BUSINESS INTELLIGENCE
All we need is leadership and Nepad
Published: 26-OCT-04
With approximately 100 million people affected by conflicts across the continent, high levels of poverty, the lowest life expectancy in world, the youngest population in the world and some of the lowest literacy rates in the world, Africa faces vast challenges – many of which can be met through Nepad, says Stanley Subramoney
The hope of Nepad is that it puts Africa firmly on a path of sustainable economic development. It is a vision that says that Africa’s time has arrived, says Stanley Subramoney, the deputy CEO of PricewaterhouseCoopers southern Africa and one of SA’s foremost advisers on empowerment initiatives and intra- Africa trade.
Speaking at the 2004 Eskom
African Business Leadership Forum
(EABLF) in Sandton, South Africa
last month, Subramoney said the
three biggest challenges facing Africa
are the survival of peoples, environment
and states.
“Because of leaky borders, it is
impossible to contain change within
one single
country. As a result, con-
flict and other problems have spilled
over borders. This is now a central concern in Southern Africa.
Political stability and good governance are the main obstacles in
Africa’s reconstruction,” he said.
In a hard-hitting presentation, Subramoney sketched the
background against which Africa stands right now. It is not a
pretty sight. Africa accounts for just 2% of world gross domestic population.
“I have spoken many times about the
eradication of poverty in Africa, where some
300 million people are living below the
poverty line. We cannot exist in an island
of prosperity and a sea of poverty,” warns
Subramoney.
“The challenge to eradicate poverty is
huge. Nepad wants to reduce the poverty on
the continent by half by 2015 to bring 150
million people out of this abject poverty, but
to do so, we need to place Africa on a path
of sustainable growth and development. It
is not about Africa going on its knees, it’s
about a
vision that says there is a plan to
place Africa on a successful path – and this
plan calls for sustained economic growth
from 7% per anuum over the next 15 years
to pull us out of this poverty.”
The good news is that Africa’s GDP has
risen close to the world average since 1989,
and it is expected to be one of the fastest growing regions to
2015. The bad news is that with population growth relatively
rapid, GDP per head has barely increased since 1989.
There are also numerous anomalies which Nepad will address
once it starts having a broader effect. For one, the United States
remains the main market for African exporters, but the real
markets may lie elsewhere, as exports have been rising fastest to
China and India. Average annual growth in African exports to
its top 9 trading partners between 1989 and 2000 showed a 30%
rise in exports to China, 19% to India and just over 10% to the
US.
By the same token, France is the largest source of imports
to
Africa, but again, imports have grown fastest from China and
Korea – 18% from China in the past decade alone, as opposed
to scarcely 4% from France.
It’s no great surprise that Africa’s main export is oil, but there
are also significant exports of manufactured goods. Manufactured
goods also make up the bulk of imports, but one of the
most astonishing figures to emerge from Subramoney’s presentation
was that oil imports are increasing rapidly – to a continent
blessed with abundant oil resources of its own.
“We have got to stop exporting our dollars to the developed
world and importing poverty in its place. Last year the global
interconnect fees for telecommunications was some US$300m.
Every time we call our neighbours, we interconnect through another
country and we export significant dollars out of our country.
We need to connect amongst ourselves,” says Subramoney.
Foreign direct investment is not the answer to Africa’s woes,
either. The hard
figures show that Africa receives very little
inward investment compared with other regions – less than
US$20bn in 2001, at a time when the developed Western Europe
received some US$330bn.
South Africa is by far the biggest economy in the region. GDP
per head is highest in Mauritius and South Africa, at over $4
000 a year. But in many countries it is well below $500 a year,
which illustrates the extent to which wealth will have to be created
to overcome the scourge of poverty.
Even in South Africa, though, challenges remain. South Africa’s
economy is the 17th largest in the world (out of 230), twice
as big as the second biggest in Africa (Egypt) and well-managed
in terms of fiscal and monetary policy. It has had one of its best
economic periods in many years, and has seen a rapid economic
transformation marked by solid growth.
It has improved its global economic integration, with a resultant
boost to balance of payments. Inflation is at its lowest
ebb
in history, and with low interest rates, a strengthening currency
and a rapidly expanding black middle class, the country looks
well set for the next decade.
And yet, says Subramoney, unemployment is rising. This
comes right back to the vision of positioning Nepad as an economic
blueprint for sustainable development throughout Africa.
The two key elements of Nepad are that it is a new partnership,
and that it is Africa-owned and led. Right now, regionalisation
is the global game. With entrenched global imbalances in place, growing and retaining skills has never been more important for the continent.
He believes that to transform the African landscape from one
that is dependent on others and accepts handouts, to a self-suf-
ficient and thriving region, the continent demands a new breed
of leaders and a modern, democratic Africa that moves beyond
narrow nationalism to embrace a vision in which Africans support
each other and achieve change
together.
“The winds of change have begun blowing across the continent
and there are several examples of visionary leaders in
Africa, there are others who remain trapped in archaic management
styles,” says Subramoney.
He has no doubt that it is possible to improve the continent’s
leadership competency through training, and the advent of a
proudly African style of leadership will see leaders stand out
from the crowd.
Leadership is individualistic and circumstantial and, as such,
African leaders should develop their own distinctive management
style that is Afro-based, modern, responsive and in tune
with the challenges and dynamics of the continent.
“Once we have identified these leaders, we need to put a
development programme around them. It is important to invest
in leadership for the future. The programme should be locally
designed and yet mindful of the fact that we exist in a global
village. We need an Afro-based leadership style, and not
some
replica of a Western programme,” he says.
He believes future failures will include those that were unable
to change because of entrenched dictators; statist, commanddriven
economies; disaffected populations and internal ethnic
conflicts. Corrupt bureaucracies, entrenched militaries, and lawless
gangs are ongoing challenges for many regions in Africa.
On the other hand, future successes will be those countries
who have benefited from democratisation, devolving market-oriented
economies and trade relations with neighbouring states.
Looking into his crystal ball, Subramoney sketches an optimistic
picture of Africa in 2050 that has strong regional trade
blocs, solid world economic growth and GEAR-like economic
policies. He sees a continent of well-managed economies, in
which stable exchange rates, single-digit inflation and real
interest rates of below 10% make for strong investment growth,
improved technological literacy and a growing middle class.
But
if this is to be even partially achieved, the time for action
is now. There must be a strong move towards mainly export-oriented
investment, with a focus on the value-added chain rather
than stand-alone, vertically-integrated operations. African countries
will have to engage in a meaningful programme of institutional
capacity building and intra-African trade, with barriers to
trade removed and APRM speedily implemented.
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