Who is Driving Africa’s Growth?

Africa Growth
Africa's growth have outpaced the rest of the world

On May 29, SOAS hosted its inaugural African Development Forum, organised by a group of postgraduate students in the development department. The theme was ‘Africa: Driving Its Own Growth’ and an impressive array of speakers explored this theme from both business and academic perspectives.

Many have highlighted and celebrated Africa’s economic growth, which, over the last few years, has countered pessimism about the persistence of poverty and insecurity in many regions. ‘Afro-optimism’ has been bubbling away for some time as growth rates in many African countries have soared, particularly those of Angola (11.1%), Nigeria (8.9%) and Ethiopia (8.4%), putting them in the world’s top ten fastest-growing economies in 2010.

But the aim of the conference was go beyond optimistic data trends and discuss whether or not Africa is really driving growth itself – particularly given the current popularity of debates on Foreign Direct Investment and Western aid.

Growth vs. development

Gibril Faal, chairman of the African Foundation for Development (AFFORD) and the founder of RemitAid, was the keynote speaker and argued that the real question is whether this bout of economic growth is a momentary flash in the pan or whether it has a strong foundation to leave an enduring legacy. As the founder of RemitAid, a programme advocating tax relief for diaspora remittances – it was understandable that he would refer to the African diaspora, and how their investment in the continent can substantially shape fiscal futures. But this perhaps undercut the idea of the conference somewhat as diaspora are still technically outside investors. Diaspora aside, the issue remains over whether ‘building Africa’ can come from within, without having to rely on outward migration and the reinvestment of global communities.

There is also contention around Africa’s recent economic growth and its actual benefits to the broader population. Increasingly, economists are referring to “jobless” growth on the continent as fiscal and economic increases are being made largely in narrow, highly corporate areas that provide little extra employment.

Related to this, the first panel discussion explored “Unique Sectors Driving Economic Growth in Africa”, with representatives from the oil industry, agribusiness, private equity and business development. The speakers essentially explored the optimism from the perspective of each of their sectors, showing how plenty of money and technological skills are flowing into Africa in a variety of guises. But there was not an attempt at this stage to make the connection to a simple truth that economic growth and development are not synonymous, and that development is not the key mission of private interest on the continent.

When I asked Rosalind Kainyah, Vice President of External Affairs and Corporate Social Responsibility at Tullow Oil, how her company felt about upcoming transparency legislation which is being debated by the European Union, I was directed to Tullow Oil’s website, which purportedly proves a commitment to human rights and will publish details of transactions with governments only when given explicit permission, as Tullow Oil does not want to act unilaterally. (The EU legislation would make it compulsory to publish what oil and other extractive companies pay to governments.)

This was a standard corporate response, but not an adequate answer. A general “commitment” to measures such as transparency is not enough for a company such as Tullow Oil, which has been embroiled in tax disputes with the Ugandan government in particular and has come under much criticism for fuelling corruption at a governmental level. Firms like Tullow Oil may be fuelling the sort of high level growth that looks great on a graph, but will never manage to tangibly change African societies because it will simply never reach them.

Business and development

Inadvertently, the conference made a key point about how business and development interact. Essentially, they don’t. While the first panel was made up of professionals and those working in the private sector, the second panel was formed largely of academics, apart from Ade Ajayi, a Managing Partner at St Marks Capital. Ajayi made an arresting argument that the private sector should be more tied to a sustainable approach, ensuring that current economic growth meets the needs of the present generation without compromising those of the future. Further speakers on this panel were also willing to admit that this growth needs to diversify and be more inclusive, as it is dangerously far from trickling down to ordinary people. Despite issues such as climate change being referred to vaguely as “opportunities” from a speaker on the first panel, when growth booms are not harnessed and used to fuel infrastructure and longer-term investments in Africa’s people, such as in education, resource-based growth looks great on paper but will not significantly help development.

This was a stimulating first conference and an event that should continue annually, but it would have been nice to see the private-sector professionals interact more with the academic speakers, whose vision of ‘growth’ was more akin to that of development studies students.

Is Africa driving its own growth? At the moment, not entirely, and the current economic growth could be fairly hollow. The optimism of flourishing businesses and capital will only become entrenched and leave a sustainable legacy, as Faal suggested, when it is more closely grounded in with things such as commitments to transparency, the building of infrastructure and employment of African workers.