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AS FAR AS economic growth forecasts for 2011 are concerned, South Africa is undoubtedly the laggard in sub-Saharan Africa, which will grow at around 6% and the former at about 3%. While a closer look at the enviable 6% growth forecasts reveals a precarious reality, SA’s growth rate begs questions about whether politicians are being bold enough in their economic leadership.
However, the reality is that sub-Saharan countries earmarked for enviable 6% growth rates next year have not done anything special to engineer that growth themselves. “Nothing has changed in those countries. Their resources dependent economies and projected growth are driven purely by demand for resources from China,” says Frontier Advisory Services CEO Martyn Davies. Sub-Saharan countries – indeed, most of Africa – have a two-decade window of opportunity to accumulate liquidity by taking advantage of China’s demand for resources.
The big question, says Davies, is how they manage that phenomenal liquidity. “There’s no such thing as a resources curse. The question is how you manage resources to make sure the benefits are diffused into and develop the local economy (as opposed to benefiting select political elites). China provides a phenomenally enabling environment – but it isn’t going to last forever,” says Davies.
He argues politics and the lack of focused, pragmatic leadership are the biggest obstacles to Africa’s ability to take proper advantage of China’s hunger for resources. “We’re going to start talking less about Africa and more about which states are the winners (able to translate that liquidity from resources into real domestic benefits),” says Davies.
Zimbabwean author and economics Professor Mandivamba Rukuni agrees, pointing to Zambia as an example of a country that, thanks to increased political accountability, is starting to use its resources to benefit and diversify its domestic economy. “Zambia is a good example of a country beginning to maximise the benefit of foreign investment. Although it’s been criticised for giving mining concessions to foreigners that were larger than they should have been, there’s a lot more accountability and planning about how investment can benefit and diversify the local economy,” says Rukuni, who adds there are indeed risks and opportunities to China’s powerful demand for African resources.
SA is obviously not in exactly the same boat as its sub-Saharan compatriots. Our economy is more diverse and not totally reliant on resources. But instead of being able to capitalise on investors’ interest in the continent and region, Davies says the main hindrance to rapid and sustained economic growth in SA is that political leaders “over-complicate” it.
“For example, the newly released National Growth Path is exceedingly complex. You can debate, research and come up with complex models all you like but there are three very simple things required for growth: education, infrastructure and access to capital,” says Davies.
Ethiopia is an example of a country not dependent on resources but, through an enabling economy and astute political economic leadership, is set for double digit growth next year.
Rukuni says economic success takes far more than political and economic stability, which is on the increase in Africa. Apart from having to become more competitive in education levels, labour costs and productivity, he says there’s another critical social/cultural ingredient that eludes so many states in Africa. “Because the continent is the least industrialised and because 70% of its population still live in rural areas, government systems aren’t going to be sufficient to secure social and human security. This means Africans are going to have to rely on their consciences to police them and not people in uniform,” says Rukuni.
However, the reality is that sub-Saharan countries earmarked for enviable 6% growth rates next year have not done anything special to engineer that growth themselves. “Nothing has changed in those countries. Their resources dependent economies and projected growth are driven purely by demand for resources from China,” says Frontier Advisory Services CEO Martyn Davies. Sub-Saharan countries – indeed, most of Africa – have a two-decade window of opportunity to accumulate liquidity by taking advantage of China’s demand for resources.
The big question, says Davies, is how they manage that phenomenal liquidity. “There’s no such thing as a resources curse. The question is how you manage resources to make sure the benefits are diffused into and develop the local economy (as opposed to benefiting select political elites). China provides a phenomenally enabling environment – but it isn’t going to last forever,” says Davies.
He argues politics and the lack of focused, pragmatic leadership are the biggest obstacles to Africa’s ability to take proper advantage of China’s hunger for resources. “We’re going to start talking less about Africa and more about which states are the winners (able to translate that liquidity from resources into real domestic benefits),” says Davies.
Zimbabwean author and economics Professor Mandivamba Rukuni agrees, pointing to Zambia as an example of a country that, thanks to increased political accountability, is starting to use its resources to benefit and diversify its domestic economy. “Zambia is a good example of a country beginning to maximise the benefit of foreign investment. Although it’s been criticised for giving mining concessions to foreigners that were larger than they should have been, there’s a lot more accountability and planning about how investment can benefit and diversify the local economy,” says Rukuni, who adds there are indeed risks and opportunities to China’s powerful demand for African resources.
SA is obviously not in exactly the same boat as its sub-Saharan compatriots. Our economy is more diverse and not totally reliant on resources. But instead of being able to capitalise on investors’ interest in the continent and region, Davies says the main hindrance to rapid and sustained economic growth in SA is that political leaders “over-complicate” it.
“For example, the newly released National Growth Path is exceedingly complex. You can debate, research and come up with complex models all you like but there are three very simple things required for growth: education, infrastructure and access to capital,” says Davies.
Ethiopia is an example of a country not dependent on resources but, through an enabling economy and astute political economic leadership, is set for double digit growth next year.
Rukuni says economic success takes far more than political and economic stability, which is on the increase in Africa. Apart from having to become more competitive in education levels, labour costs and productivity, he says there’s another critical social/cultural ingredient that eludes so many states in Africa. “Because the continent is the least industrialised and because 70% of its population still live in rural areas, government systems aren’t going to be sufficient to secure social and human security. This means Africans are going to have to rely on their consciences to police them and not people in uniform,” says Rukuni.
