Africa: between hopelessness and a renaissance

Much progress has been made. Much potential awaits further tapping.

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Much progress has been made. Much potential awaits further tapping. But life won’t wait as Africa seeks to re-define itself
as a more prosperous and hopeful place in which to do business.

Last year, the World Bank again ranked the countries of the world in an order of merit in terms of ease of doing business.

Our continent’s biggest national economies—Nigeria and South Africa—were shown to be in a rut of some sort. Nigeria has slipped to the 146th position, whilst South Africa has remained 82nd.

Mauritius, however, rose five places to 20th and Rwanda is in 29th position—globally. Rwanda’s endeavour to be the knowledge economy hub of the continent continues to impress—especially when one thinks of its genocide, bloodier and more recent than South Africa’s Apartheid or any of the other traumas of colonialism.

With free software to manage sales taxes, easier access to electricity and an efficiency in registering property second only to New Zealand, amongst all nations on earth, Rwanda is clearly making a play for the future. The past is prologue—not epilogue…

Africa has a young and growing population, unlike the ‘grey’ regions of Europe and China. This comes with challenges, obviously, but, equally, opportunities—if the basic structures of taxation, contract law, trade zones and integrity of auditing are laid in place. Predictability and transparency always give birth to innovation.

Young people, looking to build their futures, armed with the tools of a democratising digital revolution, perhaps outweigh the non-human resources in which Africa has always been so rich—our vanadium, diamonds, manganese, phosphate, platinum-group metals, cobalt, gold, aluminium and chromium, to name but a few.

Added to this, one thinks of the vast fertile soil, which covers sub-Saharan Africa. We have always had the human and material capacity to feed and develop an entire planet.

It is now time to develop the social catalysts in order to exploit our own riches.

‘Hard’ resources are not as valuable as ‘soft’ resources

The American poet, T.S. Eliot, once wrote, in a critique of the modern western world:

“When the Stranger says: ‘What is the meaning of this city?

Do you huddle close together because you love each other?’

What will you answer? ‘We all dwell together

To make money from each other?’ or ‘This is a community?’”

The irony of Eliot’s words today is that in a globally competitive world, prosperity now does require community: a sense of social trust and cohesion, married with an openness to the world. This communitas, in turn, allows people to work together toward building structures, which offer an opportunity to successive generations. We have to dwell together, to make money, together.

And this sense of community is not an ethereal sense of togetherness—it must, instead, be made into a visible, working reality, which allows for contracts, taxation, property rights and trade to be conducted in a fair and orderly fashion. Africa requires a commonwealth in the truest sense of the word.

It is in light of the abovementioned, that one may be able to perceive the vast infrastructural gaps across the continent as opportunities, rather than simply as problems. But that conversion requires the soft capital, the communal infrastructure, as a kind of spiritual scaffolding in order to get the job done together.

In order to build that scaffolding, we must first realise how much we need it.

Facing the realities

Over and above the stagnation of Nigeria and South Africa in terms of easing the difficulty of doing business and creating wealth, there are other negative indicators that must be faced. For example, the global professional services firm, PricewaterhouseCoopers (PwC), recently reported a 40% decline in initial public offering (IPO) activity throughout the continent in 2018.

Corruption, political uncertainty and business failure continue to be realities. International Monetary Fund (IMF) predictions of African economic growth for the year look set to be scaled down significantly from the published figure of 3.5%.

One of the causes of this lack of investor confidence is the instability surrounding elections this year in virtually all the major African markets: Nigeria, South Africa, Namibia, Botswana, Malawi, Mozambique, Algeria and Tunisia are all due for elections in 2019. An over-reliance on commodity prices only fuels the pessimism However, as PwC reports, there is an awareness in Africa now of the necessity of states doing something to pre-empt this crisis of capital growth amidst a booming population.

Many countries are looking to stimulate capital investment through the sale of state-owned entities. Ethiopia, our fastest-growing economy, is seeking to create a new stock exchange off the back of this privatisation, while the Egyptian government is selling its remaining interests in nearly 25 state-owned enterprises (the South African bucking of the trend to move towards the discipline of the markets in providing services remains a concern).

The problem of capital markets is perhaps nested, however, within the broader problem of auditing, both public and internal.

The MIS Training Institute (MISTI), a global player in audit, IT audit and information security training, recently reported on the continued difficulties faced by those seeking to bring transparencies and order to the accounts of public entities throughout Africa.

Public auditors in Africa have gone on record to state that, unless their audits are taken directly to the people, in accessible form, and unless these audits deal with the broader context of public entities’ performances in their economies, their work threatens to become obsolete.

The same urgency exists in the private sector.

The Institute of Internal Auditors (The IIA) and the World Bank Group’s internal audit department recently released a report on auditing in sub-Saharan Africa, which concluded: “In some instances, there is limited awareness of internal audit and its contribution to governance, despite the significant need for better governance.”

Moving toward solutions

Once the problem is known and articulated, however, it can re-present itself as an opportunity.

The authors of 2018’s Africa’s Business Revolution: How to Succeed in the World’s Next Big Growth Market, Acha Leke, Mutsa Chironga, and Georges Desvaux, argue that no matter the challenges, the basic potential of Africa anticipates the solutions to any deficit in soft capital. Finding solutions is just going to be too profitable for it to remain undone.

For example, they offer the little-known fact that Africa is already home to 400 companies with over $1 billion of annual revenue. The revolution is already underway.

Over and above the already existent commercial success, the potential of a market consisting of a median age of 20, of over 120 million users of mobile financial services, and a projected smartphone-using population of 636 million and an Internet-connected population of 1 billion, within three years, is simply overwhelming.

To that end, a firm like McKinsey has already established an Africa Delivery Hub, which partners with governments to solve service delivery problems.

The basic gap in infrastructure is, in itself, an opportunity. McKinsey perceives that.

So does the Grant Thornton law firm, which now boasts 41 offices in 24 African countries, assisting in providing services in compliance, trade, re-structuring and risk management.

Mazars consultancy operates in 28 countries in auditing, accounting and legal services.

Accenture is working with the United Nations on a development programme, which functions as a platform for the achievement of the Youth for Africa and Sustainable Development Goals.

And a highly regarded academic entity like the Gordon Institute of Business Science has established its own Centre for African Management and Markets (CAMM) at the University of Pretoria, which aims to publish research on Africa that seeks to understand and demonstrate the nuances of a continent which, as per headlines from The Economist a decade apart, is both “The hopeless continent” as well as “Africa Rising”.

The gap between those headlines, in every African country, in every African life, remains the problem, remains the opportunity. 

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