Just how well Africa is rejuvenating its geopolitical space, including its trade and scientific ties with its sovereign states and the rest of the world, will be the crux of discussions at this year’s meeting of the World Economic Forum (WEF) on Africa, in Abuja, Nigeria’s administrative and diplomatic capital, in May.
For Africa’s most populous nation, the benefits of hosting the prestigious event will go beyond the superficial. For starters, Nigeria is a land of speeches, conferences and seminars. If grandiose eloquence from politicians, community, business and religious leaders was all it took to transform a nation, then the country would be the most developed nation south of the Sahara. The presence of the world’s most influential people in Abuja will be an unprecedented opportunity for Nigeria to showcase its vast economic opportunities and deepen the dialogue on economic reform between the international and Nigerian private sectors.
Nigeria’s reputation is constantly in flux. Its quest for global leadership and respect is reflected in its diplomatic forays around the world, its contributions to global culture and the arts, its youthful and entrepreneurial populace, its consumer base and its emerging status as a leading South-South economy. Its recently concluded the sale of several state-owned assets in its power sector, and government should earn well over $10 billion when this phase of its privatization program ends in 2016.
In November, Nigeria’s president Goodluck Jonathan appointed his top economic adviser, Nwanze Okidegbe and finance minister, Ngozi Okonjo-Iweala, as co-chairs of the 2014 WEF in Africa steering committee to prepare the country for the meeting of heads of government and chief executive officers of global firms.
The steering committee is supported by the Nigerian Economic Summit Group and led by Frank Nweke, a former minister of information. The group also includes Aliko Dangote, Africa’s richest man and president of Dangote Industries; Tony Elumelu, the chairman of Heirs Holdings; Bisi Onasanya, the group managing director of First Bank of Nigeria, the country’s oldest and largest bank by assets; Nduka Obaigbena, the publisher of ThisDay newspaper and Wale Tinubu, the group managing director of Oando, Nigeria’s leading home-grown energy company.
Nigeria is arguably one of the fastest growing economies on the African continent, posting an average 7% GDP growth each year for the past decade, and poised to achieve increased revenues from the non-oil sectors in 2014, according to the IMF. West Africa’s leading economy is also plagued by industrial spats and strikes in its hospitals and schools, widespread graft and internal terrorism, mostly from the militant Boko Haram group.
The Nigerian government grabbed the opportunity to host the 2014 edition of the WEF on Africa summit with relish, eager to showcase its hospitality and status as a developing nation, while further cementing Abuja’s reputation as West Africa’s conference capital.
More than 800 delegates from around 70 countries are expected to review the progress the continent has made since the previous meetings and to do justice to the theme for this year’s event: ‘Forging Inclusive Growth, Creating Jobs’.
The WEF Africa team in Geneva are clearly seeking to advance the debates and consensus for action reached during previous meetings which focused on the need for sustained economic growth, improvements in governance, improving agricultural output, accelerating investments, competitiveness and collaboration with other reemerging economies, and scaling innovation.
“The theme aligns perfectly with the medium- and long-term aspirations and commitment of the Federal Government of Nigeria,” says Okonjo-Iweala.
“With the whole economic and political world focused on Nigeria during the meeting, it places enormous responsibilities on the country.”
Focusing on issues particular to the region—whether in the Middle East, Africa, East Asia, or Latin America—the regional WEFs are different from the annual retreat in Davos, Switzerland which has a much wider scope of examining global political, economic and social issues.
“Africa’s remarkable growth trajectory is projected to remain above 5 percent in 2014 with West Africa the fastest growing sub-region, representing the continent’s largest business opportunity. Nigeria, sub-Saharan Africa’s second-largest economy and most populous nation—with over 160 million inhabitants—already plays a crucial role in advancing the continent’s growth; yet it is also emblematic of the challenges of converting natural wealth into solutions that address persistent social challenges, says the WEF.
“Nigeria currently receives a very significant share of Africa’s foreign direct investments (FDI), and I reckon that discussions at the 2014 WEF on Africa summit would reveal the need for even more FDI for important economies like Nigeria, and attract broad-based investments that will lead to the creation of millions of new jobs,” Ogho Okiti, the special adviser to President Jonathan’s chief economic adviser, tells FORBES AFRICA.
Unlike debates and resolutions at the United Nations (UN) which are usually confrontational and perceived as quixotic by critics of the global body, the WEF has maintained a collegial culture over the decades. Three days of thematic talk comprising of workshops, interactive sessions, working breakfasts and lunches, and cultural events in Abuja are expected to facilitate pragmatic responses to insightful queries such as why nations continue to experience jobless growth and, in Africa’s case, growth bereft of sustainable development; why African nations trade more with the rest of the world than they do with themselves; and which regional blocs score top marks for infrastructure improvements, economic integration and HIV/AIDS reduction in its communities.
The WEF’s rich database and extensive use of research methodologies helps it produce reports such as the ‘Global Risks Report’, the ‘Global Gender Gap Report’ and the ‘Global Competitiveness Report’—there is also an ‘African Competitiveness Report’.
Dangote has described the WEF’s non reflection of Nigeria’s involvement and impact in Africa’s development over the years as unfortunate. On a broader scope, Africa’s numerous challenges, such as poor governance; diseases; widespread access to affordable shelter, education and clean water; poverty and poor electricity supply have been at the core of many of the forum’s initiatives. WEF gatherings encourage partnerships and the commitment of its corporate members towards solving some of these problems. Perhaps this event in Abuja might offer a solution to the Boko Haram scourge.
One candid moment that has etched the WEF permanently in the annals of Africa’s global experience was the 1992 Davos meeting where former South African president FW de Klerk shared a podium with the late Nelson Mandela. This was where Mandela reportedly made his very first speech on South Africa’s economic future under the ANC government. That speech laid the foundation for social harmony and global support for South Africa.
Founded by a University of Geneva professor of business policy, Klaus Schwab in 1971, the WEF is positive evidence that discerning conversation will never go out of fashion.
Two remarks made during the 2013 WEF in Davos illustrate why the meetings will continue to inspire the world’s business and political elite to create positive change. The first is an excerpt from United Nations secretary general Ban Ki-moon’s speech.
“As a boy, I studied in the dirt. There was no classroom. Education made me what I am; it made my dream come true… I shared my message with refugee children: Don’t lose hope, study hard. I did it, you can do it too,” he says.
The second is an observation by Rwanda’s president Paul Kagame.
“Africa’s story has been written by others; we need to own our problems and solutions and write our story.”

Africa Must Pen Its Own Story

“Prepare to get cold. Very cold. Take your worst experience in the cold and multiply that by 10!” This is how my colleagues at CNBC Africa briefed me on what would be my first visit to the small ski town of Davos in Switzerland to attend the 44th World Economic Forum (WEF).
After that advice, it’s only natural that I prepared for the worst. It resulted in two suitcases being packed with winter thermal goodies. In hindsight, I should have skipped the extra suitcase as it added logistical stress, but my biceps got a lot firmer.
While preparing for the trip, many questions filled my mind—who to speak to, how to address the global agenda, would I ask the right questions if I were to speak to Christine Lagarde, or better yet, Klaus Schwab, the founder and executive chairman of WEF. In response to the anxiety, the journalist in me searched the internet for archived pieces on previous forums, in preparation for future interviews.
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And then came the moment of bidding farewell to family, friends and the South African summer as I, together with my colleagues, prepared to brave the sub-zero temperatures in Davos for a week.
After a little more than 10 hours in the air, we touched down at Zurich Airport, where we would catch three trains in two-and-a-half hours to reach Davos.
So, after hauling my suitcases on and off the trains, I was hot, flustered, hungry and most of all mesmerized. Mesmerized by the beauty of the Swiss Alps. The mountain tops were reminiscent of soft cocoa peaks that had been drizzled in a thick layer of pure white icing sugar. Trust me to compare such a wonderful sight to food. After more than 12 hours in transit, hunger pangs were tormenting my stomach.
This tiny ski town was about to host around 2,500 delegates comprising business leaders, politicians, academia and media from across the globe.
The theme for this year’s forum was ‘Reshaping the world: consequences for business, politics and society’. It’s a broad theme that leaves you questioning where to begin and where to end?
Africa began by reshaping its image and its level of participation. Most WEF delegates are familiar with the multi-colored scarf, representing the South African flag, being adorned by both South African and international representatives, however, this year, green and white scarfs were the order of the day. The Nigerian delegation made a bold and clear statement by pronouncing their presence at WEF through this accessory that kept the cold at bay. Whatever their objective was, it worked as the world and its African peers sat up and paid attention to the West African state that will play host to the World Economic Forum On Africa in May this year. Following nations like Tanzania, Ethiopia and South Africa, Nigeria’s capital city of Abuja will welcome the 24th annual forum that will seek to find African solutions to African challenges. Coupled with the strong attendance of Nigerian delegates was that of fellow African leaders as a whole. Tanzanian president Jakaya Kikwete, Ghanaian president John Mahama and Guinean president Alpha Condé were just a few that made their voices heard.
With Africa making up roughly 4% of the world’s economic activity, 15% of the global population and 20% of the world’s land mass, it was evident that it is no longer a continent looking for aid, but rather trade.
“Africa is very much on the agenda, (it’s) on the minds of policy makers and corporate leaders,” said Christine Lagarde, the managing director of the International Monetary Fund.
After a recent visit to Kenya and Malawi, Lagarde noted that strong economic growth is projected for the continent going forward, especially sub-Saharan Africa.
Key concerns on the African agenda include boosting investment on the continent for the mutual gain of all other African markets; fighting security threats such as the Nigerian terrorist group, Boko Haram; and most of all, stimulating inter-African trade.
Bisi Onasanya, the CEO of First Bank of Nigeria, echoed these sentiments.
“I believe businesses need to pay attention to Nigeria and Africa, if they want to move away from saturated developed markets, the yields in this part of the world are a lot more superior to what you get in other parts of the world and sometimes I think the risks are overhyped to the extent that we scare away some of those investors.”
Onasanya also alluded to the unity that was displayed by both African government and business leaders in Davos, which is not always a common sight.
“Aliko (Dangote) is here, President (Goodluck) Jonathan is here… we are telling the world that we are here and ready to do business.”
Trade with no limits is thought to be the new solution to working towards economic inclusion for all African states and dispelling the stereotypes that we have regarding our peers on the continent. Trade between African nations currently stands at 11% of total trade, compared to Europe&#8217;s level of around 70%.
Peter Staude, the CEO of Tongaat Hulett, however, cautioned that we need to highlight what products can be used for trade.
“Inter-African trade is needed, however we need to ensure that there is no duplication of goods,” said Staude.
Condé is also an African optimist. He too called for more co-operation and assistance to take place between African leaders to bolster economic growth. My interview with him was a slightly tense moment as he had an entourage of at least 20 people, all asking French questions. Who were we? Where were we from? What is the interview about and when would they see it? After recognizing that our team was based in South Africa, Conde smiled and said: ‘Ah Mandela… good friend of mine. And Miriam. Miriam Makeba, good friend of Guinea.”
This light moment brought about some relief from the cold, the Guinean crowd and the French conversation.
Slowly but surely, Africa is making progress. Some states are even learning from each other. Ghana has made oil companies provide transparency around their dealings with government, with the likes of Nigeria, Angola and Uganda potentially following suit.
With Africa’s population geared to reach two billion by 2050, government and business is eager to drive for economic inclusion by creating the right business platforms and addressing infrastructural and educational backlogs, which in the long term will address the issue of youth unemployment.
As a first timer at the event, I was amazed at the united front that was exhibited by African business and government leaders. My only question is: How united are we when the conversations die down and the real work begins and we are faced with the realities of our unique every day African struggles?
Despite the challenges, I am forever a believer in the rise of Africa. The African economic outlook is also optimistic with a projected growth of 5.3%.
While on the icy slopes of Davos, I learnt something: the power of association. It’s the reason why WEF attracts so many delegates each year. It’s also the reason why Africa was so prominent on the agenda this year. Only by having relations can we engage. Only by engaging can we work together to finding solutions to the challenges Africa faces.

Africa In The Alps

If there ever could be heaven on earth, this was it. The sun peeped over Table Mountain and lit the winding streets below with a brilliant light as I walked through Cape Town to the first morning of the Mining Indaba—the 20th annual gathering of investors and mining experts. Its rays exuded optimism and felt like a warm, comforting hand caressing your face.
Without wishing to stretch the metaphor, South Africa’s mining minister, Susan Shabangu, tried to emulate the sun’s rays in her keynote speech.
“This is Africa’s time; indeed Africa has arrived and we shall seize the opportunity with both hands,” says Shabangu.
True, it is Shabangu’s job to hold the line when her country’s mining industry is under attack, especially with an election coming up on May 7. Even so, this was a speech too far; dismissed by most at the Mining Indaba. She was at pains to present a rosy picture, saying the number of mines and mining revenue had increased; further that South Africa had topped a list of 158 countries, compiled by the World Economic Forum, for corporate auditing and reporting. She also mentioned billions that will be spent on infrastructure and pledged to protect investors.
When it came to the strike on everyone’s lips in Cape Town—70,000 workers at the platinum mines, which earn 9% of South Africa’s export earnings—there was disbelief when Shabangu said there was no need to be complacent and there were many areas that needed improvement. The understatement of the year, in light of a strike that cost the South African economy 10,000 ounces of platinum and more than $40 million-a-day.
Roger Baxter, the chief economist for the Chamber of Mines, warned that 45% of the platinum shafts were either loss making or marginal. A long strike, followed by a high wage settlement, may push many more over the edge, he says. South Africa has 80% of the world’s reserves of platinum and 40% of supply; by the next Mining Indaba, the latter figure is likely to have fallen. This is one reason why many foreign investors, looking for a competitive return, say off-the-record, they are fighting shy of South Africa for now.
“The world mining funds are flush with cash right now, but they don’t want to put it here because they are very risk averse at the moment,” says one investor in Cape Town.
“They may look at an easy project, but let’s face it most of the easy projects in Africa have gone.”
Another concern for investors is the threat of South Africa’s government amending its mining bill to give the mining minister the discretionary powers to make certain minerals strategic. That would mean the producers of minerals, like iron ore and coal, could have to ask the government for permission to export and accept prices fixed by the state. For South African power generator, Eskom, this would be a boon because it could have all the coal it needs for its power stations in the country at a price it can afford. Critics, like mining lawyer, Peter Leon, has called the move creeping nationalization and warns it could frighten investors.
“It means we are closed for business,” says a former coal mine boss in Cape Town.
The Chamber of Mines paints a less worrying picture. It says that the government is unlikely to touch prices and a clause in the bill ensures consultation with the mining industry over exports. The bill was due for review on February 18.
“We are still engaging with the government,” says Baxter.
What is likely is that the government is going to push ahead with the transformation towards the 26% black ownership promised by the Mining Charter 10 years ago. In 2014, the Mining Charter—a voluntary document signed by the mining companies—will be reviewed. It is widely accepted that the ownership figure is far short of the target. Foreign investors often don’t understand South Africa’s often clumsy attempt to rebalance the scales after apartheid; the mining companies complain the process of transferring equity, to those who didn’t have the vote before 1994, is expensive and futile.
“Many mining companies put transformation systems in place thinking that 2014 will be the end of it. Nothing is further from the truth,” says Shabangu.
There is more hope across the rest of the continent for mining held in the rugged hands of the Australians. It seems the Australians don’t know what a difficult project is and are pouring billions of dollars into mining, from the Democratic Republic of Congo to Ghana, in some of the most inaccessible corners of Africa.
The Mining Indaba heard there are 246 mining companies operating in Africa. They include Sundance Resources, which is spending $5 billion on building two iron ore mines, 40 kilometers apart, in Cameroon, near the border with Congo-Brazzaville. It is hoped that by 2018 they will be producing 35 million mt of iron ore every year.
The project is an 11-hour drive from the capital and the Australians will also build a 500 kilometer heavy gauge railway to the coast to export the iron ore.
“Risk? Mining is risk and we Australians have a way of tackling it,” chuckled Giulio Casello, the managing director of Sundance Resources.
“What really impressed us on this project is that Cameroon put together a committee of experts to help us set up this project. Cameroon doesn’t have a mining industry and clearly wants one.”
Another Australian carving his way through the African outback is Harry Anagnostaras-Adams, who spent 30 years working in the banks of Sydney and now spends his days trying to figure out how to get gold out of Ethiopia. Through his resources company, KEFI Minerals, he spent $6 million buying Tula Kapi Mine, 500 kilometers west of Addis Ababa. The mine, which has two million ounces of gold in resources and another million in reserves, went for a knockdown price—ten cents in the dollar—because the previous owner had failed to deliver.
Anagnostaras-Adams will invest $150 million in the mine with the hope of producing 60,000 ounces by 2016.
“It is not for the fainthearted,” he says.
“The response to us trying to fix the problems of the mine was like greased lightning. The government always wanted us to get the show on the road; I was impressed by their pragmatism.”
There were other encouraging signs at the Mining Indaba. Brazilian resources giant Vale told how it was going to invest billions into increasing output from the Moatize coal project, in the north west corner of Mozambique, from 4.7 million mt to 20 million mt. More than $2 billion will be ploughed back into the mine; $3.4 billion will go into building a railway line from the Moatize, through Malawi, to the export port of Nacala. Another billion dollars will build up Nacala so it can ship more coal.
There were also encouraging words from the Toronto Stock Exchange, the great mining fund raising bourse in Canada. Graham Dallas, the head of business development for the holding company TMX, said around $800 million had been raised in 2013 for mining projects in Africa.
“I think if you have the right asset and the right management you can still raise foreign investment. It is not all doom and gloom, things have been better, but there is no reason to despair.”
If this optimism was not enough, Nick Holland, the CEO of Gold Fields, was brave enough to make this prediction.
“I think China is going to come back. I’ll stick my neck out and say there could be a mining boom by the end of next year,” says Holland.
This is the kind of bullish approach that has sustained mining in Africa and built the Mining Indaba into one of the biggest industry gatherings on the planet. Twenty years ago, the Mining Indaba held its humble beginning in one room in the Cape Sun; in 2014 it has expanded to fill the vast International Convention Centre. African mining has to play a clever game over the next 20 years or risk ending up back in one room at the Cape Sun.

No More Easy Money In Mining

Women walk for miles with buckets on their heads to fetch water, as the warm air rustles the leaves of the eucalyptus trees. Children play outside and men work for little or no pay. Here, in the village of Zenebework, Addis Ababa, one of the most impoverished parts of Ethiopia, the people rely on international aid for food and supplies.
“It’s how we lived and how we survived…” says Bethlehem Alemu, founder and CEO of SoleRebels.
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When Alemu was a young girl she was saddened to see her neighbors struggle to make a decent living because of the lack of jobs.
“I don’t like to call people poor. I would call them disadvantaged… if you give opportunities to the poor, they will no longer be poor.”
After university she returned home, determined to create a better life for her community, one that would empower it through its members’ creative skills. With $10,000 and a few employees her dream and artisanal shoe brand began to take shape.
“It has a strong investment on people. It’s not about giving aid but teaching people life skills that will sustain them in the future.”
SoleRebels makes eco-friendly shoes that combine traditional Ethiopian Selate and Barabasso shoes with modern production. The shoes are made from recycled tires and natural fibers. Alemu says that although the market share for green products is small, it opens up a lot of opportunities. However, this requires a lot of marketing.
“We selected shoes because we saw that footwear was an excellent platform to begin to share many of the indigenous, eco-sensible, craft heritage and artisanal talents that we have here in Ethiopia,” she says.
It was a simple idea that turned the company into the first fair trade-certified footwear brand under the World Fair Trade Organization. Over the years SoleRebels has expanded and become the fastest-growing African footwear brand with stores in over 30 countries across the world. It is also the country’s number one exporter to the United States.
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The success of the company has transformed Alemu into one of the most successful businesswomen in the world. She has appeared on the Forbes ‘100 Most Powerful Women in the World’ list and was selected by the World Economic Forum (WEF), as a 2011 Young Global Leader. Last year, she sat alongside Sir Richard Branson, Bob Geldof and Arianna Huffington as one of the councilors at the One Young World (OYW) summit, which was held in Johannesburg, South Africa.
In her address to the youth at OYW, she spoke of the importance of being innovative and how blazing your own path will pave the way for others to follow.
“When I started the business I was afraid because the market was not there&#8230; I didn’t follow anybody’s road. What’s happening in Africa is there is one big road and everybody’s following it.”
One of her biggest challenges was breaking through the mindset of those who believed an African footwear brand would not succeed.
“There are a lot of entrepreneurs in Ethiopia who are doing really well, but they don’t know how to sell their product, how to market it, or how to brand it. It’s not only a problem in Ethiopia, it’s all over Africa.”
Another issue that troubles many female businesswomen is gender inequality. Alemu, fortunately, has never been treated differently or had difficulties because she is a woman.
“I don’t think females should think like a female, they have to see themselves as a person who has a dream and can make their dreams come true. I don’t want to put myself back in that box when I am already out of that box.”
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According to Alemu, the key to a successful business – whether you are in Africa, Europe or America – is to follow the business strategies of successful companies and adjust them to suit your community. The problem for Africans is the disconnect and lack of trading agreements between other countries.
“Whenever people want to start a business, they always look up to somebody and that’s a problem. We don’t ask: ‘how are other companies reaching this point?’ or “how am I going to build that inside my company?’”
As the founder, she has ambitious dreams for her Ethiopian-based company and wants it to become the “Apple of Africa”.
“I am inspired by the founder of Apple, Steve Jobs. I love how he came up with the idea and said I want to have this kind of product next week and then people put it in front of him the next week.”
Looking back, Alemu never thought that the footwear company with the quirky name would become what it is today. She set out to create a business that would allow her to earn an income and better the lives of the people around her, and today she is one of Africa’s most successful female entrepreneurs.
The people of Zenebework, who once felt hopeless, now stand with dignity. It was one small step for Alemu, but one giant leap for Ethiopia.
She just happened to do it in a pair of  SoleRebels.
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In The Shoes Of A Rebel

With its fifth round of democratic elections slated for next year, South Africa has much to be proud of as it looks back on the achievements of the past 20 years. Thanks to reconciliation efforts, the Rainbow Nation navigated a difficult political and social transition with poise—something many countries have attempted, but rarely with such success.
Its films have won Oscars, its stadiums have hosted World Cups and its leaders have won Nobel prizes. Since 1994, the economy has transformed dramatically, absorbing 3.5 million new jobs and with a quarter of the continent’s GDP, it has successfully held the crown as the largest, and arguably most sophisticated and open, market in Africa.
However, the country still has one of the highest gini coefficients in the world, at above 0.63, indicative of the lack of inclusive growth. Unemployment is high and infrastructure is beginning to grapple with increasing demand. With South Africa’s GDP growth projected at roughly 2% for 2013, it is only a matter of years before Nigeria, expanding at rates of 7%, overtakes it as the continent’s economic heavyweight.
As a result, assessing the current state of the country and its performance requires a nuanced understanding of both the strengths that provide it with such potential and the weaknesses that threaten to undermine its progress.
The country’s fundamentals are in rude health. South Africa has a number of key competitive advantages. With more than $2.5 trillion worth of mineral reserves and the potential for commercial shale gas production, it boasts enormous natural wealth. Its business environment is among the strongest on the continent, with low interest rates, clear investor rights and a comparatively streamlined bureaucracy.
South Africa’s political system is fairly robust, and while the successive victories of the African National Congress (ANC) have caused complications of their own, the levels of voter turnout regularly exceed 75%, which is up to 10 percentage points higher than Britain.
The relative quality of infrastructure also provides an excellent base for expansion—South Africa’s national utility provider Eskom, which does nonetheless grapple with high demand, still accounts for just under half of all the electricity consumed in Africa.
Similarly, the penetration rate for financial services—an indicator of both consumption and potential for leveraged growth—in terms of the percentage of the population that has access to formal credit products is nearly three times the continental average. South Africa’s regulatory frameworks for its banks—which include the four largest in Africa—are among the most robust of any Organization of Economic Co-operation and Development (OECD) countries, and were rated third globally by the World Economic Forum (WEF) in terms of soundness for 2013-2014.
However, in spite of all these attributes, South Africa’s long-held position as the gateway into Africa is increasingly under challenge. The country’s sophistication is in part responsible for this. It is among the most-globally integrated markets in Africa, which has left it highly exposed to the continuingly depressed levels of export demand in key markets like the European Union, as well as to portfolio outflows which have left the rand vulnerable.
While the benchmark interest rate, unchanged at 5% for several consecutive quarters, is being kept at historical lows in an effort to stimulate lending, it still exceeds the average repo rates available in much of Europe, North America, and Japan; in turn attracting yield chasers.
But there are also stubborn challenges. Much of the country’s physical and social infrastructure is aging and in need of revamping. South Africa’s electrification rate—at 75% nationally—is the highest on the continent but a narrowing gap between supply and demand has led to load-shedding, which has constrained output and emphasized the need for new base load capacity. High levels of youth unemployment have led to social unrest. Wealth inequality is still high, but with a debt-to-GDP ratio that rises to 60% with off-budget commitments, the ability of the government to pay for social grants and benefits to the current 16 million recipients is becoming increasingly strained.
These challenges are taking their toll.
South Africa’s overall growth is expected to increase modestly in 2014, but still remain below 3%. The expected changes to poverty and unemployment levels are expected to remain minimal.
In the latest WEF Global Competitiveness Report, South Africa fell one spot from 52nd to 53rd out of 148 nations surveyed. The change in ranking reveals a mixed bag of both positives and negatives. With the overall score bolstered by top-five ratings in areas such as financial market development (3rd); auditing and reporting standards (1st); and accountability of its private institutions (2nd), but dragged down by an educational system (146th); labor market efficiency (116th); and burden of government regulation (116) that are rated poorly and place in the bottom 50.
A glance at the some of the country’s key sectors helps illustrate both the country’s potential and its weaknesses. With minerals accounting for around 60% of exports, the sector serves as a barometer and proxy for how the performance of the wider economy. South Africa is the largest producer of platinum group metals in the world, and in the top five for a host of other minerals and metals, including coal and gold. However, labor unrest, rising costs and slowing demand have contributed to more constrained output and concerns over mine closures.
The automotive sector provides a similar example. Constituting around 6% of GDP and 12% of exports, and hosting manufacturing and assembly plants for major international car makers like BMW, Mercedes, Toyota, General Motors and Volkswagen, automotives is often cited as an industrial success story and referenced as an example of what the country can achieve through targeted and proactive legislation and cooperative engagement between government, business and labor. Yet, the automotives industry is coming off a month-long strike during which exports fell 75%, costing manufacturers $2 billion.
For South Africa to unlock its potential, structural reforms are needed. Key to this will be the effective implementation of the National Development Plan (NDP) which is intended to form the strategic base for policymaking until 2030. The initiative seeks to rein in further rises in recurrent spending, while channelling more funds towards specific capital expenditures.
Alongside the New Growth Path (NGP), an economic policy focused on job creation, and sectoral policies such as the Industrial Policy Action Plan (IPAP), the NDP offers significant scope for mitigating the country’s weaknesses and encouraging a significant increase in secondary and tertiary activity. It will not be easy, but it offers a clear road map to strengthening South Africa’s comparative advantages in a more inclusive and sustainable manner.
Ultimately, assessing South Africa is all about context. Both its potential and accomplishments are vast, and many developed economies in the world would happily swap balance sheets. Over the past two decades, South Africa has seen its share of up and downs, although the pros have outweighed the cons. The outlook for the coming years may be murkier, and the obstacles more intransigent and complex, but the country’s healthy fundamentals and past performance provide reason for optimism.

Is There Still Gold At The End Of The Rainbow?

Africa has experienced stellar growth over the last decade. This growth has been supported by improved political stability, prudent macroeconomic policies, robust commodity demand and a growing consumer base. These factors are set to continue propelling African growth in years.
In the next couple of years, Africa is expected to be a key driver of global growth. The International Monetary Fund (IMF) expects sub-Saharan Africa to grow by an average of 5.4% between 2012 and 2013, compared to average growth of 1.6% in advanced nations over the same period.
Africa’s contribution to global growth is not going unnoticed. Cash-laden investors, benefitting from developed economies’ loose monetary policies, are looking towards the continent for investment opportunities as markets in developed economies offer less attractive returns.
Many reckon that Africa can capitalize on the economic and fiscal woes of the developed world to claim a bigger share of global growth. This argument is highly plausible. Europe, given its fiscal austerity measures which will constrain growth, is expected to remain in the doldrums for the next decade.
<div id="attachment_617" style="width: 310px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-617" class="wp-image-617 size-medium" src="/wp-content/uploads/2017/04/Kofi-Anan-300x182.jpg" alt="" width="300" height="182" />CAPE TOWN SOUTH AFRICA, 05MAY11 &#8211; Kofi Annan, Secretary-General, United Nations (1997 &#8211; 2006)</div>
The opportunity is undeniable for Africa, but with opportunity comes responsibility. As such, WEF’s theme this year could not be more appropriate. Africa is on the brink of major transformation and how this transformation is handled will shape the future of millions of hopeful Africans.
To attain the aspirations of the continent will require out-of-the-box thinking; generating creative ideas that can propel Africa to greater heights. However, ideas, no matter how grand, will remain just ideas if not coupled with bold and visionary leadership. There is no better time than the present for Africans to become doers as opposed to merely talkers.
With the flood of ideas, it is up to African leadership to come to the fore—only when African leaders realize this fact and accept the honor and responsibility of leadership, will these ideas translate into tangible results on the ground.
Unfortunately, Africa leaves a lot to be desired in the leadership category. Political developments in some parts of the continent are evidence of this. This mentality could change with the memories of the Arab Spring still fresh. Recently, the masses in Mauritania protested against President Abdelaziz and his government’s ‘anti-democratic policies’. There is a real risk for unrest in sub-Saharan Africa as people grow increasingly frustrated with poor leadership, which perpetuates underdevelopment and poverty.
Strong leadership is the foundation of Africa’s transformation. Africa needs to invest heavily in both social and economic infrastructure. In terms of social infrastructure, Africa needs to direct significant resources towards health and education. Growth and development will only occur in conjunction with a healthy and skilled population.
According to the World Bank the number of people living in extreme poverty halved in 2010. But more needs to be done, especially in Africa where the challenges are greatest. Robust investment in health and education will go a long way to achieving the United Nations Millennium Development Goals (MDGs).
Equally important to social investment is investment in capital infrastructure. Africa needs to direct enormous resources towards infrastructure development to ensure economic growth in years to come.
Regional economic integration has also been highlighted as key to the growth of the continent. According to a 2010 McKinsey &amp; Co. report, intra-African trade accounts for just 12% of the continent’s total exports. By comparison, regional trade in Western Europe accounts for 61% of exports. African leaders need to take the opportunity to boost economic ties between their counterparts and work towards enhancing trade networks to take advantage of the continent’s growing consumer market, thought to be worth at least $860 billion.
African governments have already taken heed. Almost each and every country on the continent has earmarked significant resources in their budget for infrastructure development. South Africa, the continent’s biggest economy, has budgeted R845bn ($108 billion) over the next three years for capital expenditure.
Infrastructure development will be wasted if not accompanied by regulatory enhancements that improve the ease of doing business on the continent. Africa lags behind the rest of the world in terms of the ease of doing business and governments need to eliminate red tape to ensure that their economies are conducive for business. This will ensure that business invests in that economy, which will translate into job creation, in turn denting the continent’s worryingly high youth unemployment.
The fact that 2012’s WEF on Africa being held in Addis Ababa, Ethiopia, is in itself significant. Ethiopia is the second most populous country in sub-Saharan and a prime example of Africa’s fastest growing economies—according to Ernst &amp; Young, Ethiopia is set to grow an average of 7% over the next decade; well above the average growth of 5% predicted for the rest of the continent. WEF Africa will attract global and pan-African leaders who will help shape Africa’s transformation to ensure that the continent takes its rightful place in the global economy.

Tag: World Economic Forum

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