AFRICA’S RAPID ECONOMIC GROWTH AND THE CHALLENGES THAT LIE AHEAD
An Op-Ed by Milosh Marinovich
On a recent family vacation, I spent a night discussing the rapid economic growth of sub-Saharan Africa with my wife’s uncle. A lawyer by trade, my Kenyan-born uncle-in-law said he’d seen a shift in the investment landscape of not only his home country, but of Africa as a whole.
In previous years, many Africans with money to invest looked to the West for opportunity, convinced that it offered them the best returns. Now, however, with economic prospects and, in some cases, political stability improving in Africa while both are declining in the West, many Africans are deciding to invest their money at home.
This economic shift is starkly highlighted by overseas investment in Africa as well. China, for example, has overtaken the United States as Africa’s number one trading partner – since 2000 Chinese trade with Africa has ballooned from $10 billion to $200 billion, according to the United Nations Economic Commission for Africa.
Africa’s economy is growing faster than any other continent, according to the African Development Bank (AfDB), with one-third of its countries having GDP growth-rates of more than 6%. Still, little of this new growth and investment has helped to put a dent in Africa’s poverty rate. In fact, in sub-Saharan Africa about 50% of the populace makes less than $1.25 per day.
With so much money and business opportunity flooding the continent, it’s hard to understand how this is possible. One explanation may be that much of the trade and investment in Africa is related to raw materials. For example, raw materials account for 85% of China’s exports from Africa, according to the AfDB. Most minerals mined in Africa are exported raw, meaning the jobs and wealth from processing them is created elsewhere.
In addition, while intra-African trade has also helped drive the continent’s economic boom, much of the benefit of this boom is only being seen in the private sector as substantial differences in income for individuals remain. So how can this be changed?
In short, drastic changes need to be made to Africa’s inadequate infrastructural development. The AfDB reported that “Africa currently invests just 4% of its collective GDP in infrastructure, compared with China’s 14%.” By improving infrastructure, Africa will be able to improve transport, education, and employment while also attracting foreign investment that stays on the continent helping it to develop further – unlike much of the current investment from China and America.
Of course, strong infrastructure is dependent upon sufficient engineering capacity, which is integral to all economic and social development. A recent study by the UK-based Royal Academy of Engineering (RAE) stated that sub-Saharan Africa currently lacks engineers with sufficient skills and experience.
According to the RAE, “This results in road networks that are fragmented at best, major power shortages in over 30 countries, and very limited access to services for sub-Saharan Africa’s largely rural population.” With these factors in mind, it’s not so hard to understand why much of Africa remains below the poverty line.
This lack of engineers stifles Africa’s ability to minimize economic disparity even while many private and corporate interests continue to reap the benefits of a rapidly growing economy.
But why are there so few skilled engineers? For starters, the RAE points to “Low-level public investment in engineering projects over several decades meaning an inconsistent demand for engineers, which has seriously limited the opportunities for engineers to gain marketable skills and experience.”
Another cause for the low number of engineers is poor quality of education says the RAE. Due to poor funding, engineering institutions and colleges in sub-Saharan Africa generally lack laboratory resources and highly qualified teaching professionals. Those individuals who do become highly qualified tend to leave their homes for job opportunities in the West as they pay far better.
A new and much more pressing explanation for the lack of skilled engineers lies in foreign investment. Many companies who invest in Africa use their own foreign engineers for building and infrastructure needs. Because of inadequate laws in place, these companies are never required to pass on their knowledge and expertise to local interests and individuals. Instead, the RAE says that this reliance on foreign engineering enables “capital flight and a reduction in employment opportunities” for Africans.
In addition, there is very poor oversight when it comes to the work of these foreign engineers. One only needs to take a look at the environmental devastation caused by the oil company Shell in the Niger Delta. In 2010, Newsweek reported that between 9 and 13 million barrels of oil had been spilled into the delta since 1958. By some accounts this is a very conservative estimate with other sources saying it could be as much as 100 million barrels. Thanks to poor government oversight, little has been done to stop this plague of destruction, which has decimated the water, rain forest, and health of the surrounding lands inhabitants.
It is important for African leaders to understand that foreign investment may be useful in helping your society grow, but an over-reliance on the private sector can damage the long-term outlook of the whole continent. Therefore, the RAE believes that the African engineering sector must develop strategies that use that investment, and the presence of foreign professionals, to build domestic capacity and reduce reliance in the long term.
In general, Africa must make improving infrastructure an integral part of its economic development. As the RAE aptly states, “there is a widespread need for greater recognition that the benefits of investing in physical infrastructure extend beyond the built assets and the services delivered, and include the socio-economic benefits associated with building and maintaining those assets.”
Better infrastructure will lead to economic growth on an individual scale as well as improved opportunities, for transport, education, and long-term employment. Now is the time for leaders to realize that their continent’s long-term health and success is dependent on the need to educate and employ its own citizens. Give a man a fish and he eats for a day. Teach a man to fish and he eats for a lifetime.