Africa’s Moment to Move Forward
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.
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Other Posts by Ralph Carter
- Smarter, Modern Global Policies That Cut Trade Barriers Are the Answer – Reporting Back From the APEC CEO Summit
- October 11, 2013 - 9:10 am
- Economic Advancement? Listen to These Businesses
- July 1, 2013 - 2:08 pm
- Africa’s Moment to Move Forward
- May 23, 2013 - 8:19 am
- International Services Agreement on Trade: Great for U.S. Economy and World Trading System
- January 15, 2013 - 10:57 am