26 March 2014

Africa: Top Africa Think-Tank Pushes Reform - ECA's Carlos Lopes

Photo: Mohamed Amin Jibril/IRIN
View over a section of Bakara market, Mogadishu.

The United Nations Economic Commission for Africa (ECA) drives Africa's political and economic agenda, along with the African Union – the 54-member organization of African nations, and the African Development Bank, a multilateral lending agency whose members include both African and non-African nations. Perhaps the least known of the three institutions, the ECA is one of five regional bodies in the United Nations system. Carlos Lopes, who is from Guinea Bissau, was appointed ECA's executive secretary in September 2013 after holding senior posts at the United Nations Development Program and in the Executive Office of the UN Secretary-General. He has a PhD in history from the University of Paris 1 Panthéon-Sorbonne. In this conversation with AllAfrica's Reed Kramer and Juanita Williams, he discusses ECA's obligations to tackle Africa's major development challenges.


A Think Tank for Transformation

My main objective is to introduce the transformative aspects of the African narrative to the center of the policy debate. A number of people claim to be helping Africa's structural transformation. But the way I see it, the ECA's role as a think tank should be to provide the reality check for the transformational agenda – something that can be measured with real decisions.

Most of our growth in Africa is propelled by internal consumption - construction, the middle-class moving into new patterns of income consumption and so on, and this not going to be the quality growth we need. What is very worrying is that the industrial and manufacturing sector is going down rather than up, which means that Africa is not getting the modern jobs it requires. Our natural resources are still going – raw – outside Africa, so we are exporting jobs. We have the lowest agricultural productivity. We need the continental agenda to reflect these types of preoccupations and these types of narratives.

The transformative agenda is to convince African leadership that we need to completely change the way we are approaching fundamental challenges of development. We are very encouraged by the number of leaders that are 'getting it'. But we need many more. ECA has a unique role to play, with the African Union and the African Development Bank, as the provider of policy research. Africans are not really defending their best interests. They are still in a framework of discussion that is passive.

Take natural resources, an area where Africa has been keen on putting together important policy frameworks - one for agriculture, one for mining - very progressive. They are very much what you'd expect in terms of Africa being much more in control of its natural resources. The problem has been implementation. This is what everybody will tell you.

Grounded in Data

Why is it that we have so many problems of implementation?

First, because we don't have measurable targets for any of these areas – for example, mining. We want to change the practice of mispricing, which is responsible for us losing about $20 billion a year. How do we put in place the mechanisms that will allow us, first, to check what is going on, and, second, to introduce the regulatory systems that will change the rules of engagement, and, third, to have contract negotiations that take into account the best lessons learned? This is possible if we transform the African Mining Vision from a vision to a number of practical steps that each country will have to follow.

Mispricing is very easy to check. If you compare the market prices to what you are being paid, you already have a first line of calculation. But even more, if you have a bit of contractual savviness - which you don't need to possess yourself, you can contract out - you will be able to negotiate in completely different circumstances.

You can say the same about land and land grabbing. In most countries where land is being acquired by private companies, there's an absence of legislation, absence of regulatory systems and also the absence of giving economic value to land. It's still being treated as either political or social, but not economical.

We want to transform the legal requirements for negotiating Coltan in the Great Lakes. We want to make sure that Mauritania doesn't suffer from the fisheries contracts that they are signing with Europe.

ECA can really improve the level of discussion by making sure that Africans approach these issues with much more data and much more quality information. It's not just statistics. It's also the knowledge base around these issues. It's more grounded and more concrete. And I think we are moving into an ECA that is more practical in terms of policy recommendations and doesn't do research just for advocacy. It does research for transformation.

Inside-Out Change

It is always a challenge when you introduce change. Because of the 'Africa rising' narrative, the capacity to stand and be self-confident and face the partner or counterparts has increased significantly. But it is one thing for you to have determination to get the better deal and quite another to have the information to get the better deal. This is where we want to fill the void.

We have patterns of growth that have been already witnessed in Latin America, in particular, where you have growth for a certain period of time - but growth without jobs, producing inequality and poverty. Because of the acceleration of urbanization, this poverty is going to have contours that are different from before. Most people are going to live in slums. The slums tend to polarize even further the social equation. Therefore, you create conflicts, you create all kinds of situations. that will be very difficult to manage.

The opposite approach - and this has happened some places in Asia - is what is termed a managed demographic dividend. You invest in education, You invest in certain elements that are going to raise the quality of your human capital. As a result, you may grow in the first years not as fast, but you are creating the ingredients that will make transformation. In some countries in Africa, you see very much the Latin America growth model, but you don't see much of the Asian model yet. Because we are going to witness the highest growth rates ever experienced, we have to do everything that others did well - but even faster.

We have one element in our favor - growth is there. We doubled our GDP in about a decade. That's about the rate of growth of China. In Europe, not a single country has grown at that rate in any time in their history. So this is quite unprecedented, and it's good news. But the investment Asians did on human capital was phenomenal.

We need quality growth in order to make it socially sustainable. Otherwise the consequences are going to be quite damaging. You look into the condition of education in Africa or maternal and child mortality and this is appalling. There is a cost, a human cost and an opportunity cost. The definition of human development is increasing opportunities for all, and this is not what is happening.

Agricultural Is Fundamental

To transform agriculture, we need a completely different state intervention than we have now in most countries. The transformation in the agricultural sector in Nigeria is quite amazing, thanks to some of the leaders, including the current Minister of Agriculture [Akin Adesina]. It's all about transferring huge amounts that you spent on subsidies - that had basically been used by middlemen for corruption - into real ingredients for increasing productivity. It's not rocket science. Agricultural yields are five times higher in Kenya than they are in Ghana. Ghana has human capital that is superior to Kenya. So we can learn from other African examples.

Agriculture is fundamental for transformation in general, and, I would also say, it's fundamental for industrialization. Often when we think about industrialization, we think about producing cars. The kind of industrialization that Africa requires is very different from the import-substitution model in Latin America and Asia's export-oriented approach.

We have to produce industrialization that is basically anchored in three big developments.

One is industrialization that takes the low-end value chain of production that Asians now want to get rid of because it's too expensive for them. We want it, because it creates a lot of jobs. It's not the best paid. It's not the most shiny, or fashionable, but it is the one that gives us a lot of jobs.

The second anchor is industrialization based on transformation of our commodities, both soft and hard. Of course it's not going to be the same to transform cocoa as to transform uranium. The level of sophistication of economies will have to be taken into account. But we need to do much more of that.

The third anchor is industrialization that takes into account the African market. The African market is going to be a huge market. It's already one billion people, with about 200 million being middle class. Soon it will be two billion with about 350 million middle class. That's a lot of people. If you take into account what this middle-class consumes, you have enormous possibilities for industrial development in Africa.

Breeding Pirates in the Blue Economy

The entire extractive industry in Africa employs about one percent of the labor force. That is nothing. Some people say we still have a colonial model [with] a center of production - normally a rail or a road to the port or to the airport. Nothing is transformed locally.

In the ocean, you can say it's worse than the colonial model. This is stealing, period! What is going on is outrageous! It is very easy now, with certain techniques including geospatial, to know the level of overfishing that is going on. The dumping of toxic waste is also appalling.

We should not be surprised that there are pirates in Somalia, because we killed all of their fish. We should not be surprised that most of the men that know how to navigate the ocean from Senegal turn into providers of transport for boat people. They can't fish anymore. We destroyed their livelihood, and therefore people have to survive through other means. It's kind of a paradox that Europe comes to try to fix piracy and boat people when in fact those are the consequence of the destruction of livelihoods.

The extractive industries have come under the spot. I would not say yet that they are under the spotlight! When it comes to the blue economy, the level of knowledge is much less than it is with extractive industries. African countries are not even fully aware of what incredible potential they have. I think it will require much more investment in understanding the full spectrum of the problems. ECA has made fisheries one of four areas of focus on natural resource management, the other three being mining, agriculture and land, and forestry, another area where we have devastating consequences in terms of practices that we are either promoting by indifference or allowing by contracts.

From Risk Aversion to Boldness

My vision is for ECA to be a good think tank - the best in Africa as measured by the rankings. A think tank is a provider of practical ideas, not just an academic institution that may have very important contributions to make but are not anchored in policy debates and making things happen directly.

Therefore, a think tank has to be measured by its level of influence. Before you get influence, you first have to build trust. And this is measured by the quality of its contribution.

My set of assets is that I have a budget bigger than, say, the Brookings Institution. The number of staff and their qualifications also are very important assets. We have 300 economists. We are in seven cities in Africa, so we cover the continent from different angles. We have a very special relationship with the continental organizations, particularly a Secretariat jointly with the African Union and the African Development Bank for key strategic projects - an incredible asset.

My problems? Number one is the UN bureaucracy that slows me down considerably in many respects. And this is definitely more complicated to navigate than if, say, you were operating out of a university or a trust. The second very important problem that has to be changed is the culture of this institution that is slow moving. You need boldness to be an influential think tank, so how do you move the culture from risk aversion to boldness? It's quite a task. These are some things that we are grappling with, but it is not easy.

Influencing the Influencers

Our target audience, very clearly, are the policymakers on the continent. But we also have to engage the private sector, the bankers, the academics, the media. So it's a very different proposition in terms of outreach than what we used to have.

We have to be targeted, focused, using a lot of infographics. We are trying to reduce the number of products - publications – and for each report we have a summary in three pages. That is what we really expect people to read. Only the specialist will go into the rest. We want to make sure that our websites are well visited. That's the ambition that we have, and a lot of effort has to go into how we communicate.

We want to create a different narrative. 'Africa Rising' - at least from the angle of business magazines and consulting firms - is all about incredible opportunities that exist in Africa. Investors are told: 'Pay attention or you are missing something fantastic.'

We don't like that. Yes, the investment is welcome, but we want a more sophisticated and comprehensive narrative that says: 'There are investment opportunities, and we're not a basket case, definitely. We're making progress, but it is not enough and this is why it's not enough'.

That is the story that we have to write ourselves.

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