foreign policy and international studies of all disciplines, Africa has been a backwater. Previously, I had written an MPhil thesis on the domestic and international challenges of nation-building and post-colonial development in Africa, comparing Ghana’s experience with its post-colonial compeers in East Asia. The motive was to find whether something else, beside the old beaten horse structural adjustment, was responsible for Ghana falling behind. For this reason, I was inclined to focus on ethnicity, nationalism, regional geopolitics and how these were affected by the global configuration of power. An internal examiner wrote of the thesis: while it was an engaging analytic narrative, it failed to touch on the substantive issues in international relations (IR) scholarship. In the least, the examiner noted, the author could have focused on the relations between the World Bank and Ghana. This was before the rise of East Asian powers in Africa became one of the most topical issues in IR.

The impact of World Bank policies was indeed part of the study. It was either not discussed enough or had been drowned in the cacophony of domestic events analysed in the study. Incidentally, other Africa-focused theses examined by the same scholar, including one written by a white South African on the security challenges of post-Apartheid South Africa, attracted similar comments. Coming from an IR scholar for whom Rudyard Kipling’s poems- including his exhortations for the white man to take up his manifest destiny to civilise the non-Western world- mattered more than the responses of the non-West to the West, the comments were not surprising. But they were charitable, nonetheless. In traditional IR scholarship the sort of issues most Africanists investigate belong to “low politics”. Or rather, they are pastiche to the canon. Africa was pastiche unless one threw in a Western actor doing the saving act; perhaps, the reason the comparison to East Asia also did not attract comment.

McKinsey was also probably right in the choice of the task for the Discovery Weekend for two reasons. Firstly, most of the prospects, although receiving education in leading European and American universities, were originally from Africa and had expressed interest in working on the region in the future. Secondly, management consulting firms solve problems for business. The biggest, or rather the most prominent, business that had emerged in Africa since the 1990s was humanitarian intervention led by a large number of non-governmental organisations (NGOs) to which both local governments and donor agencies outsourced relief work in response to rising complex emergencies. It was not surprising that McKinsey itself had only a marginal presence in Africa through a small operation in South Africa, Africa’s largest economy. Nor was it surprising that its main focus in Africa was helping humanitarian organisations develop strategies to effectively deliver relief. They were addressing pressing challenges.

In a sombre article in 1994, Robert Kaplan warned of a “Coming Anarchy” in Africa, observing how economic scarcity, overpopulation, corruption, crime and disease were combining to destroy the social fabric of African societies. The humanitarian agencies have been helping to combat these social maladies. The question is how best to end them rather than continuing treating them. Do we combat food scarcity, for example, with food handouts or with green technologies and infrastructure investments that help poor people to both feed themselves and spend their time in dignifying employment?

Although dismissed in some quarters as a racially-tinged Western propaganda, Kaplan’s pessimism was, nevertheless, shared by some leading African elites. At a meeting of the Organisation of African Unity (OAU) nearly a decade before Kaplan’s article, Edem Kodjo, Togolese-born Secretary-General of the OAU, harangued his compatriots: “Our ancient continent is on the brink of disaster, hurtling towards the abyss of confrontation, caught in the grip of violence, sinking into the dark night of bloodshed and death … Gone are the smiles, the joys of life.” In a foreword to a 1999 UN report on foreign direct investment (FDI) in Africa, then UN Secretary General Kofi Annan noted: “For many people in other parts of the world, the mention of Africa evokes images of civil unrest, war, poverty, disease, and mounting social problems. Unfortunately these images are not fiction.”

Between Edem Kojo’s OAU speech and Kofi Annan’s foreword to the UN report, nearly two decades had passed; yet little had happened by way of improvements to conditions in Africa. Within those two decades, the post-colonies of East Asia, which hit a high-growth path in the 1970s, had pulled farther ahead of Africa. In the 1960s these had been written off as impending development disasters, what Swedish economist and Nobel laureate Gunnar Myrdal described as the coming “Asian Drama” in his own enquiry into the poverty of nations. Behind Myrdal’s conclusion was the relative resource poverty of the East Asian post-colonies. With the benefit of hindsight we can now conclude that it is not how much, but well you utilise, the resource, huge or small. How else did Singapore grow to riches with a shipyard and a patch of sand?

By the end of the 20th Century, what was once called the “Third World”- made up mainly of poor ex-colonies and semi-colonies- had so shrunk the term had become obsolete. Oxford professor Paul Collier recently suggested another term, the “Bottom Billion”, the majority of whom live in Africa. The term “Africa Plus” is now used as a convenient shorthand for the Third World. But even more dramatic in those two decades I have been describing was how China, following the example of its smaller neighbours, rose from poverty and conflicts to stunning economic success, lifting, in the process, nearly 300 million people out of extreme poverty in one generation. Economists and historians suggest this is the biggest poverty dent in recorded history. How did China and its East Asian neighbours do it?

A seemingly bemused Olusegun Obasanja, former military ruler and later civilian leader of Nigeria, was quoted by Paul Kennedy as wondering on which planet Africa had been while all other developing regions were undergoing rapid economic transformations. Of all the regions of the world, Paul Kennedy argued in Preparing for the 21st Century, Africa was the biggest “loser” in the transformations wrought by the rapid economic globalisation of the last half of the 20th Century and the least prepared for economic competition in the 21st. By 2000, the influential British magazine The Economist thought “Hopeless Africa” was so beaten down by poverty, disease and conflict it could never possibly rebound.

A decade into the 21st Century, Africa is still not the most salubrious campsite for global investors. That still belongs to Asia. But the headlines paint a less sombre picture of Africa now than before. “Africa: A continent on the move” is the title of a 2010 report by Mckinsey Global Institute, the knowledge and research arm of the McKinsey consulting group, a sign of the sudden interest in Africa among prospective global investors, the result of the continent’s historic growth performance recently. Between 2000 and 2008, Africa’s gross domestic product (GDP) grew by 5.3% per annum (adjusted for purchasing power parity), higher than the global average growth of 4%, the first in many years. Some individual African countries like Angola grew at double digit rates.

Even in the wake of the recent global economic downturn Africa is said to offer glimpses of hope. As the financial crisis deepened in 2009, Africa managed a positive growth rate of 2%, while GDP in the in the United States contracted by 4%, in the European Union by 2.8% and in Latin America by 1.5%. To be sure, Africa’s recent impressive growth performance does not suggest that the above challenges have been solved. There are still high levels of poverty even in Africa’s fastest growing economies like Angola and the conflict in the Democratic Republic of Congo is yet to completely abate. But so is there still poverty in China. The Chinese, however, look forward to a promising future. Growth is good for hope. Recent slow growth in the United States has caused many to ask whether America is in decline, whether the American dream is fading.

Only a few years ago, most global investors would not look at Angola, a country battered by nearly three decades of civil war that ended in 2002. On September 15, 2009, a New York Times article declared that “US Sees Opportunities in Angola”. David Welch, President of Middle East, Africa, Europe and South Asia operations at Bechtel, America’s largest engineering firm, was quoted in the article as saying of Angola, “We are definitely interested …. They have every infrastructure need.” To put the significance of this statement in context, even the World Bank, established to finance development and reconstruction, lost appetite for infrastructure projects in relatively more stable countries like Ghana, least of all a war-torn country.

Across Africa, there is what another global management consulting firm, the Boston Consulting Group (BCG), has termed “A Fresh Perspective” on Africa in a report titled “The African Challengers: Global Competitors Emerge from the Overlooked Continent”. The BCG report identifies 40 fast growing companies in Africa with global ambitions, but makes it clear there are even more companies in the region nursing ambitions to cross national borders. So what has been responsible for this historic high growth in Africa in the last decade? What explains Africa’s now newfound traction and self confidence?

Are the decades of often painful Western-sponsored economic and political reforms now beginning to bear positive results? Or is what we are witnessing the result of a new and fresh approach to development co-operation brought by the East Asian powers? Or, perhaps most importantly, is Africa getting better at managing its own affairs? To sustain the recent growth and ensure Africa competes in the 21st Century, what policy options ought to be pursued? Should we embrace the sort of bare-knuckled free market policies that the hirelings of Western-based conservative organisations are promoting in Africa or a set of pragmatic policies that promote mutually-reinforcing relationships between the state and the private sector?

Kobina Idun-Arkhurst (kobkurst@gmail.com)
Columnist: Idun-Arkhurst, Kobina