There has been a lot of good news around Africa recently, and many countries are achieving high economic growth rates – Senegal, Ivory Coast, Kenya, and Ethiopia come to mind. And this is not happening by accident – over the last decade there has been an incredible paradigm shift in most countries, with a recognition that:
- a country can only be prosperous with a strong private sector – that is, a model of state-led growth cannot succeed
- countries need to compete globally to build their private sectors, including creating a conducive business environment
This evolution in thinking has been supported with progress on many key measures, including the World Bank Ease of Doing Business rankings of African countries. Rwanda in particular needs to be cited for its outstanding performance, jumping from 41stin the world to 29th, ahead of countries like France, Netherlands, and Switzerland– remarkable (Mauritius remains the top African country at 20th).
However, despite the considerable progress Africa has made, the reality is that we are not growing fast enough.
According to the AfDB’s 2019 African Economic Output report, 2018 growth rate was 3.5% and the projected growth rate for 2019 is 4.0%. This is still below the growth rate required to keep unemployment stable on the continent.
The reason we continue to struggle to reduce unemployment despite the progress in approach to the continent’s economy and the bright spots across the continent in the last decade is because the giants on Africa ; Nigeria and South Africa continue to slow down the continent’s economy.
In the case of both Nigeria and South Africa, 2018 growth was only 1.9%, dragging down the continent’s performance. We will have ample time during the year to examine the country specific issues holding back Nigeria, South Africa, and others.
For now, let’s examine the overall economic issues for Africa. Here are the 2 biggest issues:
- The global economic headwinds, their impact and implications for Africa
- The incredible achievement-in-making that is the Africa Continental Free Trade Agreement (AfCFTA)
Let’s discuss each of these in turn.
In 2017, there was the concept of globally synchronized growth – that is, strong economic growth occurring in all the major markets – USA, EU, and China – lifting economies around the world. There was an optimism that after 9 years of anemic growth following the Great Financial Crisis (GFC) of 2018, global growth was going to take off. This optimism proved to be short-lived.
As we enter 2019, we face a barrage of global negative economic news that has been building for some time. Some of the issues include:
- Slowing growth in Europe; this was inevitable given Europe’s rapidlyageing population which seems to have taken leaders by surprise. Slowing growth is a particular problem when combined with high indebtedness, which is a problem in the Eurozone, most acutely in Italy.
- Fiscal challenges in the US, where the structural deficit at the Federal level has been exacerbated by recent tax cuts, cuts which are unlikely to lead to higher growth, basically because wealthier people don’t spend much more as they earn more
- High and opaque levels of indebtedness in China. China’s economic miracle for the last decade has relied on ever increasing amounts of debt, often concealed in opaque structures. Recent economic data show this construct is coming to an end, and China’s mal-investment (particularly in real estate) may finally be catching up.
Of course, we all know 3 economists have 10 opinions about the future and it is not our purpose here to predict economic developments in 2019-2020.
The implication for Africa, however, is that Africa cannot rely on the rest of the world to drive our economic development. We need to build a resilient economy that will allow Africa to increasingly proposer, independently of what happens in the rest of the world.
In fact, if we look a little further in the future, by 2050 there will be 3 major poles of population in the world – Indian sub-continent, East Asia (China, Japan, Korea, Vietnam primarily), and Africa. Each of these poles will have 2 billion people. The population in the rest of the world will be shrinking (and shrinking in East Asia as well).
In this world, how can Africa prosper? Well, if we sell raw materials to others – with little or no value added – we will continue to be poor. So we need to sell higher value goods and services. Who will we sell these to? It is unlikely we will sell into Europe and North America because with aging and shrinking populations, it is challenging to sell into these markets (which would require displacing existing suppliers in a shrinking market). Would we be able to sell to China? Unlikely. India? Perhaps some things but not enough.
The market that is most critical for our prosperity is in fact Africa. Africa can only become richer if Africans sell to Africans. There is no other path.
This brings us to the African Continental Free Trade Agreement (AfCFTA). We believe that Africans should applaud themselves with the remarkable progress AfCFTA has made in a very short period of time. In a world where divisions and fractures between people are becoming greater and greater, and politicians exploit these divisions to sow hatred and discontent, Africa has chosen a different path.
The Africa Union and Afrexim Bank have stepped up to drive this new pan-Africanism, based on economic prosperity and the private sector. In a very short period of time,
- AfCFTA was signed in Kigali, Rwanda on March 21, 2018
- 49 member- countries of the African Union have signed the AfCFTA (SEE MAP)
- 18 countries have ratified the agreement (The proposal will come into force after ratification by 22 of the signatory states)
- UNECA predicts a 52% increase in intra-African trade by 2022 if AfCFTA is implemented
This is remarkable progress and all those who are driving this new pan-Africanism should be applauded.
So as we look forward to 2019, Africa faces an uncertain economic environment in the rest of the world. But we must use our cohesion and drive the progress of AfCFTA to ensure our future prosperity.
The views expressed in this piece are the author’s own and do not necessarily reflect News Central’s editorial stance.
Shared values and aligned interests – how Australia is supporting global action on COVID 19
Despite the physical distance between our two nations, we have much in common. Our lands are richly endowed with natural resources but we also see nature at its most cruel. From the drought stricken Lake Chad region, to devastating bushfires in Australia, we both understand the havoc of such catastrophic events on our citizens. Now faced with a global pandemic that respects no borders and affects all our citizens it’s clear our interests are more aligned than ever.
Ours is not an aid relationship but one based on equality, a mutual commitment to multilateralism and recognition of the importance of global trade for the prosperity of our citizens. We are both modern democratic nations with a bright future. There is an energy that reflects our countries’ optimism and determination to be good global citizens. We are both committed to harnessing wisely our natural wealth and talents for the prosperity of our people. And we are both proud multicultural societies. Ensuring global security, peace and prosperity for all our citizens underpins both our foreign policy agendas.
Australia, a founding member of the UN and Commonwealth, has and will continue to provide core funds to international organisations, including WHO.Ensuring multilaterals have the core financing that enable them to sustainably operate in Africa is critical to ensuring global security and prosperity. It is through these institutions that we believe global challenges that affect us all are best addressed. This is why we focus our aid investments to Africa through our multilateral partners.
And it’s through financial contributions to these international organisations that we are working with global partners to support efforts to tackle COVID-19. We have contributed AUD 170 million to global partners working on the development and deployment of vaccines, drugs and diagnostics. We are long-term funders of global health emergency, preparedness and response programs including AUD 35 million to WHO and the United Nations’ Emergency Response Fund. But it doesn’t stop there. We provide core funding to GAVI, the Vaccine Alliance; the Global Fund to fight Aids, Tuberculosis and Malaria, and the Centre for Epidemic Preparedness Innovations among many others. It’s through these core funds that the sustainability of international institutions to work in Africa is secured.
Through our active board membership in these international organisations we ensure Africa benefits. Through our steering group membership of the World Bank Pandemic Emergency Finance Facility we enabled USD 15 million to be allocated to Nigeria’s COVID-19 response activities. Through our seat on the Executive Board of WFP, we ensured Africa received timely allocation of resources to deal with COVID-19. Ensuring resources are delivered where they are most needed, whilst improving accountability to affected populations, is a key objective of our membership to these multilateral boards.
So it should be no surprise that when the time is right, Australia supports an independent review of the COVID-19 outbreak to clarify the facts around its genesis, global spread and the WHO’s response. An honest and independent assessment of events will be critical as we emerge from the pandemic and seek to improve our response to future crises. The World Health Assembly resolution on the ‘COVID-19 Response’ is an important step in that process. Both Australia and Nigeria’s leadership in co-sponsoring this EU led resolution, is testament to our shared values.
A key priority for both our countries is the development of an effective vaccine that is affordable and easily accessible to all.On May 4 our Prime Minister pledged over AUD 350 million to COVID-19 research and development with the aim to accelerate development and deployment of universally available vaccines, therapeutic drugs and diagnostic tests. At the same time, Australia’s top scientists are working with international partners to research, develop and test vaccines and treatments. Our scientists, universities and research organisations are some of the best in the world, which is why Australia is the world’s third most popular destination for international students.
Our focus on trade not aid will help contribute to Nigeria’s sustainable recovery from the COVID-19 crisis. Australia’s two way trade with Africa is over AUD 11 billion and has the potential to be significantly more. We have an open and globally integrated economy, making us a trusted partner for trade and investment. Our geographic location provides a gateway to do business in the dynamic Asia-Pacific region. An increasing number of Nigerian students recognise the quality of Australian universities, and the networks throughout Asia that an Australian degree provides.
Our economies have complementarities that make us natural partners. Extractives and agriculture are major industries in both our countries. In Nigeria there are already Australian companies supporting the development of the mining sector – a sector key to the Government’s priority of diversification of the economy and one in which there is significant potential for job creation over many years. Our similar climates mean we understand the practicalities of farming in harsh conditions and have the technology to maximise productivity. Through our scholarship program we have helped build technical capacity in the mining and agricultural sectors, ensuring our engagement is one on a level playing field.
As global power is shifting, Australia and Nigeria have much to offer each other. Be it through increasing our two way trade potential, our continental positions and influence, or through our aligned priorities in the international system – to shape and protect rules and norms, to guard against threats to international peace and security, to protect the international environment for the prosperity of our nations, to reduce global poverty and respond to humanitarian crises, or now more than ever to reduce the potential for pandemics and other international health risks to our citizens.
Claire Ireland is the Australian High Commissioner to Nigeria
Responsible business – crafting South Africa’s responsibility journey through social innovation
The new decade has in so many ways forced us to reconsider the way we live, work, produce, and trade. Businesses must be equipped to not only tackle today’s global problems – especially the current health crisis – but also build greater positive interdependence between the world’s organisations and the complex systems in which they operate. This starts by reflecting on how we lead and how we can hold organisational and political leaders to a higher standard.
At Accenture, we believe that the next legacy is about Responsible Business (RB) in action. Leaders today have to face new responsibilities. They must deliver organisational performance, embrace continuous innovation to unlock long-term value, the most challenging of all, build and earn stakeholders’ trust. These stakeholders include consumers, employees, investors, business partners, policymakers, and representatives of civil society. These important stakeholders are exponentially vocal in demanding a more equitable and sustainable wave of growth, and the generations Y and Z are at the front line of this movement.
Defining the Responsible Business framework
Our research aimed to define a new model of responsible leadership in the 2020s – one that delivers sustainable and equitable growth for all. With that objective, we extended our analysis to listen to the views of more than 20,000 people around the world. As outlined in our Next Generation Growth model, living a Responsible Business is evident both in how we serve our clients and how we lead as a company. The latest comprehensive Accenture report on ‘Seeking New Leadership’ highlights that the social, economic, and environmental challenges of the 2020s require new approaches to leadership and responsibility. Furthermore, an ability to master Mission & Purpose, Technology & Innovation, and Stakeholder Inclusion must become second nature. In terms of growth, companies that combine high levels of innovation and sustainability and trust have been shown to outperform their peers.
South Africa is quite far along in its RB journey, and the Growth Markets leadership team is showcasing us as a champion of the initiative and a blueprint for others to follow. Given this spotlight to be a global pioneer and for potential investment, we are leveraging this opportunity to its full capacity in unlocking sustainable value for our business, clients, and country. As one of our business leaders rightly put it, “Responsible business is not another KPI to us: it is simply how we do business, it is how we think, how we act and how we bring about the impact to our clients.”
‘Responsibility’ can be defined across various stakeholders and themes. We collated a comprehensive responsibility framework to look at our current portfolio and assess our impact across six stakeholder groups. By conducting an audit of all on-going initiatives Accenture Africa now has the opportunity to bring RB to the very core of our business model and impact with clients. Most of the responsibility initiatives in South Africa are Corporate Citizenship driven, lack business involvement, and are fragmented across divisions and teams. To achieve the RB vision, we need to include responsibility in the way we operate. There is also a lack of communication and visibility on these initiatives which leads to investment redundancy. Thus, we need to ask ourselves: are we investing in the most streamlined and efficient way possible?
We scanned all the current impact initiatives in South Africa across the business, people, and process lenses. All business unit leaders shared their perspective on what ‘Responsibility’ means for their business and shared certain gaps and opportunities to unlock further value. We found that there is scope to better communicate with our stakeholders and leaders on our efforts toward being a responsible business and have a common vision towards responsibility, streamlining our operations, and embracing best practices in areas that we identify as priorities.
Challenges in the South African context
The South African local context offers five key challenges for us to address in our RB strategy with unemployment, future skills shortages, and government mismanagement being the most prevalent challenges, and the economic inequality as well as environmental degradation adding to the list. The current unemployment rate sits at an alarming 29%, with youth unemployment at 56% which is the third-highest in the world. While SA spends one of the highest GDP per capita amounts on education, the quality of public education is still very poor, leaving most South African youth ill-prepared for further study and employment. SA ranked 114 out of 137 countries for education quality.
Also, South Africa’s workforce of the future is one where automation may replace manual and repetitive work and therefore workers. Over 30% of South African jobs are threatened by total automation. The industries impacted strongly will be retail, e-commerce, and financial services. The workforce of the future will be one requiring more specialised skills. This is why we place critical emphasis on improving education quality, up-skilling, and re-skilling the existing workforce.
State capture and corruption pose the third biggest challenge. There were 166 fraud and corruption cases between 2010 and 2016 related to procurement by state institutions and SOEs, ranging from R70 000 to R2.1 billion that are still affecting the economy today. Several private sector companies have been implicated in state capture, corruption, and fraud and the country’s economy has been severely jeopardised by state capture.
Being responsible in the new is weighted on five pillars:
- Responsibly South African: Tailoring our solutions to the South African market’s needs, using our RiTN strategy to directly address the biggest challenges that South Africa faces.
- Responsible Leaders: Leading by example and ‘going above and beyond’ in driving responsible business practice. Being proactive in driving impact above and beyond the regulatory checkboxes and being conscious in the business opportunities and clients we take on.
- Responsibly Human: Investing in people to be ready for the changes in the New. Positioning our employees to better respond to market demand through continuous upskilling. Enabling South Africa to play in industries that make us more globally competitive and contributing to positive GDP growth.
- Responsibly Eco-Conscious: Being Custodians of our Environment for future generations. Being leaders in conducting business in a way where Economy and Ecology go hand in hand and being custodians for future generations. Applying best practice, cutting-edge technology and solutions to drive impact internally and for our clients
- Responsibility in Action: Inspiring a shift in Thinking and Doing with clients and Engaging in Collective Impact. Using our ‘Responsible DNA’ to inspire a shift in thinking with our clients and help them drive impact beyond compliance. Proactively pursuing partnerships with clients to solve the business challenges we share.
The growing importance of Social Innovation
Social Innovation is growing in importance as part of the RB agenda. Two new forces are changing what it means to be a responsible business – Emerging Technologies and Higher Public Expectations of Business. The role of social innovation is to enable our responsibility in the new goals. It is “a new way of doing things that add value to communities, society, and the environment by unlocking value for our clients” and the business case for investment is clear.
There are four major benefits that social innovation presents. It restores trust in business – over 54% of companies in the Accenture Strategy Competitive Agility Indexexperienced a material drop in trust and conservatively lost out on $180BN in revenue. It also allows for Growth and Inclusion at scale – the world’s largest problems viewed as business opportunities are collectively estimated to be worth $12–17 trillion by 2030. It plays a role in attracting and retaining talent – around 6 in 10 millennials indicate that a “sense of purpose” is a major factor in their decision to work for their current employer. Lastly, there is a financial correlation – companies with consistently high responsibility performance, measured through Environmental, Social, and Governance (ESG) ratings, outperform their peers financially an average 13.4% increase on return to shareholders.
Accenture Social Innovators is a program designed to catalyse opportunities to create positive social impact through client and ecosystem collaboration. To up-skill, connect, and showcase our people as social innovators. In FY20 we are scaling social innovators across all dimensions of Accenture. Underpinned by the global community, the certification program which is a work in progress offers insights and methods for client engagement, social innovation ecosystem, KPIs, and measurement of success.
At present, we are creating a robust role for Social Innovation in our Accenture operating model. We are working with the Social Innovators Global Platform Leadership team to create an operating model for including social innovation in our business. This will enable us to operationalise social innovation from idea generation, building capabilities and capacity of employees to be certified social innovators, amplification through communities of practice, converting demand generation into deals, and serving as a triage function for those navigating from where to go to pursue a great opportunity or bring life to an idea. Our ambition is to become the SA change agent in the New by changing the very concept of how business is conducted with broad ecosystem consciousness. We also aim to be market leaders in RB and the first to come to our clients’ minds as their strategic partner in helping them grow into a responsible future. This will enable us to truly deliver on our purpose of Unlocking Africa’s abundance for all and shaping the destiny of the continent.
Seeking New Leadership – Responsible leadership for a sustainable and equitable world. Available at: https://www.accenture.com/_acnmedia/PDF-115/Accenture-DAVOS-Responsible-Leadership-Report.pdf
Formula Won – A new way to measure Corporate Competitiveness. Available at: https://www.accenture.com/_acnmedia/PDF-57/Accenture-Formula-Won-PoV.pdf#zoom=50
Khethiwe Nkuna is the Head of Corporate Citizenship and Inclusion and Diversity at Accenture, Africa
Nigeria: A chance for re-awakening
By March 2020, it had become very clear that COVID-19 was a global pandemic. The news media was awash with a shock announcement by the Central Bank of Nigeria on her exchange rate policy; “In what can be regarded as an unexpected yet positive move, the Central Bank of Nigeria (CBN) on Friday moved the official exchange rate from N307/US$1 to N360/US$1. At the Investors and Exporters Window (I & E), the CBN also adjusted the NGN peg upwards by 5.7%, as it raised its intervention rate to N380 from N366.”this caption was Dateline Mar 24, 2020on Nairametrics.com.
I wrote this article three years ago on January 20, 2017, after a sharp drop in Oil prices – and surprised how relevant it is even today. What was our experience as a country, what did we learn from it and how is it that we have once again been caught desperately unawares?
Why can’t we fix our educational system and send our children to schools here? And fix our hospitals and treat our sick here, instead of our notoriety as big spenders on medical tourism?
Nigerians are gradually coming to terms that the cheese has indeed moved this time. The days of lucre and easy money, fuelled by petrodollars are far behind us; no thanks to shale oil and other sources of energy.
The aimless swagger has been replaced by a renewed sense of purpose and the need to produce in order to survive. No wonder Agriculture seems to be the only game in town these days. To borrow from the words of Pravin Gordhan, Finance Minister of South Africa, it is now Agri-Cool. All manner of yesterday’s nose thumpers now proudly call themselves farmers; it is beginning to have a nice ring and tone to it.
Unlike other oil boom and busts, it seems that this particular bust is here to stay. We seem to be in a stalemate. If we cut production to shore up prices, the shale producers will seize the opportunity to increase their own production and drive the prices right down. Not to talk of the conscious global effort towards cleaner renewable energy, and the significant improvement in its technology and adoption. COP 21 in Paris cemented the commitment to clean environment and green energy.
Time was when first class and business class seats on commercial airlines in Nigeria were filled way before economy seats, and private jets littered all our airports.
How did we get here? How did we subsequently fall from such deluded Olympian heights? The recurrent mistake we keep making as a nation is failing to anticipate and plan for our oil windfalls. There have been many boom opportunities since Nigeria joined the Organisation of Petroleum Exporting Countries (OPEC) in 1971; Oil prices increased by 400% in six short months after the Yom Kippur War following the Arab Oil Embargo. Crude prices doubled from $14 in 1978 to $35 per barrel in 1981 following the Iran/Iraq war. The price of crude oil spiked in 1990 with the uncertainties associated with the Iraqi invasion of Kuwait and the ensuing Gulf War – the so called ‘Gulf War windfall’ under then Head of State Ibrahim Babangida.
The report of the panel of enquiry headed by the eminent Dr. Pius Okigbo in 1994 was critical of the government’s role in mismanaging the $12.4b windfall. Most of it had inevitably gone with the wind.
Data from the U.S. Energy Information Administration shows that the latest windfall happened between February 2011 and August 2014, under the Goodluck Jonathan presidency, when oil prices were much in excess of $100 per barrel. Another golden opportunity was squandered, characterized by organized kleptocracy of epic proportions as has now come to light.
There is a saying in my native Igbo culture that an abomination that endures for long enough becomes part of the culture. Corruption came close to achieving this status in Nigeria.
Our inflated egos were matched with the adventure into GDP rebasing in 2014 which put Nigeria as the largest economy in Africa, overtaking South Africa. Alas this new status, propped up by an artificial exchange rate sustained by huge foreign reserves did not last. As the reserves dwindled, partial reality in the foreign exchange rate wiped away close to half of the estimated $510b GDP, and with it, our bragging rights.
I say ‘partial reality in the foreign exchange rate’, because I still feel that a differential of over 60% between the official rate and the parallel rate to the dollar seems to suggest that one of the rates is way off the mark. The acute shortage of the ‘Official Dollar’ seems to suggest that the parallel rate is closer to the mark.
The thing about the market is that you can distort it for a while, but you cannot hold it back for long. The market is like water; it will always find its way.The earlier we let this happen the better for our economy. In one decade, I have witnessed the British pound at close to £1 to $1.9 and now as low as £1 to $1.22; yet the British government is not scrambling to shore up the pound by all means (including expensive subsidy of the currency).
It should be understood that such distortions open huge arbitrage opportunities for those with access, which distract from productive pursuit. Rent seeking from allocation of dollars creates a new crop of overnight billionaires akin to those created during the era of petroleum subsidy. In the long run, it blows no good wind.
I have always argued that more important than the exchange rate, is the stability of the rate, which removes uncertainty, and attracts investment. As it is, we are inadvertently inviting more pressure on the naira because even locals are saving their money in dollars, albeit at zero interest rates. And why not? They have figured out that even at the relatively high interest rates on treasury bills and fixed deposits, savings are halved in real terms due to the fast deteriorating exchange rate of the naira.
We have to understand that the exchange rate is an indicator of the perception of performance, and opportunity in the economy.To shore it up you have to do the hard work of better economic management.Removing the alert on the dashboard of your car that tells you that the oil level is low, puts out the irritating light, but does not guarantee that the engine will not stop functioning further down the road.
There is now an even more fervent glamour for buying Nigerian and growing what we eat. About time too. According to the Minister of State for Agriculture, Heineken Lokpobiri, Nigeria spends about $22bn annually on food imports. How can a country with a huge population of over 170 million people (a viable consumer market by any standard), squander such a whopping amount on imported food, and in the process export much needed jobs in the agriculture value chain? This is despite the huge fertile landmass and favourable climate?
It is no different in the Education and Health sectors. It was estimated that Nigerians studying in British and American Universities spent over N137billion on tuition and living expenses in 2014. There were also about 71,000 Nigerian students who paid tuition fees in excess of N160billion in Ghana during the same period (these may have easily doubled in the past year due to the deteriorating foreign exchange rate). And yet the Nigerian Government’s total budget for education in 2017 is N540b (a paltry $1.1b against South Africa’s $22b)
Why can’t we fix our educational system and send our children to schools here? And fix our hospitals and treat our sick here, instead of our notoriety as big spenders on medical tourism?
I understand that luxury shop owners in Dubai and London are asking loudly ‘where are the Nigerians?’ Well, the Nigerians are at home, confronting the new realities of basic survival. You only have to look into the eyes of the average Nigerian to glean the pain of adjustment. This difficult period is too painful to waste. We must seize the opportunity of this painful reality check, for a reawakening and realignment towards doing the right thing. As Maria Robinson said “Nobody can go back and start a new beginning, but anyone can start today to make a new ending”. Let us begin today to write the ending we want for our country.
Austin Okere is the Founder of CWG Plc, the largest ICT Company on the Nigerian Stock Exchange & Entrepreneur in Residence at CBS, New York. Austin also serves on the Advisory Board of the Global Business School Network, and on the World Economic Forum Global Agenda Council on Innovation and Intrapreneurship. Austin now runs the Ausso Leadership Academy focused on Business and Entrepreneurial Mentorship