2050: The challenges for Africa’s future
By ABDULLAHI BABA ALAWUSA with additional input from a World Bank Report
SOMETIME before the year 2050, the World Bank has projected that the number of Africans between the ages of 15 and 24, will pass 400 million mark. Where and how will they earn enough to support their families, remain the greatest challenge for African leaders.
It has been observed for the umpteenth time that the inability of leaders to provide transparent and accountable leadership at all levels of government has been the major obstacle for sustainable development.
Moreover, most if not all African governments, seldom operate a consultative and open government that is accessible to the governed and responsive to the people’s needs and aspirations.
Today, many young Africans queue up for jobs in the public sector, and remain unemployed when there is no vacancy.
Many of these young and talented Africans often opt for migration as a solution, mostly through uncertain and highly dangerous routes. What has too often been underestimated is the impact of the private sector, which currently accounts for 90 per cent of the new jobs created in developing countries globally, and which will ultimately be the engine of job creation in Africa.
However, the good news is that in 2005 and 2006, Africa became an easier place to do business, with dozens of countries cutting the time, cost and red tape involved in establishing firms and complying with legal and regulatory requirements. Two out of three African countries in this period reformed the business climate in some way.
According to a World Bank Report, Niger Republic has shared off nine days from what it used to take longer time for an entrepreneur to register a new company. The report also said Mali, on its part, eased the requirements for obtaining a building permit and made simpler the inspections for new constructions. The result: a 36 per cent drop in construction cost.
On the other hand, Burkina Faso reduced the number of procedures (bureaucracies) required to launch a business complex. Similarly, Madagascar chopped off the long procedures of obtaining permit and reduced significantly the expenses of starting up business in that country.
Of course, to benefit from the improving environment, African companies must also improve their production capacity and enhance their service delivery to attract international trade exchange.
World Bank research in Africa shows that at the factory floor level, African firms show productivity levels that aren’t too far from those of China, Bangladesh and other developing countries that have lowered poverty levels considerably through expending exports. It’s the high indirect costs of regulatory inefficiency and poor infrastructure that put otherwise competitive African companies at disadvantage.
Lowering the costs of power outages, the report indicated, would help hundreds of firms raise productivity, expand exports and pay higher wages while providing more employment opportunities. Overall, the World Bank report expressed optimism that the modalities put in place by several governments in the continent to address some of the problems militating against Africa’s economic development is improving.
Similarly, Africa is also seeing a pick-up in its economic growth indices. A group of fast-growing countries, excluding the oil producers, have posted an average annual growth rate of 5.5 per cent in recent years. These countries are home to 35 per cent of the people in sub-Saharan Africa, the World Bank report observed.
To push the African economy to the next level of expansion, and to bring along countries that are lagging behind, the report averred that Africa will need much higher investment. According to the United Kingdom’s Commission for Africa, “the challenge is to generate an environment where Africans want to invest in their own farms, businesses, countries and the entire continent at large, and which also attracts greater flows of foreign investment.”
Currently Africa’s ratio of investment to GDP stands at 18 per cent, well below the 24 per cent average for all developing countries, and the lowest of any developing region, the World Bank has said.
It is expected that improved investment conditions will stimulate more domestic investment and equally attract more Foreign Direct Investment (FDI), which remains feeble. The report indicated that net foreign direct investment in Africa was $10.1 billion in 2004, a mere 1.6 per cent of global flows, with more than half going to Nigeria and Sudan.
Historically, African countries have looked to development assistance to solve their economic and social problems, but this is out of step with other developing (Asian) economies, which get more out of private investment. Indeed, for every dollar that donors send to developing countries, there are four more dollars that arrive in the form of private investment.
But in spite of this, the World Bank is optimistic that things will change for the better even as it believes that the recent trends in the various economic reforms are encouraging, however. In 2005, for instance, according to the UN Conference on Trade and Development, “inward foreign direct investment rose from 78 per cent to $31 billion in Africa, second only to the increase in FDI flows into West Asia.”
It is however, believed that if African countries begin to get more of their share of FDI, the economic ripple effects in job creation, higher growth and technology transfer will be considerable. More countries are working with the private sector to set priorities for their various economic reform policies.
Note: for more information on the World Bank Report, visit the website: www.worldbank.org.