Thursday, 20 June 2013
Will The Boom Of African Economies Be Real Or Sustainable?
Writing recently for the CNN edition, Charles Robertson, Global Chief Economist, for Renaissance Global Capital which have offices in Lagos, Nigeria, Lusaka in Zambia, Johannesburg in South Africa; Accra, Ghana, Nairobi in Kenya, and Harare in Zimbabwe, outside their offices across US and Europe, including a head office in London, predicted a phenomenal growth in African economies, and suggesting that African economy might be the super power of the world beating US and Japan in the next two or three decades.
Mr. Robertson went further in that edition titled: “GET READY FOR AN AFRICAN BOOM,” to state “Nearly a trillion dollars of oil revenue every three years means unprecedented inflows of foreign exchange to fund imports of investment and consumption goods. Rapid economic growth means growing African demand for resources. Do not be surprised if Nigerian steel consumption rises from 1.6 million tons annually today to 115 million tons annually by 2050. African motor vehicle sales of 8 million by 2020 may reach 14 million by 2030, higher than the U.S. today. Who knows – someday you may find yourself driving a Nigerian auto and dialing hands free on a Tanzanian-made phone. It has all happened before”:
Realistically speaking do you foresee an African, and particularly a Nigerian boom in the next two to three decades? Would Nigeria, or Kenya, or even the better managed Ghana be able to produce cars and vehicles for the industrialized western economies in the next thirty years or so? I personally can't see that happening. My reasons for doubting Mr Robertson’s predictions or rather false expectation are as follows:
• The educational and training framework are still too weak and poor standards of graduates are been churned out by the hundreds of universities and high schools;
• The institutions of states in Africa, and particularly Nigeria are either non-existent or too weak to function without executive corruptive influence;
• The technological base to spring an economic boom is not there and neither is the foundation for these been laid in the immediate future to propel a boom in the next 20 or 30 years;
• A very weak or non-existent infrastructural base to start the economic and industrial revolution predicted;
• Dependence exclusively on primary products/commodities, non-value added exports, instead of manufactured or processed agricultural and value-added mineral resources. Tell which steel plant is working in Nigeria today and apart from South Africa and a few North African countries (outside Sub-Saharan) none can manufacture pure steel products;
• Unemployment levels is too high that idle hands, including graduates of high schools are wasting away at their prime and nothing is been done to stem this malady;
• A very deficient, if not defective legal and administrative systems, particularly in Nigeria and similar countries where justice goes to the highest bidders and the ineffectiveness of contract laws application.
• Corruption and abuse of power by African dictators and quasi-dictators who even when they profess democracy always manipulate elections to favour themselves or their chosen agents therefore denying the people the chance to elect their governments based on merit and acceptable programmes and policies;
• Uncontrolled and spiraling population growth in Africa, and the inability of African countries, including Nigeria, to do a proper census of its population, for proper planning and income redistribution, other than for politics.
Yes there may be a few economic growth indices, like rising GDPs and huge earning from exports of primary products, mainly due to competition to get oil and similar primary products by the Western economies and China, but because of corruption, wastages and mal-administration more of these earnings are cornered by a few political elites and the Revenue boards are hopelessly ineffective in using taxes to redistribute income and the lack of social security systems makes these income inequality even more devastating.
No doubt there will be growth in GDPs and GNPs but the standard of living and well being of the majority of Africans will remain in the doldrums in the foreseeable future as the leaders don’t seem to care about the welfare of the majority of the people struggling in the face of all odds to earn the equivalent of $2 (US dollars ) a day. The inequality gap will widen so much that a very elitist group- mainly the political class and a handful of connected private entrepreneurs, acting mainly as fronts for the political class will have enormous untaxed incomes beyond what they require
Charles Robertson can only say what he feels and I wish he got it right, especially for the interest of the long suffering majority of Africans, but I do doubt his analysis that a boom is in the offing for Africa or a country like Nigeria. The foundations are just not there at the moment for a lasting sustainable growth!
The views expressed in this article are the author’s and do not necessarily reflect the editorial policy of SaharaReporters