Sunday, July 14, 2024

The west should not miss the Africa opportunity


Preconceived ideas and inadequate analysis prevent investment into the continent

With its new strategy in Africa, the US is calling into question the financial aid it grants to countries across the continent. International assistance may remain important to some countries. However, it is through investment that Africa’s development and prosperity will be guaranteed.
Yet in this field too, the US seems to be taking a back seat; quite the paradox, given that it also deplores the fact that Africa seeks such investments from those who treat us as legitimate business partners, such as China.
Located between Asia, Europe and the Americas, Africa is at the centre of international trade. More than a mere geographical fact, day after day our continent acquires more and more means to contribute to wider global growth.
Before becoming a great economic power, China was tipped as a future giant in large part thanks to its human capital. By 2050, Africa will be home to 2.4bn inhabitants – a quarter of the world’s population – of whom 1bn will be under the age of 18. In Africa, just as in China, human capital is a major asset. Regardless, we must continue to improve the prospects for our young people, who all too often search for opportunities elsewhere.
Customs barriers are holding back Africa’s market potential and that is why the continent is undertaking the construction of the world’s largest free trade zone by 2030. Once implemented, it will unite up to 55 states with a combined gross domestic product of $3.3tn. It will take Africa only 14 years to forge what has taken other continents decades.
Denis Mukwege issued a forceful reminder when he was awarded the Nobel Peace Prize: African countries are among the richest on the planet, but their people are among the poorest in the world.
By doing little more than exporting its raw materials, Africa forfeits any chance of creating jobs and wealth. This situation is in the process of changing; African economic growth is being driven by the demand of the continent’s growing middle class. The continent is industrialising and now intends to transform and add value to the goods it exports.
The latest international rankings offer encouraging signs. Djibouti leapt 55 places in one year in the World Bank’s 2018 Doing Business rankings and was as one of the top 10 most improved economies for ease of doing business. Ethiopia proudly boasts double-digit growth and we should all celebrate recent political developments in the Horn of Africa.
We could go on: the inaugurations of several ports respond to growing demand in east Africa; railway networks are expanding at high speed in Morocco, Nigeria and in the Horn of Africa; and sub-Saharan economic growth is expected to reach 3.8 per cent in 2019.
However, rather than spurring hope and confidence, our continent continues to evoke uncertainty and scepticism due often to preconceived ideas or inadequate analysis.
The most commonly expressed concerns are related to debt. By becoming too indebted with certain creditors, mainly China, African countries are mortgaging their future sovereignty.
First, we note that those who once exercised their own power over our continent today appear to worry for our sovereignty. Their concerns fail to conceal their true motives. Some would argue that loss of influence is the real worry of those who persist in seeing the continent through the prism of the past.
That being said, debt is calculated on the basis of an assessment of a nation’s wealth. Many have put ambitious policies in place in order to regulate the informal economy that has, until now, not contributed to income taxes. Djibouti’s true GDP is $6bn, with an informal economy estimated at $4bn. As such, debts are based on figures that do not represent the reality of our economies.
Regardless, many African nations are experiencing remarkable growth rates, with Rwanda at 8 per cent, Ethiopia at 11 per cent and Côte d’Ivoire at 7.2 per cent. Other countries on the continent will soon be in the same boat. On a practical level, this means that our nations are becoming richer, which ultimately strengthens their ability to pay off their debt.
The challenge is thus to ensure that such growth is sustainable and that Africa firmly integrates into the globalised world. To do so, the continent must prioritise addressing its infrastructure gap. New forecasts from the African Development Bank suggest that the continent’s infrastructure needs to equate to approximately $150bn a year, with a funding deficit in the region of $68bn to $108bn. These investments will benefit the entire planet by strengthening Africa’s role as a natural bridge between continents and accelerating international trade.
Who today is ready to invest in Africa? In Djibouti, we are not closing any doors and have made respect for our sovereignty our guiding principle. We have recently inaugurated some of the most modern ports in Africa, the continent’s first transnational electric train and a free zone that could become the largest on the continent. These developments must be seen for what they truly are: not opportunities missed but possibilities created.

Aboubaker Omar Hadi is chairman of the Djibouti Ports and Free Zones Authority

Aboubaker Omar Hadi

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