Bob Diamond, Uhuru Kenyatta and the rise of Afro-confidence: WEF 2013, Cape Town – By Richard Dowden
The World Economic Forum held its annual meeting (the Davos of Africa) in Cape Town last week. It was the biggest so far – yet another sign that business is taking Africa more and more seriously – but beyond the numbers and status of the attendees it is difficult to know how successful this sort of event is. The informal meetings are probably more important than the formal sessions. The annual get-together of business, politicians and NGOs is extremely useful for company bosses, presidents and lobbyists to speed-date each other over the 36 hours. Many of them do just that, putting in an appearance at the meetings, attending a formal dinner but spending most of the time in private meeting rooms or hotel suites. For the rest of us it is like river fishing. You stand by the side of a fast flowing crowd coming out of a meeting and try to catch someone you want to speak to or just meet old contacts and friends.
The mix of people this year was extraordinary: God and Mammon, monetarists and humanitarians. At one bizarre moment I turned from a profound conversation with the saintly Cardinal Onaiyekan, the head of the Catholic Church in Nigeria, to be introduced to Bob Diamond, now of Reverent (sic!) Capital, by Jamie Drummond, the Director of One (the aid advocacy organisation).
The next day I went to listen to President Uhuru Kenyatta laying out his plans for Kenya. Nobody referred, even obliquely, to the fact that if he keeps his promise, he will be absent from Kenya for months, maybe years, attending the International Criminal Court later this year to face accusations of crimes against humanity. Shortly afterwards I went to listen to the Swedish crime writer, Henning Mankell, now running a theatre in Mozambique. Maybe we will soon be reading a thriller set in Cape Town about monks, money, murder and global finance. At least he made provocative statements like: “If you have an idea, don’t wait for the money. Get on with it.”
The main themes of the conference were diversifying Africa’s economies, boosting infrastructure and unlocking the continent’s talent. So far Africa’s economic growth has been driven by the world’s demand for its raw materials and the growth of its middle classes who want all the goods and services this social group all over the world has. But, outside north and South Africa, there are very few small and medium sized businesses in the continent.
Eric Kacou, one of the WEF’s Young Global Leaders, put it very well when he said: “The amount of visible business in Africa is very small. At the top there are people who can go to the president to sort out any problems, and at the bottom there are women selling stuff on the streets. The middle bit is missing. Don’t ignore the struggling entrepreneur who can’t afford a bank loan.” He is right. Most banks in Africa make their money buying government paper. They are also happy to lend money for buying a house. But their lending rates to small and medium businesses are absurd, often more than 17%.
The infrastructure debate ground on, driven by the excellent Donald Kaberuka, head of the African Development Bank. How can the continent fund power stations and at the same time build railways and roads to create bigger markets? Gordon Brown – yes, he was there too – said that a trillion dollars were needed worldwide for infrastructure, of which Africa needs $90 billion. Only $40 billion had been pledged.
Africa’s power supply is also pathetically small. The whole continent only uses as much as Spain, according to Nkosasana Zuma, head of the African Union. Yet vast quantities of oil and gas are being discovered, developed and exported from Africa. Where are the refineries and gas-fired power stations? Kaberuka advocates an end to Africa’s dependency on aid and is launching an ADB infrastructure bond to build them.
The lack of power partly explains the gaping hole in Africa’s development: manufacturing. The economists’ dictum is that to reach middle income status, a country must add value to its raw materials. That’s where the real profit is. And it creates wealth throughout society by providing jobs. So I was delighted to find a small South African company that makes bespoke event clothing is shifting its manufacturing from China to South Africa and Rwanda.
That is the first sign that rising wages in China may induce companies to establish factories in Africa. I asked the owner the politically incorrect question about productivity of African workers compared to Chinese. I was delighted to find an honest answer. He admitted that African workers were slower than their Chinese equivalents but they were equally skilful and he judged that in the long run, a number of factors made it sense to move manufacturing to Africa.
But the main thing I took away from this WEF was the explosion of Afro-confidence among young African professionals. Every time something negative was said about Africa, it was rebuffed by a subsequent speaker. And every positive intervention was greeted with clapping and whoops of approval.
A Clarification: Noticing that some people who responded to my blog on the ICC and Kenya assumed I had some British imperial intent in writing about Kenya, I am on the record as saying that when the ICC charges George Bush and Tony Blair for the illegal invasion of Iraq in 2002, justice will start to be done and the ICC will gain credibility in Africa.
Richard Dowden is Director of the Royal African Society and author of Africa; altered states, ordinary miracles. For more of Richard’s blogs click here.
Interesting piece. There are some effective solutions to fostering industriousness amongst African workers to make them as competitive as the Chinese:
1. Employ more women. African women already work very hard to sustain a hungry continent and will not find highly demanding work an alien experience. They are more dedicated and more bankable because they are the mothers, daughters, sisters etc. on whom the burden of feeding a hungry continent largely falls, so there is motivation right there, waiting to be tapped.
2. Secondly, pay a wage that makes rising up early worth the effort. We are not talking unhelpful western economist dollar sum talk. Just a decent living wage that leaves them feeling more like human beings and less like donkeys at the end of the day. Remember Africans have been on the wrong end of exploitation for hundreds of years now and resent feeling cheated, even if they aren’t always powerful enough to voice their frustrations. This kind of demotivation leads to protest “slovenliness”. At the end of the day, we all have families to feed.
3.Third, as with practise elsewhere, pay should reflect the amount of work actually done to foster competitiveness. People in Africa, especially African women, are generally not afraid of work, but giving equal pay to the slovenly as the hardworking crushes the spirit, that is why a lot of government workers all over Africa do the least they can get away with, the system is not tied to merit and actual output and there are no incentives for ‘doing extra’