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Middle class helps Africa to avoid past pitfalls
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Middle class helps Africa to avoid past pitfalls
In part 2 of our series, David Smith finds that domestic demand and diversification are underpinning the continent's economic boom.
David Smith, Africa correspondent
It has been described as the new scramble for Africa. The continent has awoken from the nightmare of its mid-90s civil wars. Coups and dictators appear to be going out of fashion. Now, with six of the world's 10 fastest-growing economies, there is a growing consensus that Africa's time has come.
Africa's GDP growth will average 5% in the coming decade, according to Ernst & Young, with Ghana, Ethiopia and Uganda set to top 7% a year. Foreign direct investment, which has risen six-fold in the past decade, is forecast to reach $150bn (£95bn) by 2015.
There is growing confidence in Africa as an investment destination, with the highest returns in the world. In the World Bank's most recent Ease of Doing Business rankings, 14 African countries ranked ahead of Russia, 16 ahead of Brazil and 17 ahead of India.
But with expectation comes the potential for disappointment. The question now is can Africa build on the opportunity and avoid the pitfalls of the past?
Some are in no doubt that the continent is better shape this time. This month, Tony Blair, who once described Africa as a "scar on the conscience of the world", told businessmen in London: "There is no doubt: Africa is changing for the better, the perceptions of Africa are also changing for the better. There is a new sense of hope and confidence, an optimism and an expectation that is based on evidence not dreams.
"Above all, I am noticing in my frequent visits there that there is a new generation of leaders in politics, business and civic society who don't simply have a new competence about how they approach their tasks but a new attitude, a new frame of thinking, a new way of looking at their own situation."
Whereas in the past these opportunities may have been squandered, or cancelled out by a global financial crisis, it now appears that Africa is better positioned to withstand shocks. During the meltdown of 2009, while developed western economies were shrinking at average of 2%, sub-Saharan Africa was still growing at about 3.5%.
Mthuli Ncube, chief economist at the African Development Bank, gave three reasons: "First, the growing domestic demand in Africa itself, the rise of a middle class, acted as a shock absorber. Second, there was improved macroeconomic management from a generation of managers who trained during the restructuring programmes of the early 90s.
"Third, African economies have diversified: Nigeria is now not only oil but also tourism and agriculture. Diversification is very helpful when there is a decline in commodity prices."
The bank estimates the middle class at 313 million people in 2010, 34% of the continent's population, and predicts it will grow to 1.1 billion (42%) by 2060. There are now more than 100,000 Africans with at least $1m to invest, according to the consultants Merrill Lynch and Capgemini. A mobile phone revolution is sweeping the continent.
Blair said the growing influence of China was another reason for optimism. Three years ago it overtook the United States as Africa's biggest trading partner. China, which has a thirst for Africa's natural resources, says bilateral trade grew from $10.6bn in 2000 to $160bn in 2011 and investment totalled $13bn.
Sceptics accuse China of a morally blind "resource colonialism". But in his speech in London, Blair said: "The fact is that China has both the capital and the capacity to get things done. This is especially true in infrastructure.
"How many times do you see in Africa a road promised for years, that finally is being built; and we, in the west, at the same time as we make legitimate points about the methods of investment sometimes used, have to face up to the uncomfortable fact that this didn't happen with us."
However, as the good times roll, there is a danger of Africa becoming too dependent on exporting mineral resources and not investing in manufacturing, Ncube added. "Most trade is between Africa and the rest of the world. It will take a while to fix."
Intra-Africa trade, punished by lack of regional integration and poor infrastructure, makes up a woeful 10% of total exports, compared with 60% for south-east Asian countries.
Such weakness led to a warning from the Africa Progress Panel, whose members include Blair, Kofi Annan and Bob Geldof. "The lack of economic diversification, in terms of both export products and destinations, explains the high volatility of African trade in recent years, and the strongly adverse impact of the global economic crisis through trade," said the panel in its 2011 report[pdf].{unavailable here}
"It also explains why so little of the continent's high GDP growth translates into social development and tangible improvements to people's lives ... It is thus hardly surprising that, despite a decade of strong economic growth, poverty remains pervasive throughout the continent."
Africa remains the poorest continent, with only one in four people having access to electricity. The experience of Angola and others suggests that economic growth may deepen, rather than reduce, the gap between rich and poor.
There appears to be no causal relationship between growth and democracy and human rights. Corruption is still rife and agricultural productivity frustrating low. These issues could undermine the growth narrative.
The oil and gas finds have the potential to translate into riches. But Philip Walker, senior editor/economist for Africa at the Economist Intelligence Unit, warned that the projects were still at a very early stage.
"The common bottlenecks to doing business on the continent – excessive bureaucracy and government inefficiency – coupled with a lack of regulation in many countries mean that it will be a number of years before the potential is fully realised."
But despite the persistent caveats, Africa, where 70% of population is under the age of 30, is thinking big. Talks began last year on a planned Cape-to-Cairo free trade zone encompassing 26 countries, 525 million people and $1tn in output which, it is hoped, could be in place in three years.
As one Reuters commentary put it: "The penny has also dropped in most capitals that Africa needs to start making more goods and selling them internally rather than just digging up minerals, putting them on a ship to China and importing washing machines or shoes on the return run."
Source: The Guardian UK, 28 March 2012
No commentsSeven steps to prevent the collapse of west Africa's fishing grounds
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DateLines
Foreign fleets have left many west African fishing communities on the brink; some small changes could make a big difference.
Sudanese refugees struggle without enough food and water
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DateLines
Sudanese refugees struggle without enough food and water
While talks between the two neighboring countries falter, aid agencies working on the border between Sudan and South Sudan say food and water shortages already exist for the 100,000 refugees in the conflict zone...More Details
Oil, national pride at stake in the Falklands
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Oil, national pride at stake in the Falklands
Interests in oil and other natural resources have led to renewed tensions over the Falkland Islands. The confrontation between Argentina and Great Britain is about strategic interests - and wounded pride.
It's become a kind of ritual: with each major anniversary of the 1982 Falklands War comes renewed saber rattling. The months ahead of the 30th anniversary of Argentina's occupation of the disputed archipelago on April 2 have been no exception.
Argentina and Great Britain trade off in charging one another with colonialism or imperialism, both insisting on their right to the small group of islands that are shared by around 3,000 residents, 1,200 British military troops and half a million sheep. London recently sent its HMS Dauntless destroyer and, according to media reports, a nuclear submarine to the South Atlantic.
Argentina's President Cristina Fernandez de Kirchner responded by issuing a protest to the United Nations that the British deployment represents "a major risk to international security."
'On a crusade'
"The Argentine president is on a personal crusade," said Sukey Cameron, the UK representative of the Falkland Islands government. "I think the issue of the island is very high up on her agenda."
In fact, Argentina has been increasing pressure for two years. Starting in 2010, ships in Argentinean waters were told they needed special authorization if they were headed toward the archipelago.
At the end of last year, four of the countries in the South American economic union Mercosur agreed to close their harbors to ships flying the Falklands flag.
The move is little more than symbolic, but islanders fear further sanctions such as an embargo against companies active in the Falklands. Some speculate that Kirchner could convince Chile to shut off the only flight connection between the archipelago and South America.
"We very much hope not," said Falkland representative Cameron, appealing somewhat helplessly to Argentinean patriotism, as it's a step that would prevent Argentinean war veterans and family members of the victims from visiting the islands.
A royal stir
London reacted to the pressure earlier this year by sending one of its future heads of state to the Falklands. Prince William, the grandson of the queen and a helicopter pilot in the Royal Air Force, was stationed for six weeks at the Mount Pleasant airfield on the islands. The Ministry of Defence stressed that his presence was routine and long planned, but few believe those claims.
"The difficulty I have with that argument is that his deployment was never going to be just routine," said Klaus Dodds, an expert for geopolitics at the University of London's Royal Holloway College. Dodds added that it's not at all surprising for Argentina to see the move as a pointed provocation.
Natural resources are part of the reason why the islands are such an object of interest. Many expect to find oil near the approximately 200 islands, even though test drills have so far delivered no results. Dodds believes the long-term prospect of reserves of raw materials is a more important factor.
"The proximity to Antarctica is huge. To my mind it's one of the big factors that hasn't really been sufficiently discussed because so much of what Britain does in the Falklands is driven in large part by the British Antarctic Territory," he said.
The islands serve as a jumping off point to that territory, an enormous chunk of land on the icy continent under British control.
"I am not saying anybody any time soon is going to be exploiting Antarctica for oil, gas, uranium, zinc or whatever," Dodds noted. But, he added, the provisions of the Antarctic Treaty System, an environmental protocol which currently forbids exploitation, could be revised at a conference in 2048.
Foreign policy victory
From the Argentinean side, national pride is a major component in the conflict. Many consider the British control of the islands an enduring humiliation, and the topic was an important part of Argentina's foreign policy throughout the second half of the 20th century.
Rightly so, argues Marcelo Leiras, a political scientist at the University of San Andres in Buenos Aires, who says the issue touches on Argentina's sovereignty.
"Sovereignty is not something you measure in square kilometers or riches," said Leiras. "Either you exercise it or you don't and any challenge to sovereignty is seen as a sign of political weakness."
With that in mind, the approach President Kirchner has taken makes sense, he said.
"The president has a stronger personal interest and different take on the issue and a different idea of what might work to better advance Argentina's interest," said Leiras, adding that the harbor closures represent a "significant victory for Argentina's foreign policy."
'Sovereignty is not up for negotiation'
The archipelago was once in the hands of the French and Spanish, and it has been a British territory since 1833. But the distance between the islands and the countries that have ruled it are reason enough to question the British claim to the region, according to Leiras.
However, the political scientist considers Argentina's 1982 invasion a mistake. He describes the war that cost 900 people their lives as a desperate attempt by the military junta to hold on to power.
Both of the involved countries, along with independent observers, rule out the possibility of a renewed war over the islands, but many also think it's unlikely the conflict will be resolved soon. The UN issued a resolution in 1965 calling on both sides to take up negotiations, but Great Britain has insisted on maintaining the status quo. Argentina is only interested in negotiations that would affect the status of the Falklands, said the island's UK representative.
"We are happy to discuss anything with them except for sovereignty," said Cameron. "Sovereignty is not up for negotiation."
Those stances represent nothing new, says Falkland expert Dodds. "UN resolutions get taken seriously by more powerful nations when it suits them."
Author: Dennis Stute / gsw Editor: Martin Kuebler Source: Deutsche Welle
Wives, daughters of Osama bin Laden jailed in Pakistan
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Wives, daughters of Osama bin Laden jailed in Pakistan
A Pakistani court has convicted five close relatives of deceased al Qaeda leader Osama bin Laden for illegally staying in the country. They were sentenced to 45 days in prison, fined, and will subsequently be deported.
Osama Bin Laden's three widows and two of his daughters were convicted of illegally entering and staying in Pakistan on Monday. They received sentences of 45 days in prison - with 31 of those already served during their trial - fined 10,000 rupees ($110, 75 euros), and will face deportation to their home countries when released.
{sidebar id=11 align=right}Despite being formally arrested on March 3 ahead of their trial, the five women had been in detention since last May when the al Qaeda leader was killed by US commandos at a compound in the town of Abbottabad.
The women's lawyer, Amir Khalil, said that the fines had been paid on the spot and that the family's younger children would travel with them when they left Paksitan. Khalil also said that his clients did not plan to appeal the ruling.
Two of the wives are Saudi Arabian, one hails from Yemen. Khalil said authorities in Yemen had already approved the defendants' return, though he was still negotiating with Saudi Arabia, which stripped Bin Laden of his citizenship in 1994.
Once out of Pakistan, the women might reveal more information about how Bin Laden was able to evade capture and detection for years in Pakistan. No evidence has been found suggesting that Pakistani authorities knew where Bin Laden was, but doubts remain given that he lived so close to some sensitive military sites.
Washington hunted Bin Laden for almost a decade after the September 11, 2001 attacks.
msh/rc (dpa, Reuters)
Source: Deutsche Welle