What the continent needs to prosper
Africa has garnered heightened attention in recent years, framed by scintillating economic growth and increasing prosperity. Indeed, the gushing new narrative celebrates an ascendant continent neatly captured by the catchphrase “Africa Rising”.
Africa’s share of world output, exports and foreign investment is markedly higher than 20 years ago. Progress has been extensive, capturing middle-income and low-income nations, minerals-rich and poor economies, as well as coastal and landlocked nations.
But although emboldened with optimism and expectation, we must acknowledge that, based on the experiences in Brazil, Argentina, India and other developing and developed economies, Africa’s continued ascent is neither guaranteed nor inevitable.
To be sure, reforms that lock in the essential building blocks and inspire new growth triggers form the cornerstone of Africa’s economic promise.
Thus, while we seek to reimagine Africa’s future, it is instructive to draw on historical lessons; here, three themes stand out.
First, political stability is a precondition. Encouragingly, across the continent, elections occur more frequently and are increasingly reinforced by multiparty contestation.
But progress has been uneven and, in some places, there’s even been a roll-back. The recent uprising in Burundi is a case in point.
The good socioeconomic progress that has been made in most African countries and the commitment to political systems and processes that fortify citizens’ basic democratic rights and leaders’ accountability must become further entrenched.
This may sound simple enough, and universally recognised, yet incidents of political promiscuity occasionally raise their head.
Second, Africa has flourished on the bed of macroeconomic reforms, symbolised, in part, by greater fiscal sustainability and low inflation. But here, too, the gains aren’t iron-clad. Too often fiscal overreach, sometimes driven by unforeseen shocks, such as plunging oil prices or failed crops, have unsettled economies.
African governments must aspire towards reducing external and internal economic vulnerabilities, promote central bank independence, increase regional and intra-African trade, invest in infrastructure projects and encourage governance structures that help avert economic derailment.
Connected to macroeconomic dynamism is capital investment. African governments must continue to create an attractive and globally competitive environment for domestic and foreign investment and also introduce appropriate fiscal and regulatory measures that encourage and incentivise the establishment of public-private partnerships.
Investment in human capital is a critical sister component of capital promotion. Initiatives should be undertaken by both the public and private sectors to steer towards educational outcomes that will produce students and employees with skills that are globally competitive.
The third component in favour of a robust growth climate is the introduction of microeconomic reform measures that will allow dynamic, innovative and efficient private firms to flourish.
Africa’s next billion jobs will be reliant on commercial endeavour in markets with calculable risks.
I am confident that the 2015 World Economic Forum on Africa will deliver compelling insights into further nurturing and stimulating Africa’s resurgence. I continue to be optimistic and excited about Africa’s economic future – a future that must also be inclusive and benefit all the inhabitants of the continent, particularly the poor, unemployed and marginalised.
Patrice Motsepe was co-chair at the World Economic Forum on Africa 2015, which ended in Cape Town on June 5.