African development forum 2018: “transitions”

Africa’s prospects are again being questioned for many reasons: some quite familiar, like commodity prices, debt or conflict; others less so, such as climate change, technology or migration.

To link the fortunes of a continent to its natural resources bounty should have been positive. Indeed, Africa has been blessed with mineral wealth, a remarkable blue economy, and incredible energy potential. However, paradoxically, these ingredients for growth have benefited others, empowering others’ industrialisation, creating value chain opportunities for others, generating employment elsewhere, or accumulating capital in other shores.

Unsurprisingly, part of the Africa Rising narrative matured around the commodity boom and the need to take note of the continent’s growing business opportunities. It was, therefore, only natural that such a narrative would change with the end of the so-called commodity super cycle; heralded with historic low prices for oil that hit hard some of the continent’s largest economies. Pundits were quick to identify the reasons for lowering expectations.

As much as it irritates Africans to be perceived as having little to contribute to the global economy,  apart from supplying raw commodities, the reality is there. How can one justify that exports count for so much in countries’ national product, and why after five or so decades are two out of three of the countries classified as commodity-dependent for their exports? This is almost unique, yet so familiar that it is hard for most to stop judging Africa’s economies for what is obviously only a tiny fraction of what is going on… or should happen, economically.

The most relevant transition this generation of African leaders has to produce is the shift towards structural transformation. Industrialisation has an enormous role to play in such transformation. Africa is the only region in the world that has not yet experienced an acceleration in industrialisation. Make no mistake, this is not about manufacturing alone. It is rather linked to the need to multiply productivity gains deriving from a modern economy. It should span from agriculture to services.

Industrialisation counts already for around 11% of the continent’s GDP. But essentially the reality is one of latecomers facing a barrage of difficulties they need to overcome: tough trade environments and regulations, unassailable intellectual property regimes,  complex value chains, difficult financial rules, and many more. But there are grand opportunities too: large renewable energy sources are ready to be tapped at a time exploring the costs as much as choosing fossil fuels, young population and growing consumer market, rapid urbanisation,  frugal innovation prospects and renewed regional integration impetus.

There is another reason industrialisation is so crucial.  It is the only way economies can generate massive employment with the characteristics that urbanised and better educated young Africans expect. Indeed, the biggest transition the continent is already experiencing is demographic.

By 2034, Africa will have the largest labour force in the world but also its youngest. Current average population age is in the twenties.  The declining fertility rates in other regions of the world, coupled with health and living standards improvements, are pushing life expectancy to levels never experienced before. The dramatic expansion of aged population makes Africa’s youth bulge unique. The world has never experienced before a youth bulge of such size when most other regions are aging fast. This has dramatic consequences.

Demographic tectonic shifts explain part of the migration trends. The refusal to treat human mobility as the new normal is one of the symptoms of a values crisis.  Western democracies have preached human rights so loud that they find themselves in a difficult corner when they have to justify migration policies that accommodate populist and racist sentiments.

Every country or region in the early stages of economic take-off experiences migration tendencies. With new opportunities limited to a few, while social, peer and family pressure mounts, the alternative left to the lesser fortunate is often to migrate. Europeans did it, the Chinese are doing it. Africans will be no different.

With almost as many cellular phones as inhabitants, this is after all a world of migrants. One may not travel physically, but still be connected one way or another to an extended family or reality. In most young Africans’ palms, you would find an instrument that has a higher capacity than the computer that got Apollo 11 to the moon. The potential for anybody grasping the world to innovate is unimaginable.  Frugal innovation in particular is going to mark Africa. That is another transition worth noting.

For those who believe artificial intelligence and machine-efficiency is going to skip Africa, let me modestly offer a word of caution.  In the same way few predicted technology-intensive corporations would have the levels of capitalisation they currently enjoy, almost nobody could have envisioned Africa leading in mobile banking,  e-insurance or some drone applications.  The beauty of being a latecomer is the easiness to leapfrog.

When in May 2013 African leaders gathered in Addis Ababa to celebrate the jubilee of the continent’s organisation, they looked back at the past 50 years of achievements but more emphatically on missed opportunities. Commodity dependence, debt or conflict, certainly, as well as poverty, corruption or mismanagement. A lot of these difficulties could be attributed to external  actors, others still to internal players. Leaders agreed it was time to change.

Agenda 2063 is the response to the challenge of making “the Africa we want” in the next 50 years. It will require skilfully dealing with a multitude of transitions. We are already late.

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