Africa’s Triple Challenges

Posted by on Nov 6, 2013

Africa’s Triple Challenges

Nowadays Africa is the darling of the global investment community. Report after report highlights the impressive actual growth and the promising prospects for the continent’s economic performance over the medium to long term. The so-called “dark continent” has transmuted into the “bright continent”. And, that is most welcome. However, for these sentiments and opportunities to be converted to sustainable socio-economic developmental momentum a number of key issues need clear recognition and effective solutions. Three of them loom large in this context.


First and foremost, it is critical to recognize that there is a difference between the requirements of the short and medium term economic performance and those of the long term sustainable development. It is a fact that most African economies are growing from a low base at high annual rates. This is because at the early stages of growth, opportunities for investment are plenty and capital flows are insensitive to the critical role of economies of scale. However, when these short term- the so-called “low hanging fruits”- are exhausted, capital flows increasingly respond to market size, economies of scale in production, and the comparative advantages arising from well-designed and integrated infrastructural logistics- something that more often than not requires a great deal of transnational coordination and operation. In this regard Africa is way behind. Neither its political nor its institutional structures have moved far beyond the colonial mindset! The historic fact of Africa is that the colonial past left the continent with too many sub-optimal independent territories, most of whom lack the absolute or relative economies of scale.  On top of it blind nationalism and even raw tribalism are still excessively prevalent on the continent. Yet, many countries are way too small a market to generate internal sustainable growth momentum for the medium to long term. In a world where increasingly global competitiveness matters, this is a real challenge that Africa has to overcome- and need to do so urgently. Even if political boundaries are kept, agreements have to be reached to facilitate investment and industrialization policies that are based on solid regional integration platforms.


Second, and related to the above, is the need for industrialization across a set of industries where Africa, and sub-regions of the continent, have sustainable or dynamic comparative advantages. Once again, for such a strategy to be successful, economies of scale are vital. Strategically, the global factors are in favour of Africa’s industrialization. The continent’s resource base in some key sectors is rich, global capital markets are awash with “cheap capital”, and the required technologies are easily accessible. Examples in this regard include mining equipment industries, the petrochemical complex, food and agriculture industries, and clean energy generation. This favourable structural configuration is only the necessary condition. The sufficient condition, however, is to put in place the required long term framework that creates ample and evident economies of scale for investments in transnational logistics, market access, human resource development and capital market institutions that guarantee the medium to long term developmental sustainability. Importantly, Africa cannot replicate the industrialization templates of Europe, US, Japan or South-East Asia. The dynamics and requirements of industrialization differ at different times for different regions. In this context, the national policies within Africa are unlikely to succeed unless and until they are integrated into the continental or sub-continental industrialization strategies.

The third, and most important, challenge is related to human resources development, with focus on the youths. It is a fact that Africa has one of the youngest demographic structures at present. Global projections indicate that for the next four to five decades, African demographics will be dominated by the younger cohorts. This is potentially a valuable developmental resource and at the same time a fatal risk if not appropriately developed. To this end, not only the national but also consistent continental and sub-continental human resource development strategies are needed. Furthermore, attention has to be paid not only to the “technical training” of the youths, but also focused and sustained emphasis is needed for the moral and ethical education of Africa’s youths. It is a sad reality that both colonial and  post-colonial socio-political periods have show-cased socio-cultural milieus that have not be conducive to the promotion of the culture of clean governance, productivity, work ethics, self actualization and socio-economic probity. Africa’s long term prosperity will be stillborn if this developmental factor is left to chance.