During the five years spent researching the new Chatham House report, Our Common Strategic Interests: Africa, Growth and International Policy Post-G8, the most telling comment came from a senior British business person. He was the Africa director of a multinational company that makes over twenty percent of its money from sales across Africa, yet he said his calls for further investment in the region were not taken seriously, while pitches from directors of regions with far poorer sales and prospects were.
Once interviewing got under way with other western businesspeople, a pattern emerged.
Companies that get established in African markets generally often admit they are very profitable, but it is an admission they make with some reluctance, occasionally with surprise, and only after some thought. Why is this?
Our new report points to some of the reasons. Africa has come to fulfil a particular role in the western public eye that meets a set of political and psychological needs, related to humanitarianism, and a desire to do good. Yet it is a role that is detached from less romantic and more complex realities.
This is not to fall into the trap of those who claim that all aid or development assistance is wholly bad for the continent. The data tells a far more complex story, and although in the past a lot of aid was wasted, over recent years it has become far more effective. It is the way in which this humanitarianism continues to dominate western perceptions, to the point where it challenges and excludes all others, that is the growing problem.
For, largely beneath the radar of the increasingly myopic western main stream media, many African states have become more assertive internationally, more dynamic economically, and more strategic in their commercial relations. Their suitors are the increasing number of ambitious emerging global powers, many in the G20, which sense that the global financial crisis marked the emergence of a new world order in which there is all to play for.
Africa sits at the base of the global supply chain, with almost forty percent of the mineral resources, arable land, fresh water and energy required to secure global growth. With a billion people, it offers valuable market share, and for the past decade growth across much of the continent has outpaced every other region of the world.
Of course, this is from a low base, but points to even greater potential. If Africa’s low income countries were to become middle income, the additional value to the global economy would be equivalent to that of another China: over $4.5 trillion.
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This prospect is still some way off, but those countries that are investing now are laying the groundwork from which to benefit later. While China has been the focus of much western media interest, it is the sheer number of countries increasing their African engagement that is noteworthy, many with far fewer historical ties to the continent than China.
Turkey is massively expanding its diplomatic presence across Africa; Mexico has taken on observer status at several African regional groupings; Argentina has established a bi-national commission with South Africa; and South Korea has initiated a high level dialogue with the African Union and hosted a number of major summits.
All of these have seen commercial engagements with selected African countries increase, but they are also seeking African support for a plethora of international objectives, from international climate and trade negotiations, to nuclear cooperation. It is worth noting too that countries such as Iran and Venezuela are increasingly active in Africa, hoping for help in their ongoing commercial and diplomatic struggles.
Of course this brief overview hides wide variations across the continent’s 53 countries. South Africa has little in common with Somalia. A number of nations such as Liberia or the Central African Republic, will remain very poor and fragile for some years and depend on donor support. Real poverty will continue to be prominent across the continent, even in relatively wealthy parts such as South Africa. But enough countries are now emerging from post-colonial economic malaise to suggest that a fundamental transition is underway, slowed in some respects, but hastened in others, by the global financial crisis.
South Africa is an ambitious G20 player itself, building active alliances with India, Brazil and others through new regional groupings. Angola is an increasingly assertive petro-state, with strong links to China. Ethiopia has been a major player in international climate change talks. Uganda has been increasingly active through its elected place on the United Nations Security Council – the list goes on.
More than a quarter of UN member states are gathered in Africa and even a marginal increase in international activism will have profound implications, not least as increasing numbers of emerging powers court their support.
Western countries such as Britain still enjoy advantages in expertise and understanding on Africa, as well as in cultural, historical and familial affinity. Yet these are rapidly fading through neglect and stunted by emotive humanitarianism. Neither businesses nor policymakers see the attraction in investing time or resources in difficult markets when the major emphasis is on passive victims, often with private investors seen as nothing more than a source of further misery.
Quite to the contrary, while aid will remain important, under the prevailing global economic system it is only private sector-led growth that will deliver the broad based expansion required for the kind of lifestyle choices taken for granted in the west. This is why commercial interest from emerging powers is so welcome in principal, but also why the lack of a strong private sector element in western interest in Africa is both self defeating and self deluding.
At present, rhetoric from emerging investors in Africa focuses on new relationships offering a fresh approach of southern cooperation, ‘win-win’ and equal partnership. Implicitly, this is set against the old colonial, clientalist arrangements that many African countries endured. Too often the reality is an unregulated, opaque, and ultimately near sighted rush for opportunities that reproduce the very worst of the colonial era exploitation such deals are supposed to replace.
The west has not entirely left such practises behind of course, as BAE’s admission of guilt over its conduct in relation to deals including the controversial sale of military radar to Tanzania demonstrate. Yet a culture of transparency, regulation and oversight has become more entrenched, particularly in relation to development. If this cultural shift could be harnessed to emerging power economic dynamism, the result might suit everyone. Yet to make the case, particularly to African governments, western countries have to be recognised as economic players, and at present there is insufficient evidence that they wish this role.
The missing link in all this is leadership.
A group of African leaders – former Presidents Thabo Mbeki and Olusegun Obasanjo of Nigeria, Presidents Abdelaziz Bouteflika of Algeria and Abdoulaye Wade of Senegal, whatever their shortcomings, should be credited for initiating many of the reforms and international support that contributed to the continent’s renewed growth. Yet this group has now dissipated, and leadership from Africa is once more lacking.
Ultimately, while international partners can play a role in encouraging investment that brings long-term benefits, it is African leaders themselves who will decide whether the current glut of international suitors will produce lasting results, or simply reproduce the colonial exploitation from which much of Africa is only now apparently emerging.