Peace: African Realities and Perspectives

Tuesday, 10 February 2009

Remarks to the Brazilian-Angolan Friends Organisation
Legislative Assembly, Sao Paulo, November 13, 2008
…I’d like to consider two basic perspectives on Africa today, one
presented in the new book Africa Rising, by Vijay Mahajan, former
dean of the Indian Business School, now a professor at the
University of Texas; the other, in The Bottom Billion by Paul
Collier, former director of development research at the World
Bank, now director of the Center for the Study of African
Economies at Oxford.
Mahajan presents us with what is going right in Africa and builds a
strong case for the continent as an exciting destination for foreign
investment – even in these turbulent times. Collier helps us
understand the traps than are keeping millions of Africans mired in
poverty and which are hampering from the continent achieving the
potential Mahajan so correctly identifies.
Mahajan argues that Africa, with more than 900 million consumers,
is on the world fastest growing markets. He invites us to understand
that Africa, taken as a whole, has a Gross National Income of
around 980 billion, making it the tenth largest economy in the
world ahead three of the four BRIC economies – Brazil, Russia and
India. It’s ahead of India on a GNI per capita basis as well. In fact,
six Africa countries boast a higher GNI per capita than China.
“There will soon be a billion consumers on the continent of
Africa,” Mahajan writes. “Every day, they need to eat, they need
shelter. They want education for their children. They would like to
have soaps to wash their clothes. They desire cell phones, metal
roofs for their homes, televisions, music, computers, movies,
bicycles, cosmetics, medicines, cars and loans to start businesses.”
A lot of people think Africa’s wealth resides in oil and diamonds .
If we’re talking about oil and diamonds as primary exports
commodities, we’re talking about one the factors that Collier sees
trapping much of Africa in poverty.
But Mahajan sees the wealth of Africa is other kinds of oil and
diamonds. He cites the case of Bidco in Kenya will has built a $160
million business selling cooking oil, detergent and other products to
low income customers throughout East Africa. As for diamonds, he
identifies the so-called Black Diamonds of South Africa, as the
University of Cape Town’s Unilever Institute called them. They are
members of South Africa’s rapidly emerging black class, which,
unleashed by the end of apartheid, has been growing at a rate of
around 30 per cent a year.
They are not a uniquely South African phenomenon. Mahajan
estimates that there are aound 400 million people in the middle
segment of the overall African market. This help account for the
fact that while the four largest African companies are still in the
resources business, firms in other sectors are gaining an ever larger
representation in the top 20. These include makers of consumer
goods like SABMiller, telecoms companies like MTN, Orascom
and Telkom SA, and banks like Standard, Absa and FirstRand.
Mahajan isn’t the only one telling this story. On September 2, the
Wall Street Journal ran an article headlined “Investors bet Africa
stocks are new tigers”. It gave the example of the Ghana Stock
Exchange All-Share Index which, at the point, had appreciated by
63 per cent over the preceding nine months while on Wall Street
the S&P 500 was down 13 percent over the same period (and has
since swooned even more dramatically).
The Journal had a very telling quote for Charl Malan, the head of
African research for Van Eck Global. African stocks, he said, were
not a play on commodity prices any more. “If you think the
commodities cycle is unsustainable, then why is Africa sustainable?
Because this time, there’s a whole range of growth initiatives put
into place by various African leaders.”
What helped inspire the Wall Street Journal story was an article by
David Nellor, a senior adviser in the International Monetary Fund’s
Africa Department. Comparing their performance with the of the
so-called Asian Tigers as they readied for take-off in 1980, Nellor
concluded that “several African countries…are promising
candidates to become part of a second generations of emerging
market countries.”
“The same crucial development,” Nellor continued, “are taking
place in parts of sub-Saharan Africa today – growth is taking off,
the private sector is the key driver of that growth and financial
markets are opening up. The search for yield…has encouraged
investors to expand their horizons.”
In a separate study, published last month, the IMF looked at what it
called the “Great Sub-Saharan Africa Growth Take-off”. If found
that the fast growers were a diverse group, including resource rich
and landlocked countries as well as resource poor countries that
have not had large gains in their terms of trade. The IMF also found
that while most African countries were going to having difficulty
meeting the Millennium Development Goal by the 2015 target date,
growth was benefiting the poor who were seeing real rises in their
incomes.
So there is a new and very hopeful story being told about Africa.
Tragically, the old story, the story of conflict, atrocities and
refugees, continues to be told as well. Right now the focus is on the
eastern corner of the Democratic Republic of Congo. The Darfur
situation in Sudan continues to be a grave concern as does
Uganda’s unfinished war with the Lord’s Resistance Army.
This is where Collier’s findings become interesting. As the name of
his book indicates, his focus in the poorest one billion people on the
planet. They are concentrated in Africa and Central Asia, and they
are the least likely to touched by the growth story we’ve been
looking at so far. The countries they live in are caught in one or
more of a set of often interrelated traps which include civil war, a
dependence on the extraction and export of natural resources and
bad governance.
Collier begins a sobering statistic: 73 per people in the bottom
billion live in societies that have recently been recently been
through a civil war or have recently been through one. He then goes
on to demonstrate, empirically, the intimate relationship between
poverty and conflict and how they feed each other.
One of his key findings is that Africa is not uniquely conflict prone.
Rather, it became more prone to conflict when as its economic
performance deteriorated. In other words, causation has flowed
from poverty to conflict not vice versa.
The trouble is that once a civil war has erupted, it tends to have a
highly destructive impact on the economy, thereby sowing the
seeds for further conflict. The experience of having been through a
civil war roughly doubles the risk of another conflict, Collier
writes. And even if further conflict can be avoided, undoing the
economic consequences can be very difficult. Collier believes that
DRC will need 50 years of peace at its present growth rate to get
back to 1960 income levels.
Nonetheless, growth does directly help reduce the risk of civil by
raising incomes and making it easier for countries to diversify their
exports. Fragile states that rely on the export of one or two high
value commodities are always at high risk of conflict resulting from
competition to control the rents from those commodities.
The lesson to be drawn is that anyone who is serious about seeing
Africa meet the potential Mahajan describes in Africa Rising must,
in addition to be serious about pro-growth economic policies, also
be serious about conflict resolution and prevention.
This is why South Africa has been more than happy to play it part
in working with regional partners and the African Union for peace
throughout the continent, from the DRC to the Great Lakes to
Darfur to the Comoros to Cote D’Ivoire to our neighbor Zimbabwe.
To achieve the African Renaissance we all dream of, we need to
end cycles of violence and economic immiseration and prevent new
ones from starting.
We bring to the table our own experience in bringing peace and
democracy to a land that was torn apart for generations by racial
oppression. Among the most important of those lessons is for peace
to be sustainable, all parties must feel they own it and no one
should leave the table thinking that that they were forced to accept
terms by powers outside the negotiating room. This takes a lot of
patience, creativity and a capacity for empathy, but the election on
April 28, 2004, and the adoption of our new constitution two years
later, showed it can be done.
We also know, from bitter ongoing experience, about how hard it is
to escape the continuing echoes of conflict. There severest
challenges we face today, from crime to skills shortages to
HIV/AIDS, owe their origins to what apartheid and our struggle to
end it did to the fabric of our society.
Above all, we understand that if our so-called miracle is to last, it
must be underpinned by economic policies that promote growth
and equity, help generate the resources needed to roll the legacies
of our history and enable us to play our part in the great Africa
Rising story.