Africa crawls as others scramble for her resources

It pleases and pays to be rich. However, when wealth brings more desolation than contentment or prosperity, the endowment becomes a curse.

And this for decades has been Africa’s story – a place of abundant minerals and arable land transfixed with a sea of poor people. Plundered by colonialists and pillaged by their native post-independence successors as well as ravaged by wars, a continent gifted by nature found itself hostage to destruction by greedy men, and rarely women.

An avalanche of diseases, including HIV/Aids; mass illiteracy and poverty made an already bad situation more pathetic.

The continent was ripe for, or at least appeared deserving, of mercy. Western powers feigned ignorance of their own culpability and showed up with aid – as humanitarians - filling bowls from the continent’s begging leaders.

That created a dependency syndrome; that Africa could not solve its own problems until, and unless, a compassionate West intervened.

Foreign aid that was scarcely applied to develop infrastructure to generate wealth helped incumbent presidents, oiled with a stream of gun supplies from the West or East, bribe or coerce opponents and brutalise its own citizens. The big men resisted political and legislative reforms necessary to attract investment and trade because aid covered the resource gap and converted the West as their de facto constituency.

Now all is changing for the better – or at least there are indications to that effect.

A briefing book Oxford Analytica, a global analysis and advisory firm, specially prepared for The Times CEO Africa Summit held in London last Monday (March 19), identifies Africa as the most lucrative investment frontier, its associated high risks notwithstanding.

“Increased foreign investment, a rapidly expanding middle class, a burgeoning population, improving terms of trade, and an accelerating interest in growing its own regional markets is steadily altering Africa’s strategic importance,” according to Oxford Analytica chief executive, Mr Nader Mousavizadeh.

There are about 1 billion people in Africa, which theoretically offers as much demand for the continent’s 54 countries as China enjoys. Yet intra-Africa trade is curtailed by derelict transportation and communication infrastructure as well as polarised politics. Mass consumption, if the 1 billion Africans have the purchasing power, would accelerate industrialisation and in turn buoy job creation – the catch phrase of the political elite.

Income inequality
Yet wide income disparities mean the swelling middle class is not homogenous from Cape Town to Cairo. Millions of Africans live on less than one-and-a-quarter dollars a day (they are chronically poor), and mostly the politically well-connected thrive in business.

Mr Emmanuel Katongole, the chief executive of Quality Chemicals Industries, that among other things manufactures generic Aids drugs, said he teetered with his investment ideas 27 years after leaving college, until “maneuvering” his way to meet President Museveni.

“Young man, are you dreaming?” he told the London summit of Mr Museveni’s response after his briefing. The President was not sure Mr Katongole, who at the time was pursuing some $30m to set up a small manufacturing plant in partnership with some Indians, could prosper in a pharmaceutical business.

He later promised to assist, including offering government guarantees to buy the drugs, on two conditions: Mr Katongole had to ensure the medicines were manufactured according to international standards and priced comparably.

It is then that a hesitant Barclays Bank agreed to loan $17.5m to the local investor who, together with friends, had mobilised $4.5m beside another $5m from the government. His tale tells of how the dearth of capital is the biggest albatross in realising embryonic business ideas.

Political benefactors seek to get a share of investment that they support, corruptly or otherwise, according to some analysts. There is the other risk that a sudden regime change, such as happened in Mali on Thursday, truncates state financing that causes private enterprises to atrophy. Looked another way, no investors would want to put their money where authorities don’t work by the rules and without no guarantee of sustainability in the event of abrupt change in government.

Former UK Prime Minister Tony Blair, while opening The Times summit in London on Monday, said African governments changed 30 times through the ballot since 1991, something that in the two decades before then only happened once. There were only 3 democracies in Sub-Saharan Africa in 1989, but some 23 today.

Thus the debate and reforms in Africa are not just about favourable business projections but also matching political improvement. It establishes the nexus between clean political and economic entreprise.

Yet the continent’s past poor performance tends, according to Oxford Analytica, to obscure the significance of these positive changes taking place.

Mr Blair pinned it on bad leadership. He said: “The reality is that the biggest obstacle to Africa’s development is governance. And in the modern world, it is the one thing that unlike capital or technology simply can’t be imported.”

Africa’s tale
The Rupert Murdoch-owned The Times, according to its editor James Harding, wants to tell the world Africa’s story as it is - a land of opportunities with highest returns on investment than any part of the world. Labour is cheap on the continent, markets are expanding with booming middle class and technological transfer/adaptation has found home to spur domestic progress.

Mr Murdoch may be eying to invest in Africa – he already has strong economic foot prints in the US, UK and China – but his newspaper seems to execute the work African governments, and their oversees embassies, should be doing – that of organing a business summit to court foreign investors and expose them to lucrative investment opportunities here.

The paradox is that African Presidents and business executives, like the anti-colonialism strugglists before them did, fly to London where they tell, or are told, of growth potential on the continent - with no prospective entrepreneur able to see it firsthand.

And Africa is not homogenous. The stellar story of Rwanda economic revival from the mayhem of pogrom is undercut by a coup d’état announced by a mere military Captain in West Africa’s Mali. Sporadic xenophobic attacks make economic giant South Africa seem wobbly while its cousin Nigeria, Africa’s most populous nation, is grappling with the nightmare of Boko Haram extremist group and graft.

In Uganda, bloody street clashes between police and protestors since the disputed February 2011 vote show the weakening hand of President Museveni, in power for 26 years. The social unrests scare investors and tourists, starving the country of foreign exchange, at a time it is emerging as a likely leading oil exporter on the continent.

Kenya may have recovered from its 2007/8 election debacle rather quickly, but public altercations between President Mwai Kibaki and Prime Minister Raila Odinga, the principals forced by the Kofi Annan team into a coalition government, about the next election date sets the country as another political accident waiting to happen. That will, as it did four years ago, have dire economic ramifications for inland countries.

Worse, construction of the $200m African Union headquarters in Addis Ababa was financed by China which, like the West, itself is hungry for the continent’s raw materials. The rivalry between the West and China raises a new quandary for African governments, and its people.

Former Nigerian President Olusegun Obasanjo thinks the continent must benefit from either side, without foreign-engineered encumbrances. Because the struggle is over resources, nationalism over particularly the extractive industry is growing; giving head ache to leaders as citizens demand not just transparency but also their share.

Zimbabwean Prime Minister Morgan Richard Tsvangirai, convinced Africa is the land of opportunity, said: “Our problem has been that of big conglomerates, from both east and west, cutting deals with corrupt governments and cutting away profits and unprocessed raw materials to the detriment of our countries and our people’s quest for decent life.”

Thus governments and prospective investors will therefore have to behave. Otherwise, unhappy citizens could target to remove both.

UK thoughts
But the UK government has some ideas. Mr Henry Bellingham, the Parliamentary under-secretary of State in the Foreign & Commonwealth Office, said their new approach is to ensure diplomacy targets commercial dividends.

London will through its diplomatic representations the world over accelerate trade as a priority because UK’s recovery will have to be export-led.

“The message is loud and clear to our embassies that however small a company is, whatever sector, it’s not too small for our ambassador or High Commissioner or the commercial people at the embassy to take a real interest in [it],” he told the conference at the Savoy Hotel in central London.

After the foreign firms come and invest or extract resources they want, the bigger question would remain: What’s in it for Africa?

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