Saturday, 2 March 2019

Making Africa a Future-Fit Continent

An address delivered by A. Prof Camaren Peter of the Allan Gray Centre for Values-Based Leadership of the Graduate School of Business at the University of Cape Town; to the participants of the Leadership in Extractives and African Development Programme (LEAD).

It may perhaps appear ironic that in the wake of the 2008 global financial collapse, we entered an era of long overdue afro-optimism. In 2010, McKinsey released a report entitled, “Lions on the Move: The Progress and Potential of African Economies[i]. This was followed by a range of similarly optimistic projections for the future of the continent, and from a wide range of sources; from the African Development Bank in 2011[ii], to global multinational corporations, who were looking for new markets to access in a stagnant post-collapse global economy. Let me read you a quote from UN-Habitat’s State of the African Cities Report in 2014 [iii] (full disclosure: I was one of the authors):

“In recent years, Africa’s economic growth has seen real gross domestic product (GDP) increasing at a rate twice that of the 1980s and 1990s. The spread of growth over economic sectors has been relatively uniform. By 2020, 128 million African households are projected to have transited to “middle class”, boosting consumption and spending potentials; and by 2030 Africa’s highest-performing 18 cities might reach a combined purchasing power of USD 1.3 trillion. Projections over the longer term include growth of the middle class from 355 million people in 2010 (34 per cent of the total population) to 1.1 billion (42 per cent) in 2060, exceeding that of China today.”

UN-Habitat State of the African Cities Report, 2014

This optimistic turn quickly came to be reflected in the media as well, as can still be evidenced today from the ‘good news’ media stories that we are exposed to about the continent on international news channels such as CNN and the BBC. Everybody, it seems, was queuing up in the wake of the 2008 financial collapse (i.e. from the US, to Europe to India and China); in a ‘new scramble for Africa’. To be sure, on a continent such as this, that has undergone such drastic exploitation over centuries, strong warnings also emerged. Many on the continent were not quite sure whether to trust this new version of their continent that was doing the rounds in the global media discourse. As the State of the African Cities Report of 2014 went on to warn, a more cautious optimism was necessary. After all, at the time;

“… despite ten years of high economic growth continent-wide, around 50 per cent of Africans today remain at incomes below USD 1.25 per day, while only four per cent receive more than USD 10 per day. Using the range of USD 10 to USD 100 per day, Africa constitutes a mere two per cent of the global middle class and has only one per cent of its purchasing power.”

There is more to this picture, and I will address some of the dimensions that require serious attention if we are to understand; (1) how future fit the continent is, and (2) what needs to be done in order to secure an affirmative future for the continent. And to be sure, we face difficult and complex challenges; not least because it is difficult to speak of such a large, diverse continent in singular terms. Context matters and generalizations often do injustice to our understanding of the developmental challenges we face, as well as to the solutions we adopt. So it is a difficult task that I am faced with tonight, and I must beg your indulgence. In problematising the ‘African condition’ I may be omitting some of the nuances of it. However, we have a short amount of time, and despite the difficulty of the task I have been set, we need to ask some basic questions.

And the very first question is, “what do we mean by ‘future-fit’?” In simple terms, we can think of future fitness in terms of resilience, sustainability, equity and prosperity. There is perhaps more to add to this, but for now this broad characterization will have to suffice.

Additionally, the question of how ‘future-fit’ the continent is; is linked to the questions such as:

1.      Is the continent undergoing a transition in the first place?

2.      If it is,
a.      What kind of transition is it?
b.      Who are the protagonists?
c.       Where is it leading?

3.      And most importantly, what can we begin to do now to secure a more equitable and sustainable future for the people who live on the continent? What elements, seeded now, can grow a more sustainable, resilient and prosperous future for the continent and all those who live within it?

The short answer to the question of whether the continent is undergoing a transition or not is, “yes”, most certainly! That does not mean that historical inequalities and negative trends are not being reproduced in this transition. What it means is that it is undeniable that some fundamental changes are unfolding on the continent. So let’s take a look at some of the dimensions of change that are unfolding on the continent:

One of the key dimensions of change on the continent today is urbanization:

·         African cities are exhibiting the highest growth rates in the world, even though national urbanization levels remain low, especially in Eastern and Southern Africa.
·         Over a quarter of the 100 fastest growing cities are in Africa.
·         The number of African urban dwellers is projected to increase from 400 million to 1.26 billion by 2050.
·         The global share of African urban dwellers is projected to rise from 11.3 per cent in 2010 to a 20.2 per cent by 2050.
·         A critically important factor in the urbanization trends in Africa is the dominant growth of smaller, intermediate and secondary cities (75% of urban growth is being absorbed in small to intermediate cities).
·         Another critically important factor is that this urbanization is taking place without significant industrialization.

When it comes to population growth:

·         The African population is projected to double from 1Bn in 2010 to 2Bn in 2020 and may surpass 3Bn by 2070 (SOAC, 2014)
·         Average densities will increase from 34 to 79 persons per km2 in the period between 2010 and 2050.
·         Africa’s labour force is projected to reach 1.1Bn by 2040, when continent will be more than 50% urbanised.

Another critical feature of the transition that is underway on the continent is the ‘youth bulge’:

·         In 2012, Africa was recognized as having the youngest population in the world, with around 200 million of the population between the ages of 15 and 24 (i.e. 20%). This is projected to double by 2045 if growth trends persist.
·         To put this into perspective over 40% are under the age of 15, and 20% are between the ages of 15 and 24.
·         According to the World Bank, African youth constitute about 60% of the unemployed on the continent. The upshot of this is that most youth are absorbed into the informal sector, or into insecure work. Lastly, it is important to mention that this youth unemployment is also drastically gendered.

It is also very important to account for the emerging African middle class, as it is a complex phenomenon, not to be compared to the middle classes of the developed world:

·         By 2020, 128 million households will be middle class.; from 355 million people in 2010 to 1.1 billion in 2060 (i.e higher than that in China today).
·         This middle class is defined as those living on between USD 2-20 per day, and constitutes around 34% of population.
·         Floating middle class: USD 2-4 per day (60% of the aforementioned 34%)
·         To put this into perspective, as mentioned earlier; only 4% of Africans living on incomes higher than USD 10 per day, and  50% live on less than USD 1.25 per day.
·         If we compare Africa to the ‘global middle class’ (i.e. those living on incomes that range between USD 10-100 per day) then Africa constitutes only 2% of global middle class.

Yet the transition that is underway on the continent is a fraught one, primarily because of the predominant and pre-existing conditions that plague the socio-economics of the continent. The majority of African cities are constituted of slums and informal settlements (between 60-80% from West to Central to East Africa). Poverty remains the majority condition of most people on the continent. Infrastructures such as road, rail and air are severely lacking in many parts of the continent. So are service provisions such as electricity, clean water, sanitation, healthcare and internet access. Food insecurity continues to plague many Africans.

Moreover, there are severe institutional challenges – whether in government or the private sector – that need to be confronted across the continent. The dominance of national and local elites – who are typically connected across public and private sectors – serves to deepen entrenched, inherited inequalities on the continent.

Maintaining political stability is also a critical challenge, as political turbulence and insecurity wreaks havoc on developmental agenda’s, and serves only to thwart the kind of stable investment that is required for long term growth. It may be that political models – in particular democratic political models – may have to evolve to fit the African context more appropriately. That is, African countries may have to negotiate what democracy means for them on their own terms, rather than simply importing democratic ideals and practices.


So where does this leave us in terms of our options? How can we make decisions today to secure a ‘future-fit’ trajectory for the continent?

One of the most critical factors to consider when formulating strategies is “where are we now?”, and “where to from here?” What is emerging, that can be leveraged to bring about the kind of outcomes we desire. In this respect, it is – in my view – great folly to overlook the vast potential that sustainable solutions, green technologies and infrastructure, as well as the emerging innovations of the fourth industrial revolution; have to offer the African continent.

The African continent is – in general terms – largely characterised by a lack of adequate bulk infrastructures and the high pre-existing levels of unplanned slums and informal settlements (particularly in cities). These negate the easy introduction of these bulk infrastructures and commensurate service provisions. Green technologies and systems, however, are largely decentralised or semi-decentralised, and can therefore function in the absence of bulk infrastructure provisions, or link into existing bulk infrastructures.

Moreover, from a developmental perspective, the absorption of green and sustainable technologies can help seed small to medium scale enterprises on a large scale, driving economic growth and circulation of cash flow at the levels where it is needed most. This can also help absorb unskilled and semi-skilled workers into the workforce, that is, at precisely the levels that employment creation is desperately needed.

Employment can be significantly boosted through the introduction of technologies such as solar panels, solar water heaters, grey- and black-water recycling systems, biogas digesters, energy savings devices, energy savings companies, renewable energy micro-grids, small-scale wind and hydro energy technologies, urban agriculture and permaculture operations, agro-industrial processing, public transit systems, waste recycling systems, and so forth.

The introduction of semi-decentralised and decentralised green technology solutions and systems can also help lower costs and buffer producers and households from exogenous shocks. Fifty to seventy percent of the household budgets of poor African households are spent on food, water, energy and transport, rendering them vulnerable to external shocks. Buffering poor households from these shocks can go a long way towards making these households – and local authorities (who will then be able to collect local revenues and decrease their dependence on central governments) – more viable.

This is not just healthy for households and governance, it is also healthy in the sense that it will help stabilise and promote the emergence of an African middle class. Stabilising this middle class in genuine terms, and enabling them to be able to afford assets, have disposable income and grow into a consumer class, requires more than a conventional industrialisation programme. It requires a transformative programme of industrialisation; one that purposively seeks to innovate in service of the future sustainability of the African continent.

The opportunities afforded by the fourth industrial revolution – for leapfrogging Africa’s development onto a more equitable and sustainable trajectory – are vast. For example, the fourth industrial revolution can facilitate the roll-out of green infrastructures and technologies through: financing, insurance, micro-credit and banking services; advanced revenue collection systems; sharing economy offerings; education and skills development; real-time data and information synthesis and analytics; coordination of resource and other material flows; automation, mechanisation and robotification; logistics, transportation, planning and spatial development; as well as capabilities that are yet to emerge or be innovated. 

As mentioned earlier; in Africa, unprecedented urban growth is proceeding in the absence of any significant industrialisation. The fourth industrial revolution presents a massive opportunity to leapfrog African productive economies into a wholly new space; one where its internal markets grow and its external markets are other developing world economies (preferably their neighbours).

Since the end of WWII the mantra proposition for the African Renaissance has been to beneficiate its resources by following the traditional industrialization trajectory that was undertaken by the global North. In the 21st Century, however, new opportunities are presenting themselves; opportunities that could be leveraged for a wholly different industrialization and diversification trajectory for the continent.

In this talk, I have primarily dealt with the question of what kind of developmental and economic diversification trajectories are available to us to actualize a ‘future-fit’ continent. There are of course, a broader range of factors to consider, and we do not have the time to go into all of them here today.  

Suffice to say that a future fit continent is something we have to begin building now; and what is clear is that it requires that the choices that African countries make are characterized by; (1) ensuring the sustainable and equitable use of its resources, (2) leapfrogging the technological and infrastructural developmental trajectories that were adopted in the Global North in the 20th Century, (3) building robust institutions that can deliver on their mandates in the interests of all who constitute society, and (4) embracing the potential for innovation and mobility on the continent, which in large part resides in its large youthful population, and (5) engendering political stability through leadership that is transparent, accountable and responsible, as well as bold in respect of the decision-making that is required to navigate towards the desired long-term horizons for the continent.

        




[i] McKinsey (2010). Lions on the Move: The Progress and Potential of African Economies, McKinsey Global Institute, McKinsey and Company.
[ii] AfDB (2011). Africa in 50 Years Time. The Road Towards Inclusive Growth, African Development Bank (ADB) (Tunisia, Tunis), September 2011.






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