Africa can give the world the economic pulse it needs
As global gravity and political and economic power gradually shift to new places – from North to South, and West to East – we look to new organisations to voice and respond to global challenges.
The G20’s member countries account for 80% of the world’s trade and its combined domestic product: it follows that the world’s remaining 180 countries (home to a third of global population) do just 20% of its business. Far from focusing solely on its own interest, the G20’s obligation is just as much to those who do not sit at its table. Its most notable absentee is Africa, with just one African country – South Africa – among its number. The continent of 54 countries and one billion people is all but overlooked.
This, when the story of Africa since the Millennium is one of extraordinary growth. A continent-wide GDP of $600 billion in 2000 had reached $2.2 trillion in 2012: a tripling in size on the surface, and a doubling in reality, given inflation. Seven of the world’s ten fastest-growing economies are in Africa (the DRC, Ethiopia, Ghana, Mozambique, Nigeria, Tanzania and Zambia), and it will achieve 6.6% growth in 2013.
The trajectory continues upward. A population growing by 2.2% a year (compare 0.9% in Asia) promises a huge youth dividend, if the jobs and the skills are there in equal supply. Africa’s increasing rates of urbanisation (at 40% now, to be 70% by 2050) offer similar opportunity if properly managed. Africa’s middle class is set to double to 600 million by 2030. Africa boasts two-thirds of the world’s arable land, and – with advances in science and genetics – it can drastically improve its food supply. It also boasts significant amounts of the world’s minerals and fossil fuels, and its wealth of natural resources can be further explored, as geological mapping continues to make new findings. Information technology can continue to leapfrog Africa forward: it now has more mobile phones than North America. That said, we know that huge challenges remain: pockets of fragility, a lack of basic infrastructure, a disjointed regional economy, and the quest for truly shared and truly sustainable growth.
The G20 ought to listen to its missing continent and to partner with it, and to see the continent for what it is – a global dynamo of opportunity, the world’s new growth pole, and the final development and investment frontier. Africa is not a burden – as it was seen to be only 10 years ago – but increasingly it is a source of solutions for a world that is languishing.
The G20 is now well aware that Africa is open for business. Organisations like the African Development Bank and its partners are helping to lay many of the foundations – in building the infrastructure of road, rail, water and electricity, in strengthening government institutions and fighting corruption, in supporting education and skills.
Development aid is a small but significant part of the way ahead, especially if it is the precursor to the foreign and domestic private sector money that can, in turn, make the private sector the engine of growth that will propel Africa further forward.
Fourteen members of the G20 support the Africa Development Fund which completes its latest replenishment in September 2013, and which needs to remain strong to finish its task of securing the momentum of the many while still focusing on the fragility of the few.
But every member of the G20 can contribute to the newly launched Africa50Fund, a facility set up to find and finance bankable infrastructure projects supported by African central bank reserves, pension funds, insurance companies, as well as international public and private sector funding. The Bank can leverage $3 for every public sector dollar it receives, and $6 for every private sector dollar – this is ‘smart aid’ at work through leveraging and mobilising finance, as Africa takes hold of its own development destiny and makes a little go a long way.
The G20 also has a role to play in taking up the G8’s 2013 agenda of Trade, Tax, and Transparency. On trade, Africa has waited 10 years for the tariff – and barrier-free global deal in the Doha Round which will allow all goods to cross all borders, everywhere. It is still waiting, and realistically, the chances of reaching a deal remain remote. This is what makes it all the more urgent to unlock Africa’s own internal markets, thereby deepening intra-regional trade on this continent. The G8 and the G20 can get behind this.
On tax, Africa and the G8 converge on the need for adequate information which is adequately shared, especially by multinational companies which evade taxes. Far too much African wealth lies in G8, G20 and other tax havens, and we welcome the moves to bring it home. The G8 and the G20 must work alongside Africans’ and others’ continuing efforts to collect tax and share information.
On transparency, Africa and the G8 share an agenda of empowering people to hold governments and companies to account, above all in the extractive industries on which so much of the economic growth on the continent has been founded. Practically, that means a shared commitment towards common global reporting standards on payments and revenues. The African Development Bank already supports twelve of its member countries in complying with the Extractive Industries Transparency Initiative, while its Africa Legal Support Facility helps countries negotiate often muddy waters in drawing up extraction contracts with multinational companies.
It is through Trade that this continuing African growth story will be told, and it is Tax and Transparency which are some of the foundations on which shared and sustainable growth will be built. The G20 should work with Africa, the continent which offers it hope and opportunity. Africa can give the world the economic pulse it needs.
This piece is extracted from a previous and longer article on the G20 by Dr Kaberuka.