14 September 2018

Africa: Making Africa Work

book review

Making Africa Work, by Greg Mills, Jeffrey Herbst, Olusegun Obasanjo and Dickie Davis (editors)

The following fast facts have been revealed in this book: the population of Africa will double to two billion in 2045; by then, more than half of Africans will be living in cities; the young will primarily be connected through mobile devices; more than 40 percent of Africans are still living under the absolute poverty level of $1,90 per day; climate change is affecting food production; manufacturing is suffering because of the export of raw materials rather than beneficiating locally; mining is still big business; services and technology are catching up in parts of Africa; the Chinese are vital to the provision of infrastructure and project finance; and finally, the East Asian model of development before democracy (Singapore, Vietnam and even Dubai) is more suitable for Africa.

The evidence? Rwanda, Botswana, Ethiopia, Ghana, Nigeria, Côte d'Ivoire, Angola, Mozambique, Gabon, the Democratic Republic of Congo, Kenya, Uganda, Zambia, Namibia and Malawi are often referred to.

This book of 317 pages is structured into three parts. Part 1 deals with the state of Africa's people, institutions and structures, with special reference to cities, democracy and development, and infrastructure. Although Africa is poor, the authors say cities are the best path out of poverty, but warn against "the demons of density".

Unfortunately, no attention is paid to Africa's specially designed cities of Dodoma (Tanzania), Abuja (Nigeria), Gaborone (Botswana) and Lilongwe (Malawi). Do they have demons of a better kind?

On democracy and development, the authors prefer the non-African model of East Asia, that is, of development before democracy, as in Singapore. Their nearest African case study to this model is Rwanda. It is a pity, however, that there is no theoretical input here, exactly as writers such as SM Lipset, SP Huntington, Adam Przeworski, Barrington Moore and Nicolas van de Walle have written about.

On Rwanda, parallels are drawn with Singapore's strong leadership, the pivotal role of parastatals and the ease of doing business. However, two longer-term weaknesses that deserved attention are not discussed: one, Rwanda's population density of 420 persons per square kilometre is the highest in Africa and makes for demographic pressures, which, in Africa, have almost always threatened stability whenever land scarcities arise - the demons of density are therefore also rural; and two, Paul Kagame's government in Rwanda is a clear case of Tutsi minority rule, and, as we know, any minority rule - whether in [white] Rhodesia, or [apartheid] South Africa, or centuries of [minority] Amharic rule in imperial Abyssinia/Ethiopia - is democratically unsustainable, and will inevitably make way for majority rule (in Rwanda's case, Hutu rule, as in neighbouring Burundi).

The chapter on infrastructure spells out how poor the conditions in Africa still are, especially those of transportation and access to electricity. Then the authors ask the question of where infrastructural funding comes from. The surprise answers are internal development institutions, then Asian sources (especially Chinese), African development banks, multilateral banks such as the World Bank or IMF, then European, Arabian and American donors, and, lastly, commercial lending from local banks. However, in Part 3, they opt for China's model of swapping African resources for Chinese infrastructural investments in Africa.

Part 2 deals with economic sectors, where agriculture and manufacturing are arguably the weakest.

For example, 40 of the 55 African states are food importers, the most expensive food for urban consumers is in Nigeria and Kenya, and all leading agricultural exports in Africa today are genetically modified organisms (GMO). The authors should tell us whether this is safe or not. Interestingly, 15 African states are cited as net agricultural exporters. Closer scrutiny reveals that, of the top six, only one - South Africa - exports food. The others are exporters of cash crops, such as cocoa, coffee and tobacco (and vulnerable to commodity cycles).

Manufacturing in Africa has suffered: firstly, during colonial times, when raw materials were exported, as beneficiation took place abroad; and secondly, today, as China does the same. No wonder manufacturing represents only 14 percent of the sub-Saharan African GDP.

The book makes a case for services which are about tourism, banking and insurance. Yet, only two countries in Africa receive 40 percent of all tourists today: Morocco and South Africa. South African banking is also by far stronger than the rest of Africa combined, with Kenya top in mobile banking ("M-Pesa"). And, interestingly, the most profitable part of insurance in Africa is revealed as funeral business.

Mining is big business in Africa. This continent is well-endowed with gold, titanium, manganese, cobalt, diamonds, phosphates, coal, chromite and platinum. At the height of the recent commodity boom (in 2012), mining represented 28 percent of the continent's GDP, but has dropped sharply since, with Botswana (diamonds), Zambia (copper) and the Democratic Republic of Congo (copper, cobalt, diamonds, coltan and gold) suffering most.

However, the thrust of this book is Part 3 ("Making Africa Work"). Five principles are identified: business-friendly mindsets, policy certainty, reducing the cost of doing business, limitations on foreign aid and, finally, embracing Chinese engagement.

Part 3 begins with Chapter 9, which could have been an extension of the chapter on democracy and development. It deals with the "how" of development, listed here as the better mobilisation of resources and the de-risking of investments. For the authors, the mobilisation of resources is mainly about the financing of projects, which features the Chinese model of swapping African resources for Chinese investments in infrastructure. But what about beneficiation and taxation policies? The only case study discussed is China and the Democratic Republic of Congo. (What about Angola and Zimbabwe, where this model also applies?)

Other sources of funding in Africa are listed as bond (or debt) markets; official development assistance (ODA), usually from the "North" (say, the European Union or the USA) to the "South" (say, Africa or Latin America); private equity; and remittance from members of the diaspora to relatives in home countries (examples that come to mind are Eritrea, Ethiopia and Zimbabwe).

Mozambique is scrutinised. By about 2010-2012, donors viewed this country as a "success story", with growth rates averaging nine percent, vast coal deposits at Tete, and offshore gas. But when the government failed to declare debts in 2015, the IMF pulled the plug with "things going bad again", and the metical plunged by 40 percent. For the authors, the lesson here is that resources and economic potential are not enough, and that good governance matters, which, in this case, is all about transparency.

The penultimate chapter in this book deals with the "planning for success". Five points are made: plan for growth that reduces unemployment; involve the business sector; prioritise; recruit the "best available"; and circumscribe foreign roles. This is a let-down, as readers would certainly want to know more, as Africa's 55 states are not the same. Certainly, one-size-fits-all cannot work.

The authors critique "National Plans", where, in Malawi's case, there was "too much goal setting"; in Zambia's case, there were "no less than six National Development Plans", but "no delivery"; and on Zambian agriculture, there was "this huge pile of paper ... [but] very little actually happened". All this may be true. But what is the evidence?

Any success stories? The authors cite Singapore for meritocracy, pragmatism and honesty. The best success records in Africa are given as Mauritius and Rwanda.

The final chapter in this book deals with "leadership and delivery". The listed principles are democracy, execution, personal skills and "accountability through transparency". It deals with Nigeria, Ethiopia, Botswana and Côte d'Ivoire, but the comparisons are not consistent.

For example, Nigeria's challenges are given as high debt and sharia law. (What about petrodollar corruption, lack of diversification, high dependence on oil and the bad governance of mega cities?) Then Ethiopia's case successes are listed: fast GDP growth, Ethiopian Airlines, the flower export industry and [Chinese] shoe factories. But what about the challenges such as land scarcity for the 80 percent ruralised population, various civil and international wars in the Horn of Africa in which the Ethiopian military participated, the recent police crackdowns on the people of the Oromo and Amhara regions, and the absence of private banks and/or any property rights in Ethiopia?

One more point on Ethiopia: why does the partially Chinese-funded Grand Renaissance Dam in the Blue Nile provide for only hydroelectricity, and not also for irrigation for food production, in a country where droughts and famines are legendary?

In Botswana's case, Gaborone is lauded for "cranes, traffic jams and hotels". What about having the second highest HIV infection percentages in Africa; the lack of diversification for the days when Botswana runs out of diamonds; and President Ian Khama praising his own military background as explanation for his strong leadership (without any reference to his autocratic style of governance, violation of press freedom and intolerance of opposition)?

And, finally, why include Côte d'Ivoire in this list? Under Felix Houphouet-Boigny, the country enjoyed high growth, thanks to high coffee and cocoa prices - also during the recent boom period. Since then, it has been struggling to deal with both democracy and development.

The three chapters of Part 3 are the crux of this book, the "handbook for economic success". As implied above, this part was not nearly as well researched and conceptualised as Parts 1 and 2. Still, Tafelberg/NB Publishers must be applauded for this technically superb book, which, after all, is not an academic handbook, but a valuable guide on Africa.

Reviewed by Willie Breytenbach, Emeritus Professor, Stellenbosch University


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