All we need is leadership and Nepad

Published: 26-OCT-04

With approximately 100 million people affected by conflicts across the continent, high levels of poverty, the lowest life expectancy in world, the youngest population in the world and some of the lowest literacy rates in the world, Africa faces vast challenges – many of which can be met through Nepad, says Stanley Subramoney

The hope of Nepad is that it puts Africa firmly on a path of sustainable economic development. It is a vision that says that Africa’s time has arrived, says Stanley Subramoney, the deputy CEO of PricewaterhouseCoopers southern Africa and one of SA’s foremost advisers on empowerment initiatives and intra- Africa trade.

Speaking at the 2004 Eskom African Business Leadership Forum (EABLF) in Sandton, South Africa last month, Subramoney said the three biggest challenges facing Africa are the survival of peoples, environment and states.

“Because of leaky borders, it is impossible to contain change within one single country. As a result, con- flict and other problems have spilled over borders. This is now a central concern in Southern Africa. Political stability and good governance are the main obstacles in Africa’s reconstruction,” he said.

In a hard-hitting presentation, Subramoney sketched the background against which Africa stands right now. It is not a pretty sight. Africa accounts for just 2% of world gross domestic population.

“I have spoken many times about the eradication of poverty in Africa, where some 300 million people are living below the poverty line. We cannot exist in an island of prosperity and a sea of poverty,” warns Subramoney.

“The challenge to eradicate poverty is huge. Nepad wants to reduce the poverty on the continent by half by 2015 to bring 150 million people out of this abject poverty, but to do so, we need to place Africa on a path of sustainable growth and development. It is not about Africa going on its knees, it’s about a vision that says there is a plan to place Africa on a successful path – and this plan calls for sustained economic growth from 7% per anuum over the next 15 years to pull us out of this poverty.”

The good news is that Africa’s GDP has risen close to the world average since 1989, and it is expected to be one of the fastest growing regions to 2015. The bad news is that with population growth relatively rapid, GDP per head has barely increased since 1989.

There are also numerous anomalies which Nepad will address once it starts having a broader effect. For one, the United States remains the main market for African exporters, but the real markets may lie elsewhere, as exports have been rising fastest to China and India. Average annual growth in African exports to its top 9 trading partners between 1989 and 2000 showed a 30% rise in exports to China, 19% to India and just over 10% to the US.

By the same token, France is the largest source of imports to Africa, but again, imports have grown fastest from China and Korea – 18% from China in the past decade alone, as opposed to scarcely 4% from France.

It’s no great surprise that Africa’s main export is oil, but there are also significant exports of manufactured goods. Manufactured goods also make up the bulk of imports, but one of the most astonishing figures to emerge from Subramoney’s presentation was that oil imports are increasing rapidly – to a continent blessed with abundant oil resources of its own.

“We have got to stop exporting our dollars to the developed world and importing poverty in its place. Last year the global interconnect fees for telecommunications was some US$300m. Every time we call our neighbours, we interconnect through another country and we export significant dollars out of our country. We need to connect amongst ourselves,” says Subramoney.

Foreign direct investment is not the answer to Africa’s woes, either. The hard figures show that Africa receives very little inward investment compared with other regions – less than US$20bn in 2001, at a time when the developed Western Europe received some US$330bn.

South Africa is by far the biggest economy in the region. GDP per head is highest in Mauritius and South Africa, at over $4 000 a year. But in many countries it is well below $500 a year, which illustrates the extent to which wealth will have to be created to overcome the scourge of poverty.

Even in South Africa, though, challenges remain. South Africa’s economy is the 17th largest in the world (out of 230), twice as big as the second biggest in Africa (Egypt) and well-managed in terms of fiscal and monetary policy. It has had one of its best economic periods in many years, and has seen a rapid economic transformation marked by solid growth.

It has improved its global economic integration, with a resultant boost to balance of payments. Inflation is at its lowest ebb in history, and with low interest rates, a strengthening currency and a rapidly expanding black middle class, the country looks well set for the next decade.

And yet, says Subramoney, unemployment is rising. This comes right back to the vision of positioning Nepad as an economic blueprint for sustainable development throughout Africa.

The two key elements of Nepad are that it is a new partnership, and that it is Africa-owned and led. Right now, regionalisation is the global game. With entrenched global imbalances in place, growing and retaining skills has never been more important for the continent.

He believes that to transform the African landscape from one that is dependent on others and accepts handouts, to a self-suf- ficient and thriving region, the continent demands a new breed of leaders and a modern, democratic Africa that moves beyond narrow nationalism to embrace a vision in which Africans support each other and achieve change together.

“The winds of change have begun blowing across the continent and there are several examples of visionary leaders in Africa, there are others who remain trapped in archaic management styles,” says Subramoney.

He has no doubt that it is possible to improve the continent’s leadership competency through training, and the advent of a proudly African style of leadership will see leaders stand out from the crowd.

Leadership is individualistic and circumstantial and, as such, African leaders should develop their own distinctive management style that is Afro-based, modern, responsive and in tune with the challenges and dynamics of the continent.

“Once we have identified these leaders, we need to put a development programme around them. It is important to invest in leadership for the future. The programme should be locally designed and yet mindful of the fact that we exist in a global village. We need an Afro-based leadership style, and not some replica of a Western programme,” he says.

He believes future failures will include those that were unable to change because of entrenched dictators; statist, commanddriven economies; disaffected populations and internal ethnic conflicts. Corrupt bureaucracies, entrenched militaries, and lawless gangs are ongoing challenges for many regions in Africa.

On the other hand, future successes will be those countries who have benefited from democratisation, devolving market-oriented economies and trade relations with neighbouring states. Looking into his crystal ball, Subramoney sketches an optimistic picture of Africa in 2050 that has strong regional trade blocs, solid world economic growth and GEAR-like economic policies. He sees a continent of well-managed economies, in which stable exchange rates, single-digit inflation and real interest rates of below 10% make for strong investment growth, improved technological literacy and a growing middle class. But if this is to be even partially achieved, the time for action is now.

There must be a strong move towards mainly export-oriented investment, with a focus on the value-added chain rather than stand-alone, vertically-integrated operations. African countries will have to engage in a meaningful programme of institutional capacity building and intra-African trade, with barriers to trade removed and APRM speedily implemented.

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