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Africa’s Moment to Move Forward

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I recently returned from the World Economic Forum on Africa in Cape Town, South Africa.  The city lives up to its reputation as one of the most beautiful in the world.  But the assembled leaders were there to do much more than just take in the view.  Like the early explorers who founded Cape Town, this group of leaders came to chart a course for a new era of growth and opportunity for the continent.  Optimism was the prevailing mood of the participants, though at the same time they were also realistic about the challenges Africa must overcome if it is to achieve its full economic potential, such as the need to build up infrastructure to support the growing economies there.

On the positive side, Africa is experiencing strong growth of 6.2% coupled with increasing foreign investment.   One of its major competitive advantages is demographics.  The top 20 countries with the highest percentage of people under 20 years of age are all in Africa.  The continent will have 1.1 billion working age people by 2040, more than China’s working population.  Additionally, supporting growth on the continent is the abundant natural resources and vast amounts of arable land for agriculture.

Of course the challenges that Africa must tackle are well known.  Fourteen of the world’s 20 least competitive countries are in Africa.   Lack of infrastructure across the continent slows economic growth by some 2% per year.   Only 30% of African households have electricity. Africa scores low in measurements for development such as education, training and skills building.  African agriculture suffers from chronic productivity problems.

The WEF conference, entitled “Delivering on Africa’s Promise,” was all about finding and implementing solutions to these challenges. Discussions focused on infrastructure investment, boosting agricultural productivity through technology, energy generation and distribution, education and entrepreneurship, and the role of civil society.   In particular, Africa is a continent where the proliferation of new technologies like mobile phones has helped  connect and improve lives. And, perhaps most impressive were the many examples of creative ideas and approaches by young entrepreneurs and non-governmental organizations dedicated to tackling these challenges and moving Africa forward.

Improving infrastructure was probably the most talked about theme in Cape Town.  The World Bank estimates that Africa will need to spend $93 billion per year for the next decade to close the infrastructure gap. Poor logistics services and slow customs clearance in Africa were widely acknowledged as major impediments to growth across the continent.  Of all of Africa’s trade, only 12% is within Africa.  Part of this can be explained by the lack of diversity in Africa’s economies and too much focus on natural resource extraction.  But part of it is also explained by the fact that it can cost just as much, and can take even longer, to move a container of goods from Shanghai to Cape Town, as it does to move the same container from Cape Town to Nairobi.   Africa recognizes that these weaknesses must be addressed to accomplish their goals of deeper global economic integration and increased manufacturing.

FedEx contributed our experience in building and managing global supply chains to many of these discussions.  We emphasized the importance of removing administrative barriers to the movement of goods across borders as a cost-effective way to increase trade and economic growth.  We also pointed out that investments in hard infrastructure will not produce the desired results without similar investments in soft infrastructure, i.e. the regulatory environment.    I believe there is huge potential for growth in Africa as it seeks to diversify and industrialize its economy.   FedEx looks forward to helping achieve those goals and to “deliver” on the promise of a better future for the people of Africa.

Comments (3) 

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Ralph, This is a great and very precise rendering of the current state of the business ecosystem on the African continent. You pertinently highlight that the inherent need for hard infrastructure investment should be coupled with significant improvements in soft infrastruture. The soft infrastructure-related challenges in Africa are - one can argue - an indirect consequence of the perduring unfavorable social climate on the continent as a whole (55 United Nations recognized states). FedEx today provides solutions to customers to enable them to ship ( FedEx provides computers, supplies, facilities ) in the USA and many other developed countries and is therefore often identified as a technology partner. I think that the strategy for Africa would have to be extended beyond technology partnership to social entrepreneurship. An example would be to work with local governments and - without waiting for the infrastructure to be built - build a hub that could be eventually transformed into a hospital after FedEx uses for a defined number of years. The example given is just one that came to mind but the point is that there are innovative solutions available in order to reach those markets without further delay. Having worked at FedEx for many years I know that the company is no stranger to creativity and innovation.

Fascinating article! Thank you!

I really enjoyed reading your blog entry on the Africa. Thank you for sharing with us what you experienced at the World Economic Forum on Africa in Cape Town. Having been born on the continent and as a frequent travel to Africa, I have witnessed first-hand the immense transformation that is taking place all over this vast and resource rich landmass. While the continent has a long way to go in some area, tremendous strides have been made over the last two decades. A critical necessity for African nations is to invest heavily in infrastructure which in turn will create access to facilitate intra-Africa trade which is essential for the continent as a whole to become an economic powerhouse. It is my belief that in the coming year’s companies such as ours will play a large and integral role in the “African Renaissance” by working hand in hand with regional governments, companies and organizations to pave the path for increased trade and economic growth.

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