The World Economic Forum spoke to over 500 companies from around the world May 4-6, 2011 about Africa’s huge economic growth potential.
The forum opened with a call for Africa to rethink its global role. “You can no longer talk about the old Africa,” said South African President Jacob G. Zuma. “We need to develop very urgently partnerships that are different from the past, relationships that benefit Africa more.”
For a part of the world that has the richest resources in regards to gems and minerals, it’s about time. Platinum, vanadium, nickel, and chromium – crucial to many electronics – occur naturally in this vast continent. Forty percent of the entire planet’s diamond reserves are in Africa. Uranium, gold (half of the world’s gold reserves are in South Africa alone), cobalt, iron, and oil reserves are in abundance as well (1).
And then the people: there are over a billion people across the continent of Africa. South African President Jacob G. Zuma said at the Forum that “If Africa is one of the fastest-growing regions and has a billion people, then we need to think differently about how we interact with the world. We also need to consider how we interact among ourselves. We need to develop a common approach to the problems of the continent (2).”
Someone is beginning to harvest the potential Africa has to offer, but it isn’t the developed nations – it’s the up and coming nations like China and India.
China has “established special trade and cooperation zones that can be used to boost the local economy and create jobs. China encourages Chinese companies to invest in the manufacturing industry and to work hand in hand with African partners in joint ventures. This form of engagement is a win-win situation for both sides (3).”
These South-South relations are key to growth in Africa.
Regarding Tanzania, former UN Secretary General Kofi Annan, who chairs the Alliance for a Green Revolution in Africa, said, ““The innovative partnerships that we have created address one particular problem we face – how to transform Tanzanian agriculture, which is predominantly subsistence and marked by low productivity.”
“Our vision is not just to help farmers to feed themselves,” he continued, “but also to feed the markets so Africa can become part of the global food security system. This is not a pipe dream.”
Governments cannot do everything, he added. “That mindset has to change.”
According to the Session Summaries from the World Economic Forum, there are four key points to take into account:
• Investors increasingly show interest in Africa and there are great opportunities for investment in value-added commodities, as well as in the agriculture and manufacturing sectors.
• Against the popular perception of Africa being exploited by resource-hungry China, South-South collaboration is beneficiary to both sides. China and India are both engaging notably in the continent’s development.
• African countries can particularly benefit from such collaboration by encouraging the transfer of technologies.
• With the growth of emerging economies, the governance system may change significantly (4).
While all of this information seems to bring great hope for Africa, it will only do if the investors and companies work ethically with the African people. So many countries on this continent have suffered at the hands of the IMF and World Bank, but also because of greedy corporations that strip the country of their assets and do not give back to the country’s people.
Fortunately, Africans are investing in Africa as well. Africa’s middle class, 60,000 in 2000, will have doubled by 2014. A larger middle class means more consumers. One of the challenges will be for Africa to build their own brands, including within the luxury segment of the market.
Another challenge is the health of the African population. According to one session called “Healthy People, Healthy Business”, companies that offer health incentives will have a significant market edge, as they will be seen as doing well financially and doing good socially. For example, Anglo-American South Africa has one of the largest HIV/AIDS workplace prevention programs and was one of the first businesses to provide Anti-retroviral Therapy to it’s employees.
“We can’t continue to make profits if there are people around us dying from HIV/AIDS and malaria,” said Precious Moloi-Motsepe of Africa Fashion International.
References:
[1] Africa – Minerals and Resources. http://science.jrank.org/pages/115/Africa-Minerals-resources.html”>Africa – Minerals And Resources
[2] World Economic Forum. News Release: South African President Zuma: Fast-Growing Africa Must Rethink It’s Global Role. May 2011. http://www.weforum.org/news/south-african-president-zuma-fast-growing-africa-must-rethink-its-global-role
[3] World Economic Forum. Session Summary; Building South-South Relations. May 2011. http://www.weforum.org/sessions/summary/building-south-south-relations
[4] World Economic Forum. Session Summary; Building South-South Relations. May 2011. http://www.weforum.org/sessions/summary/building-south-south-relations
