PANAPRESS
Panafrican News Agency
Debunk myths about Africa's potential, say WEF participants
Addis Ababa, Ethiopia (PANA) - Africa cannot continue to be marketed as a country, when it is a continent of 54 countries, which, by 2040 will have the largest workforce in the world, the Executive Secretary of the Economic Commission for Africa, Carlos Lopes, has told a session of the World Economic Forum (WEF) on Africa in Cape Town, South Africa.
Since by 2040 Africa will be more urbanised‚ connected and educated, Lopes said: “It will be a very different picture from what is now."
Discussions at the Forum underscored that perceptions on risks and uncertainties with respect to investing in Africa have been made to look like reality.
“While some issues may be real, there are many advancements that bust perceptions of corruption, lack of growth and lack of capacity, among others,'' Lopes pointed out.
The session underscored that Africa has a growing middle class. With increased incomes, the emerging picture shows a continent where two-thirds of its growth comes from consumption; as a result, Lagos has a much bigger purchasing power than Mumbai.
“Africa has twice as much per capita than India, more cell phones than India, less poor people than India, and we can go on and on! The mega trends are in favour of Africa,” Lopes stressed.
But for the continent to reap the demographic dividends, it must address the question of infrastructure, which is necessary for industrialisation and for bringing the rural areas to the global market.
In this regard, a significant amount of money is needed to realise the Programme for Infrastructure Development in Africa (PIDA) and since markets do not invest in these kinds of projects, the session underlined the need for alternative sources of funding.
According to some Forum participants, the good news is that money exists in Africa, but a shift in mindset is needed to tap into the half a trillion dollars sitting in African central banks as reserves. PIDA projects, they noted, could be broken into ‘short-range projects’, all aimed at a long-term goal.
The session also addressed the perception that Africa is lacking in skilled personnel and underscored that Africa has been on the cutting edge of innovations. However, branding and marketing of these innovations fail beyond the borders.
“Many African economies are run by informal sector, where banks do not come to the party and so the entrepreneurs in these informal sectors do not grow,” said a participant, stressing that the myth that must be busted is that these informal entrepreneurs cannot grow into big business with appropriate financing.
The session acknowledged, however, that the lack of depth in the capital markets is real and it limits the possibilities for innovations to grow.
On the question of “corrupt African leaders”, the session acknowledged that the weakness lies in the capacity to investigate and get convictions, as well as lack of consistency and leadership.
Participants highlighted that the lack of a strategic vision made corruption lead the narrative and countries like Malaysia, Indonesia have been able to project their narratives on their strategic visions and less on corruption.
The need for consistency in regulatory frameworks and policy was stressed, “as it reduces the meddling of government in areas where the private sector is meant to play”.
In addition, it was felt that consistency across administrations is also important to ensure that investors play fairly.
“Investors do not always like regulations,” said a participant, highlighting that the commodity boom super cycle led to an increase in profits by mining companies “by at least 200 percent, yet tax revenues in the affected countries increasing by only 30 percent.”
Further, the perception that '54 countries constitute one country where there are no positive stories to be told’ could be attributed to failure by the media and the lack of attention to marketing by African governments.
But a key issue that emerged was the persistence of information gaps, created by the lack of country assessments.
In addition, the Forum participants wondered whether those doing business in Africa might be contributing to the myths. Doing so, they said, creates entry barriers for potential competitors, and keeps resident players laughing all the way to the bank with premium returns.
-0- PANA AR/VAO 11May2013
Since by 2040 Africa will be more urbanised‚ connected and educated, Lopes said: “It will be a very different picture from what is now."
Discussions at the Forum underscored that perceptions on risks and uncertainties with respect to investing in Africa have been made to look like reality.
“While some issues may be real, there are many advancements that bust perceptions of corruption, lack of growth and lack of capacity, among others,'' Lopes pointed out.
The session underscored that Africa has a growing middle class. With increased incomes, the emerging picture shows a continent where two-thirds of its growth comes from consumption; as a result, Lagos has a much bigger purchasing power than Mumbai.
“Africa has twice as much per capita than India, more cell phones than India, less poor people than India, and we can go on and on! The mega trends are in favour of Africa,” Lopes stressed.
But for the continent to reap the demographic dividends, it must address the question of infrastructure, which is necessary for industrialisation and for bringing the rural areas to the global market.
In this regard, a significant amount of money is needed to realise the Programme for Infrastructure Development in Africa (PIDA) and since markets do not invest in these kinds of projects, the session underlined the need for alternative sources of funding.
According to some Forum participants, the good news is that money exists in Africa, but a shift in mindset is needed to tap into the half a trillion dollars sitting in African central banks as reserves. PIDA projects, they noted, could be broken into ‘short-range projects’, all aimed at a long-term goal.
The session also addressed the perception that Africa is lacking in skilled personnel and underscored that Africa has been on the cutting edge of innovations. However, branding and marketing of these innovations fail beyond the borders.
“Many African economies are run by informal sector, where banks do not come to the party and so the entrepreneurs in these informal sectors do not grow,” said a participant, stressing that the myth that must be busted is that these informal entrepreneurs cannot grow into big business with appropriate financing.
The session acknowledged, however, that the lack of depth in the capital markets is real and it limits the possibilities for innovations to grow.
On the question of “corrupt African leaders”, the session acknowledged that the weakness lies in the capacity to investigate and get convictions, as well as lack of consistency and leadership.
Participants highlighted that the lack of a strategic vision made corruption lead the narrative and countries like Malaysia, Indonesia have been able to project their narratives on their strategic visions and less on corruption.
The need for consistency in regulatory frameworks and policy was stressed, “as it reduces the meddling of government in areas where the private sector is meant to play”.
In addition, it was felt that consistency across administrations is also important to ensure that investors play fairly.
“Investors do not always like regulations,” said a participant, highlighting that the commodity boom super cycle led to an increase in profits by mining companies “by at least 200 percent, yet tax revenues in the affected countries increasing by only 30 percent.”
Further, the perception that '54 countries constitute one country where there are no positive stories to be told’ could be attributed to failure by the media and the lack of attention to marketing by African governments.
But a key issue that emerged was the persistence of information gaps, created by the lack of country assessments.
In addition, the Forum participants wondered whether those doing business in Africa might be contributing to the myths. Doing so, they said, creates entry barriers for potential competitors, and keeps resident players laughing all the way to the bank with premium returns.
-0- PANA AR/VAO 11May2013
