Africa’s moment to shine
- Wits University
Africa is entering a century of global dominance in growth.
Africa is entering a whole new era where it will be the global driver of growth in the next century.
This is the combined view of scientists and corporate commentators who spoke in a panel discussion at Standard Bank on the future of Africa.
The discussion, which featured leading economic historian from Columbia University, Professor Adam Tooze, was hosted by Standard Bank as part of the launch of the Standard Bank Chair on African Trust Infrastructures in the Wits Institute for Social and Economic Research (WiSER) at Wits.
“This is the African century, there is no question about it,” said Sim Shabalala, CEO of Standard Bank. “We have the privilege to operate in 20 African countries, and there is no question that Africans are getting wealthier, healthier and more productive.”
Tooze said Africa’s position in the future is “historically, radically novel”.
“If you think of the return to centre-stage of Asia in the last 20 to 30 years, which is in a sense a kind of rightful correction of the world economy, which was so distorted by white dominance in the past 150 years, that is in a sense a return to a historical norm,” said Tooze.
“The situation that Africa is entering into now is historically novel – fundamentally novel. Africa, up to now, has been characterised by low population density. And we are now entering a period where the African continent will actually be the dominant – not just in relative terms, in terms of the pace of demographic change, but in terms of the absolute size of the demographic change – the driver globally, and that is a situation where there has been no historical precedent for this before. This is the true revolution.”
While China’s resurgence has been a restoration of an order that was normal before the 18th century, Africa’s growth is a “revolution”, which is both a challenge and holds vast opportunities.
While Africa has vast human potential that is opening up, Tooze believes investment is critical if Africa is to step up to this opportunity.
“The capital to labour ratio – the wealth per capita in several African states – especially in West Africa, due to rapid population growth, has gone down over the last decade. So, the fundamental element in this equation, other than the human capital formation, is investment. There has to be [investment]. The huge African deficit is simply the capital to labour ratio. It lags far behind the rest of the world, and that vast human potential cannot be unlocked, unless that capital is unlocked,” said Tooze.
Standard Bank’s Regional CEO for East Africa, Patrick Mweheire, said Kenya is an example of great positive growth in Africa. Unlike South Africa and Nigeria, the GDP of Kenya and other East African nations is growing faster than their population.
“Kenya has become a major hub for a lot of global tech companies, who are transferring a lot of work that used to go to India and Eastern Europe to Nairobi,” said Mweheire.
Shabalala explained East Africa’s growth by saying that the region operates as an integrated region, with rational domestic and international policy formulation.
“It is an excellent example of rational policymaking and great financial management, which gives it a great competitive advantage,” he said. “It is not surprising that that part of the world is beating South Africa hands down in human development. Nigeria and South Africa are the continent’s biggest risk in GDP growth.”
For the first time in a very long time, the African continent is in a position to negotiate the best bargains for itself, said Shabalala.
“There is a contestation for African resources that other parts of the world don’t have, and we are in a position as Africa to negotiate excellent bargains for ourselves, because the Chinese, the European Union and the Americans want them.”
One of the challenges to overcome, however, is policymaking at a national and international level, as well as obstacles in moving people, goods, money, ideas, and data freely through the continent.
“If we could wave the magic wand, we would get rid of all the blockages that make it difficult for people, goods, capital, ideas, and data to move between African countries. Again, the East Africans have done that, and that has made it significantly more competitive, and there is no good reason that we can’t do that,” said Shabalala.
“It makes so much more sense to make it easy for people to move, for capital to move, for ideas to move and for goods to move freely. It will be enhancing to welfare, it will be easier to produce goods, the continent will become more productive and with will become more competitive.”I
Mweheire said Covid, the war in Ukraine, and other political and economic challenges in the past three years have led to a “perfect storm” that forced Africa to “grow up” and solve its own problems.
“What I’ve seen is, we’ve seen leadership actually show up,” he said. “It has also forced us to come up with local solutions. A lot of conversations that we are having right now, we would not have had five years ago … I just feel that the African solutions for African problems discussion that we are having right now is very healthy. We’ve realised that we are on our own, and that our problems are unique, and that we have to come up with our own solutions. The world has forced us to grow up and come up with our own solutions and that leaves me with huge optimism.”
Tooze said that we are seeing a new form of globalisation that truly includes everyone, and not simply a globalisation that simply dictates to everyone from the top.
“This is a very optimistic and dramatic moment. I personally feel privileged to experience this moment. It is a transformative moment,” he said. However, the flipside of this moment is extremely dangerous, and that is the polarisation of the old players – namely the United States and China.
Shabalala said pessimism versus optimism is a choice, and the choice between the two has profound consequences.
“When confronted with risk and conflict, it is better to be optimistic, because you make better choices. You are more likely, in a company like ours, if you are optimistic to make an investment. If you are pessimistic, you are going to hold back,” he said.
“Our relationship with Wits is based on optimism.”