THE mood in Tunis last week was upbeat. The African Development Bank annual conference was a celebration of Africa’s resilience in the face of the global meltdown.
The tone of the meeting was reflected in bank president Donald Kaberuka’s opening speech. “An unusually strong momentum has built up in Africa over the past decade.” Although the mood about the continent was not yet “Afro-ebullient”, it was certainly not the “Afropessimism of the 1990s”, he said.
The note of optimism at the event in the African Development Bank’s home base, Tunisia, was buoyed by the release of an International Monetary Fund report earlier this month. The report predicted that continental gross domestic product (GDP) growth for this year would be 5% — double last year’s dismal 2,5%. It further predicted higher growth next year.
As the resources boom thunders on, growth in secondary sectors, such as telecommunications, services and retail, is helping to lift growth and make it more sustainable, delegates at the conference heard.
Remittance flows also survived the global crisis, despite dire predictions that there would be an enormous contraction in line with shrinking jobs in the developed world.
Interestingly, this was attributed to high levels of remittance flows within Africa itself, a fact that highlights the disaggregated nature of African development, which continental growth figures tend to obscure.
But when the dust settled at the conference, there was more sober discussion of the considerable economic and social challenges that will not be erased by higher growth.
Kaberuka himself voiced concern about maintaining the growth trajectory after a large energy infrastructure deficit. Speakers raised the perennial problem of agriculture.
Africa is exporting every commodity in large volumes, except food. It is a continent that still cannot feed itself and now it faces the spectre of climate change, fuelled (many believe) by the very resources driving growth.
Trade barriers, which have little to do with infrastructure and everything to do with the dead hand of bureaucracy and graft, are persistent.
Goods take three weeks to get from Mombasa port to the factory gate in Nairobi, for example. Intra-African trade remains about a quarter of intra- Asian trade. Intra-African investment, too, is low — about 3%, compared with about 30% in Asia. Gains in domestic resource mobilisation are in danger of being undermined by illicit capital outflows from many countries.
Savings are almost nonexistent, small companies — the backbone of Africa’s economies — struggle to grow, and spending on science and technology is less than 1% of GDP across the continent, hampering innovation and value addition.
Predictions of another decade or two of growth will be compromised if structural transformation of African economies does not take place. It may simply entrench inefficiencies and policy weakness.
Nigeria’s central bank governor, Lamido Sanusi, who also spoke at the event, highlighted a central problem. “The good growth we are seeing is predicated on growth in other parts of the world. How long can we rely on their growth for us to grow?”
The danger is that new revenues from resources, if not properly harnessed, may end up plugging revenue gaps, in the same way aid has done, rather than providing a catalyst for broad-based growth.
China was on the African Development Bank menu last week, and the debate seemed to be unchanged from that of five years ago — how can African countries negotiate a deal with the Chinese to ensure long-term benefits for the continent? Apparently we have still not figured this out.
African countries are still grappling with fundamental issues, such as how to build a sustainable tax base and how to make microfinance effective.
And then there is the usual problem of politics. Self-interest and rent- seeking by politicians in policy implementation and prioritisation is a curse that continues to dog the continent. Sanusi reflected that Nigeria had achieved 7% growth despite — not because of — government policies.
Africa, as a continent, is undoubtedly on an upward trajectory and there are marked improvements in many states, such as Ghana. But it is too soon to celebrate.
Economic growth statistics mask the vulnerability and skewed sectoral performance of many countries. This is particularly true of resource- based states that are contributing in large measure to the continent’s overall growth figures.
As one delegate said: “We want to know that when we see growth in services in Africa, that is about IT, financial services and tourism — not an increase in the number of miserable fellows selling oranges in the traffic.”