Prior to the pandemic, nine of the ten fastest growing economies were in Africa. Much of those gains have been wiped out by the pandemic and the economic crisis that have followed in its wake. Many African countries are now grappling with increasing poverty, rising prices and debt service requirements that are no longer affordable.
This is in addition to the effects of climate change and an unhelpful global financial system that places impediments in the way of African economies. Despite these challenges, panellists on Day 4 of the World Economic Forum in Davos insisted that Africa still retains its attractiveness and with the right policies and conditions, can gain from the energy transition and the re-ordering of global supply chains.
The session aimed to uncover some of the approaches that African countries can adopt to restore growth in a way that is sustainable and protected from global economic headwinds.
The panel featured Patrick Njoroge, governor of the Central Bank of Kenya; Nonkululeko Nyembezi, chair of Standard Bank Group; Mthuli Ncube, Zimbabwe’s minister of finance and economic development and Vera Songwe, chairperson of the Liquidity and Sustainability Facility.
The climate crisis, which poses an existential threat to the world, Africa included, also offers an opportunity to structurally transform its economy, Songwe argued.
Africa’s wealth of resources, some of which are critical to the energy transition, mean that the continent can become central to the search for global solutions. However, this means that beneficiation must take place on the continent, shifting away from the previous paradigm when raw materials were shipped out of the continent.
Similarly, production on the continent would help alleviate some of the challenges in the global supply chain. “These solutions can start on the continent and finish on the continent, if we decide to take advantage of the potential on the continent,” she said.
Mthuli Ncube said Zimbabwe has banned the export of lithium and has received overtures from companies who want to undertake production locally, attesting to the possibility of local processing of these metals and the evolution of a local industry. Governments, he said, can support entrepreneurs with guarantees that will enable them to raise the capital necessary to invest in Africa’s industrialisation.
Nonkululeko Nyembezi argued that the private sector must be allowed to lead, with the full support of the public sector. Closer collaboration will lead to better policies and more fruitful outcomes, adding that “the idea that there cannot be trust between the two is a 20th century idea that must be discarded”.
The panelists shared optimism about the future of the African Continental Free Trade Area, education and skills training for its young people, investments into regional infrastructure, better governance and a focus on renewables. Patrick Njoroge said African leaders have to look forward to the next 25 years when the continent will be home to a fifth of the world’s population – 60% of which will be under 35 – and start making the social investments necessary for that situation.
That question of preparing for the future was taken up by a second panel, who addressed the theme of “Africa’s Century”. On the panel were Winnie Byanyima, undersecretary-general of the United Nations and executive director of the joint United Nations Programme on HIV/AIDS; Alain Berset, president of the Swiss Confederation and federal councillor of home affairs; Najla Bouden, prime minister of Tunisia; and Imtiaz Patel, chairman of broadcast giant MultiChoice Group.
While this moment of “polycrisis” – including the tailwinds of Covid-19 and the Russia-Ukraine war – poses severe difficulties for the continent, the panellists said that learning to weather short-term challenges would help Africa to realise its longer-term ambitious for the “African Century”.
Bouden emphasised that it was time for Africa to take control of its fate and to seek to insulate itself from imported crisis, while addressing its own challenges of poverty, climate change and terrorism. The top priorities, she said, have to be investing in people, especially women and children, building resilience to climate change and powering the continent with renewables.
In addition, the continent has to pursue cooperation with other countries in the global south and bridge the digital divide to empower its youth.
Winnie Byanyima said that there had to be a structural change in the global system that she argued is designed to crush Africa, pointing to the pattern of vaccine distribution in the wake of the pandemic, when rich countries bought more than they needed and African countries were unable to procure the adequate doses.
Byanyima said the MRNA hub in South Africa is proof of what Africa can do with the right support. “Africa is doing what is right to build its market but we need to change the rules to help it reach its potential,” she argued.
The debt situation that some countries are in also starves them of funds for social investment, as most of their revenues are applied towards debt repayment. Byanyima said there has to be a multilateral framework to ease the continent’s debt burden so countries can invest in health and education.
Imtiaz Patel expressed great optimism about the continent, calling the continent’s youth resilient, hungry for growth and keen on innovation. Policymakers have also adopted pro-growth positions and are ready to support the private sector. Investors, he said, have to have confidence in the continent and make big bets guided by local knowledge and partnerships.
Alain Berset recommended that African governments have to support ecosystems that are conducive for investors in order to attract and retain investment.