1 dicembre 2014

Promoting Stability and Development in Africa: Fostering Cooperation between Public and Private Sector

Conferenza organizzata dallo IAI e dalla FEPS - Sala delle Colonne, Comune di Torino

Ladies and gentlemen, dear colleagues and friends,

I am pleased to deliver the opening remarks of this conference on stability and development in Africa, organized by the Foundation for European Progressive Studies, that I have the honour to chair, and the Istituto Affari Internazionali, which I would like to thank for the excellent research they are carrying and that will be presented today. I am pleased, as I mentioned, to deliver the opening remarks because I am not an expert on African issues and my intent here is just to put on the table a few questions that I consider crucial and that, I am sure, will be discussed at length by the outstanding speakers that will follow me.

I remember that at the turn of the Twenty-first century the British magazine “Economist” dedicated a large section of one of its May issues to the “hopeless continent”. Failure and despair, warfare and thuggery, poverty and pestilence, floods and famine were the words used to describe the daunting situation and prospects of not just a single country, but of the whole of Africa, which seemed to be so intractable that, I quote, “It began to look as though the world might just give up on the entire continent”.

Some of the articles focused on Sierra Leone, which, manifesting the African countries’ worst characteristics, epitomised the rest of Africa. Fifteen years later, things have changed dramatically. According to the 2014 African Economic Outlook, Sierra Leone is currently the fastest growing country of West Africa. Its projection of growth in the present year is close to 14%. Once again, Sierra Leone represents an extreme example of the circumstances of the continent, whose average growth rate is estimated to be about 6% in the next decade. These figures show as well that Africa’s growth has returned to the pre-global recession levels and that even if the financial crisis has impacted on the African economies, their growth remains, on average, impressive.

They also demonstrate that, after fifteen years from that disheartening issue of the “Economist”, Africa is no longer an hopeless continent and, in spite of broad divergences in the level of development and wealth among the African states, persisting wide economic and social inequalities,and the many obstacles to be overcome in their path towards progress,African economies have grown, on average, since the turn of the century,more than any other part of the world, save for China and India.

This positive tendency is indeed to be ascribed to several factors, from the boom of commodityprice, which has been driven mainly by the growth of demand from China and other emerging markets, to the oil and gas as well as mining discoveries – 30% of the new energy resources findings over the last five years have been made in Sub-Saharan Africa –, from the effects of the debt relief packages to the increase in remittances and, above all, foreign investments from non OECD-countries and in particular from new economic actors, such as China and Brazil.

However, as mentioned earlier, economic performances differ widely across the continent and not all the African countries are benefitting equally from this positive trend. Some states have managed to improve the investment environment and will keep growing in the years to come; others, despite the impressive economic growth, have failed to diversify their economies or have not carried out the necessary reforms and risk not to maintain a steady pace; unfortunately, there are also countries that are falling behind due to mismanagement, corruption, or conflict.

This divergence results,on the one hand,from factors on which men have little or no influence, such as weather conditions or the availability of natural resources, and, on the other hand,fromthe governments’ capability to build momentum and face important challenges, such as maintaining political and social stability; strengthening their institutional capacity; improving the investment climate; accelerating the building of infrastructures; promoting regional integration; transforming their economies from resource-driven to ones with higher added value and greater sustainability; managing with caution the natural resources, for whichthere is obviously a growing global appetite.

As for the latter points in particular, let’s not forget that the high commodity demand that has contributed to the recent growth trends is not endless. Changes in Chinese or Brazilian economies or their slowing down, for example, can have an impact on their African partners.

That is to say that Africa has huge potentials and great opportunities, but these need to be grasped in order to consolidate this encouraging trend, which, it must be underlined, seems to be qualitatively different from past spurts.

Poor governance, in particular, represents one of the crucial shortcomings of the continent. Most African countries have been moving, with different speed and mixed results, onto a democratic path and have enhanced their governance, institutional framework and democratic standards. Yet a lot remains to be done. According to Freedom House only 10 out of 49Sub-Saharan countries are to be considered free, whileilliberal regimes endure in 19 states; and in most countries political rights and civil liberties have declined over the past five years.

As for North Africa, the Arab Spring revolts have fuelled hopes for democratization that, with the notable exception of Tunisia, have not materialized. Actually, there is a widespread fear that unrest in that area might spill over and further affect stability in other regions of the continent.

Alongside strengthening democratic governance and the rule of law, social rights and economic inequalities need to be urgently addressed. Even if poverty levels are falling, incomes are rising, a middle class is steadily emerging, and the participation of women in political life is gradually growing, the question of social inclusion, of the highly unequal economic and social opportunities remainsvery serious.

Economic growth, in fact, has not led to a corresponding and sufficient increase in wages or employment, or in an adequate improvement of the population’s living conditions. And, particularly in the countries that are richer in natural resources, which – it must be noted – benefit mainly national elites and multinational companies, wealth inequalities are even widening. In fact, if we consider the Human Development Index (HDI),we can observe that resource-rich countries are heavily concentrated in the lower ranks. Equatorial Guinea, for example, is ranked 45th on the Gross National Income (GNI) per capita scale, but only 136th on the human development one.

Education must also be part of a broad development scheme. Today, African countries suffer an enduring deficit in primary and secondary education. Since the beginning of the century there has been a noteworthy increase in school enrolment, but this is far from being enough. Sub-Saharan countries have the worst world records in this field: 22% of primary school-age children and 66% of secondary ones do not attend school at all.

And yet, being Africathe youngest continent of the planet, African governments should look at youth as a potential engine of growth and innovation, and therefore invest on its human capacity, by improving its education standards, building a better skilled workforce, expanding the employment opportunities, particularly in qualified jobs, and tapping into their diasporas as a source of knowledge. Today, the share of vulnerable employment remains as high as 70% of total employment. Too many people still work in the black economy.

Another question that should be urgently dealt with and that seems to be almost paradoxical in a continent so rich in energy resources is that of people’s access to electricity. Today about 70% of the Sub-Saharan population have none. This means over 600 million people. According to the International Energy Agency’s Africa Energy Outlook, in the last fifteen years, “two out of every three US dollars invested in Sub-Saharan Africa went to produce energy for export”.

A part from the larger investment opportunities that the efforts at filling this gap would offer, providing access to modern energy to African people must be an essential component of any development plan aimed at meeting pressing social goals.

The problems I have listed so far imply of course social justice. But they are also a question of social stability. There is no doubt that in the future the African governments will have to face more and more challenges from discontented citizens, who are increasingly interconnected and aware of their rights. 

This would add to an escalation of political violence that has been taking place in the last years and that no longer entails large wars between states, as it happened in the past decades. Nowadays, we rather observe smaller warfare involving rebels, insurgents, mercenariesand Islamist groups fighting against feeble governments and often controlling wide areas or provinces within single states. Yet, they still tend to have an impact on neighbouring countries’ stability.

From South Sudan to the Central African Republic, from the Democratic Republic of Congo to Mali, Somalia and Nigeria – where the infamous Boko Haram insurgencyhas been sowing terror in the civilian population since 2009 – violent andincreasingly better armed non-state actors proliferate and generate insecurity. So far, even relatively wealthy and well-armed states, such as Nigeria and Kenya, have failed in containing these rapidly spreading terrorist threats.

While the western media have recently focused the attention mainly on the Islamic State militants in Syria and Iraq, Boko Haram’s horrible mass kidnapping shows that in Africa too there is plenty of scope for home-grown fundamentalism to take hold.

Together with securing the waters off the coast of Somalia, which since the beginning of the century are menaced by piracy, these are security issues that need to be addressed urgently. Yet, I think it is necessary to tackle them with a broad approach, keeping into due consideration the social and economic roots of the phenomenon. As for piracy, for instance, we should not forget that it is also a consequence of European super-trawlers unfairly competing with local fishermen, exploiting the resources of this region, buying fishing rights, and depriving local communities of essential revenues.

Regional integration has, in my opinion, a crucial role to play in the field of peace and security. Despite the African Union’s attempts to strengthen its intervention capabilities and its undeniable achievements, member states’different national interestsand priorities, lack of political will and financial difficulties, gaps in communication and coordination among AU bodies have so far hindered the process of integration.

I would like to underline that the Istituto Affari Internazionali together with FEPS two years ago released an excellent publication on the role of regional organizations in strengthening peace and security in Africa.

The African Union and sub-regional bodies – such as the Southern African Development Community (SADC) – have represented major advances in regional governance. Efforts by regional economic communities to promote free movement of goods and people and the harmonization of business regulations have been made. However, problems with enforcement and consistency persist.

Deepening regional integration wouldhelp the African states boost their economic development, making them more competitive in the global markets. Besides a handful of states, most African countries are, in fact, small economies. Moreover, fragmented markets, lack of an adequate and cheap transportation network and other infrastructures, diverse regulations from one country to another and other tariff and non-tariff barriers are deterrents to investors. It astonished me to find out, for instance, that trade within Africa amount to only 10% of the continent total trade.

Mutual mistrust, unequal and unsteady commitment, reluctance by political leaders are thus to be overcome if African governments wish to pave the way for a robust and sustainable growth.

There are just a few other issues that I would like to raise before leaving the floor to the distinguished speakers.

This concerns Africa’s relationship with other global actors. As I said earlier, one of the drivers of African countries’ growth has been the surge of commercial relations with other emerging economic players. In particular I cited China and Brazil, but I could have also mentioned India. African governments have with reason welcomed alternatives to traditional western economic partners and donors. If they pursued a policy of non-interference in domestic politics and of respect of sovereignty, without insisting on human rights and democratic standards, it was of course, from their point of view, even better.

China has now become Africa’s biggest trading partner and India is the fourth largest investor [Ernst&Young, Africa 2014: Executing Growth].

As for the European Union, it remains a strong economic partner. However, Europe’s share in African markets has progressively reduced. And this is a trend that will probably persists in the future, considering the increased competition that EU member states will have to face.

This said, historical ties, geographic proximity, stability and – I should also add – health concerns (considering the serious question of the current epidemic ofebolain West Africa) should make relations with this continent a priority for the European Union.

Therefore, the EU African policy, in my opinion, should put emphasis on a partnership based on the awareness of the common interests and the deep interdependence between the two continents, rather than on simply solidarity and aid, avoiding the patronizing attitude that characterized Europe’s approach in the past.

Furthermore, since African stability and security are strictly linked to security in Europe too, I think that it is in our interest to encourage human development, social justice and economic prosperity in this continent, instead of reacting – as many European governments have been doing recently – advocating stronger border controls and restrictions against theflow of migrants from the African coasts to the European ones.

Economic development, social and political stability, and security are inextricably linked. A path full of challenges but also of opportunities is what lies ahead of African governments, civil society and private investors. Each of them has an essential role to play in order to ensure a future of long-term growth and social development.