This past week Zimbabwean President Robert Mugabe under the auspices of the highest court in Zimbabwe set the elections for July 31^st. The court ordered that the electoral process take place on July 31^st, much to the consternation of the main opposition party the MDC. In a regional summit held this weekend in Mozambique SADC officials expressed caution towards the holding of elections in July especially after the country recently held a referendum on the new constitution. South African president Jacob Zuma at the summit expressed hope that more time would be given to implement the new media and legal regulations that are now instituted in the new elections. The financial reality for the country is that they simply cannot afford an election, especially after a constitutional referendum just held in March. Zimbabwe is beholden to the its regional neighbours for any financing of any election this year and so one would expect the election to be delayed until the full implementation of the new constitution. The political reality for the ZANU-PF is that with a bit of stability in the economy and disillusionment with the opposition MDC they are in pole to win legitimately the next elections.

A recent report by the international crisis group reports that while the economy is still in a mess it is highly likely that the ZANU-PF will win the next elections either peacefully or by foul. The reality is that it will probably be a bit of both in the case of Zimbabwe, but it is largely fuelled by better political leadership by the ZANU-PF. The ZANU-PF leadership have been playing the rounds on the international circuit seeking to re-establish positive relations with western political actors and making overtures to international capital. The ZANU-PF having cemented the much opposed land reform have moved from a more adversarial political approach to more conciliatory political approach towards the US and even Britain.

Zimbabwe has also benefited from the monetary assistance of South Africa as the reserve bank has allowed the country to use the Rand as the main currency. The result is that slowly but surely the disastrous land reform programme is showing some moderate success as the state is now able to provide financial assistant to the newly emerging black Zimbabwean farm community. In a new book Zimbabwe takes back its Land, authors Joseph Hanlon, Jeanete Manjengwa and Teresa Smart provide evidence to show that it was poor economic decisions that led to hyper inflation in Zimbabwe. The research team argues that it was through the implementation of the US dollar as the main currency that helped stabilise the economy. This writer would like to add that this was facilitated by the endless and constant financial support of the South state.  It is important to note that without South African financial support the Zimbabwean economy would have eventually collapsed without a creditor.

The ZANU-PF at the present moment is in a good position to win the next election due to noticeable changes on the ground and shifts in the mood in the country. While people are not satisfied with the state of the society they are less enthused by the MDC. The only fear for the ZANU-PF is the old age of the leader, without Uncle Bob at the helm the party cannot win the next elections. Let’s see what happens!

Japan recently concluded the Fifth Tokyo International  Conference on African Development (TICAD) joining the race to secure political and economic advantage on the continent competing with their neighbour China. The conference announced a US$32 billion dollar fund for the continent to be used by the countries in the way that they see fit. The Japanese have found themselves in a situation where they are playing catch up to the Chinese in the race to secure favour and most importantly to secure market for their products. As Japan battles with deflation and economic stagnation it is finding that it needs to develop and secure new markets for its products due to increasing competition in their main market the Unites States and Europe. While China’s main relationship with the Africa continent at the moment is driven by resource allocation, Japan’s relationship with the continent is the development of the market potential. Abenomics has reached the African continent!

The conference was focused on securing Peace and Development on the African continent under the theme “Enhancement of Peacebuilding” with particular focus placed on the developments in Mali and the Sahel region. In his speech to the conference Japans Prime Minister Shinzo Abe stated:

Japan is acutely aware of how peace is a fundamental source of growth. Japan achieved its prosperity by learning the value of peace from history and in preserving peace, was able to build a secure society. This is why TICAD has consistently placed great emphasis on peace and stability.

In the 2000’s, with many countries achieving peace and stability, Africa overcame an era in which it suffered from conflicts and instability and obtained the foundations for growth. Taking the occasion of the 20^th anniversary of TICAD, I would like to celebrate this fact with you.

However, it is also a fact that conflicts and elements of instability remain, especially in the Sahara belt ranging from the Sahel region to Somalia, as well as the Great Lakes Region. Now, as Africa tries to achieve rapid growth through trade and investment, we should continue to make efforts to enhance peace building in order to establish a society in which people are able to engage in socio-economic activities, with a sense of security.  (02/06/13)

While the focus was on security and peace under the conference backdrop the Japanese minister met with each of the African Heads of Government and pledged Japans commitment to the development of each country. While it is noted that Japan is seeking to secure more natural gas supplies as it moves away from nuclear energy due to the devastating earthquake and tsunami in 2011, the main area of focus for this commentator is the security of the African market. The political reality for Japan is that they are too late to gain a major foothold on the African continent in relation to resource allocation and they don’t have the money to match the Chinese.

 For this commentator the African continent forms part of the aggressive economic strategy of the Shinzo Abe. Japan needs markets for its exports as it battles with Chinese and South Korean exports in both mature and developing markets. Africa is a prime target for Japanese manufacturers especially in the area of car exports and consumer electronics.  Abenomics has now reached the African continent, expect further overtures to key African states in the near future.

The US State department recently revealed that US President Barack Obama will be making a trip to the continent in June. This is the US Presidents second visit to the continent, the first was a trip to Ghana as a political reward for what the US considers to be a model of democracy on the continent. Those familiar with US foreign policy will be familiar with the twin motives of US policy which are the promotion of democracy and the security of its domestic interests. The trip will see the US president visit South Africa, Senegal and Tanzania. The trip underscores the fact that US is losing ground on the continent and the recognition that former Secretary of State Hillary Clintons constant tours of the continent have not helped stem the influence of China and Brazil. The Obama administration’s policy on the continent has been a disaster from its reticence to respond to the social uprisings in North Africa and underestimating the influence that China would have on the continent. Is Obama’s trip to the continent too little too late?

The first failure of the Obama administration in relation to the African continent is that they saw the continent through the prism of sentiment and not serving America’s strategic foreign policy interests. The newly elected US president Barack Obama chose to dedicate his first trip to the continent to visit Ghana and deliver a major address on the importance of democracy. The remainder of the term saw the then Secretary of State Hillary Clinton tour the continent in vain seeking to curb the political influence of China. In addition to this the US then went on to support the European led intervention in Libya and the consequences of this are still being felt by the administration.

The decision by the US to get rid of Muammar Gaddafi has created the single biggest challenge that the continent will face to its economic progress in the coming decades and that is the rise of Islamic extremists. At the moment West Africa is facing a major challenge in relation to Islamic extremism in the form of Boko Haram and the Horn of Africa is already dealing with Al Shabab.

The decision by the US to go to Senegal, South Africa and Tanzania represents the divergent interests at play in relation to US policy on the continent. Senegal is important to the US because at the moment it is a big recipient of US Aid that is directed towards both social development and infrastructure development. South Africa is a bit more obvious as it is a key player in the BRICS international grouping and South African capital has its tentacles all over the continent. Tanzania is an important player in the African Union (AU) under the leadership of President Jakaya Kikwete.

The trip is aimed at seeking to improve US interests in Sub-Saharan Africa but while it may improve relations in the short term the US influence on the continent is in long term decline. The rise of Chinese investment on the continent and the increasing development of intra-regional trade mean that the continent is no longer solely dependent on US Aid. It’s a new era of African politics and the US will become an additional player and not the primary international player as they have been in the past. Its too little too late!

On the Saturday May 25^th officials gathered in Addis Ababa Ethiopia to celebrate the 50^th anniversary of the African union. It is indeed a cause for celebration as the Organisation of African Unity (OAU) and now the African Union (AU) have been the pillars of the independence movement in the 50s and 60s. The present AU can see its roots in the Garvey movement in the early 1900s, the pan-African Congress movement that occurred in London and yielded the first crop of leaders such as Kwame Nkrumah, Jomo Kenyatta and Julius Nyerere. For years the African Union has been the primary vehicle through which the collective political voice and will of the continent has been represented on the International scene. The African Union (AU) has grown into more than a political body; it is now assuming responsibilities for maintaining peace and steering economic development for one of the largest continents in the world. The organisation is increasingly being asked to actively intervene in many African countries primarily in peace making function with the budget fit to govern a major city not a continent! The key question is what will the African Union be in 50 years?

As the continent continues to move forward in the 21^st Century the issues of political sovereignty and economic development differ from the 1950s. For one the main relationship that most African countries have with their former colonial powers is much less pronounced, with the exception of former French territories.  In addition to this many new international players are active on the continent as economic players such as China and Brazil. The continent is also becoming more interdependent as intra-regional trade continues to grow just as fast as external trade with the continent. The result for the AU is that it will become more active in relation to the governance of the continents economy at a supranational level and the possibility of a common market a distinct possibility. The current European Union experience should prove to be a deterrent for a monetary union of the continent.

The AU is already engaged in multiple peace-keeping missions on the continent, it should be expected that the organisations involvement in maintaining peace and security will continue to grow in the coming years. The issue of political stability will become forefront on the agenda for the African Union as it will not only have to deal with the issue of military conflict that require troops but also sensitive political issues. The political problems in Nigeria with Boko Haram, the political violence in Kenya, and the political problems facing Zimbabwe will all require some form of AU mechanism to ensure law and order. It could be expected that the AU establishes an appeal court to decide judiciously politically sensitive matters such as this, instead of being handled by the ICC convention.

The African Union is moving past the days when it simply sought to represent anti-colonial politics and support the independence movement. The organisation will become more involved in the general governance on the continent from economic practice to deciding legal matters in the next 50 years. It is a sign that the continent is moving in the right direction towards economic prosperity and political stability.

The United Nations Economic Commission on Africa (UNECA) recently published its 2013 economic report on the African continent. The report entitled “Making the Most of Africa’s Commodities: Industrialising for Growth, Jobs and Economic Transformation”. The report’s findings led by AU Chair Nkosazana Dlamini-Zuma and UN Undersecretary Carlos Lopes.  If one was writing this article in the 1950s it would seem as if it was a policy document written by Ghana’s Kwame Nkrumah as it argues that the continent needs industrialise its commodity sector to achieve economic growth. In the 1950s there were only a few buyers in the market for commodities, which consisted of consumers in the major western countries. The lack of buyers along with an oversupply of commodities meant that prices were always depressed, fast track to the 21^st Century and the development of the Global South has created new markets for African commodities. The growth of the global south beyond the BRICS group has meant that the continent has an opportunity to finally develop a solid industrial base which was the fascination of politicians in the immediate post-colonial period.  The major question of the report is can commodities boost the African economy?

The report argues that the basis for African economic growth in the next decade will have to be based on exploiting its surplus of commodities both mineral and agricultural. It is expected that commodity prices will remain at their current high levels due to the increase due to the presence of emerging markets. The lack of reliance on the markets in the developed north has ensured that African countries are not subject to the fluctuations in the western economy.  Thus the continent is not a victim of the boom and bust economic cycle that currently defines the developed north.

The UNECA report states:

The key challenge for African countries today is how to design and implement effective policies to promote industrialization and economic transformation. Despite some gains in manufacturing over the last decade, the continent is yet to reverse the de-industrialization that has defined its structural change in recent decades: in 1980–2010, its share of manufacturing in aggregate output declined from more than12 per cent to around 11 per cent, but remained at more than 31 per cent in East Asia, where labour-intensive industries induced high and sustained growth and helped lift hundreds of millions of citizens out of poverty.

Africa has also lagged behind East Asia on other measures. That region has seen not only surging per capita income but also a soaring share of global exports and income over the last four decades (table 1). Industrial policies were particularly successful in East Asia because of committed and visionary political leadership and institutions that designed and enforced strict performance criteria for industries that received subsidies and trade protection, supported by a capable bureaucracy largely insulated from political capture.  (March 2013, p7)

The key test for the continent will be how to take advantage of high commodity prices and creating a secure industrial base for the development of domestic and regional economies. As far as this writer is concerned it is only through the collective leadership of African leaders that the continent can make the most of this moment. The continent needs a similar approach to the current commodity boom that it took towards aid when it facilitated the creation of NEPAD.

The UNECA is a step in the right direction, what needs to take place is a programme under the current BRICS political umbrella. The problem is that the main political actors to instigate such an initiative are focused either on ICC investigations or dealing with upcoming elections. It seems that such an initiative will have to be led by the AU Chair in close cooperation with African Heads of Government. The time is now.

]]> http://www.ryanonafrica.com/can-commodities-boost-the-african-economy/feed/ 0 http://www.ryanonafrica.com/the-future-of-the-continent-is-somalia/ http://www.ryanonafrica.com/the-future-of-the-continent-is-somalia/#comments Sun, 12 May 2013 19:30:15 +0000 Ryan "On Africa" Williams http://www.ryanonafrica.com/?p=351 Read more...]]>

The World Economic Forum has met this past week in Cape Town, South Africa, while in London the UK-Somalia conference was taking place. The two events represent two intersecting themes defining the politics and economics of the continent at the moment. The first is the economic potential of the African continent for international business and second is the issue of security and political stability on the continent. South Africa and Somalia represent polar opposites as one is seeking to be an international economic player while the other is seeking to rebuild a state that has suffered from the cycle of violence and depravation. If the continent is to move forward into the future it will need to invest its time and resources in ensuring that there is political stability and security. The future of the continent’s prosperity lies in the solution to the issues plaguing Somalia.

Somalia has made many strides in the region holding successful parliamentary and presidential elections last year.  It is critical that the African Union and International execute the commitments that they have made to Somalia during the conference. The EU has pledged to give Somalia €44 million and the UK has committed to giving more than £22 million in development and security assistance. The big issue for the international community and for the AU is the security of the horn of Africa. The President of Somalia, Hassan Sheikh Mohamud in his opening speech to the conference stated:

People may ask why Somalia matters at this time but there is a huge amount at stake right now: the future of our country, the security of the region and the wider world, and the removal of the piracy stranglehold on the Gulf of Aden.

I know you all understand this and I fully appreciate the political capital being invested to support Somalia.

Since the last meeting held here in London more than one year ago, more has been achieved than anyone would ever have imagined. In just one year the cornerstones of a new Somalia have been successfully and peacefully laid.

The political transition has ended and I stand here as the elected President of a sovereign nation, with an elected Speaker leading a new Parliament representative of all the regions and all communities and with a legitimate and effective government delivering our Six Pillar Policy Framework. Progress has defied the skeptics. Somalia has rejoined the world community.  (07/05/13)

Somalia matters to the continent and the world! If Kenya is to become a regional economic hub it will need to invest in the security and stability of Somalia. If Ethiopia is to achieve economic growth it will need secure sea and trade routes. Both countries will need to be an enabler to Somalia’s growth and not seen to interfere as an exploiter, this would just fuel the political cause of political groupings such as Al Shabaab.

The great thing is that the AU and the international community are taking the issue of Somalia seriously and are willing to put resources and time into the effort. It is clear that Somalia’s future will be better than it’s past.

]]> http://www.ryanonafrica.com/the-future-of-the-continent-is-somalia/feed/ 0 http://www.ryanonafrica.com/is-this-the-end-of-british-influence-in-africa/ http://www.ryanonafrica.com/is-this-the-end-of-british-influence-in-africa/#comments Mon, 06 May 2013 20:24:14 +0000 Ryan "On Africa" Williams http://www.ryanonafrica.com/?p=345 Read more...]]>

The UK government announced this past week that it was cutting aid to South Africa; it argued that from now on all relations with the country will be based on trade. The decision has led to an outcry by many charities who work in the country and by South African government representatives themselves. It has even caused a bit of a diplomatic row with South African ministers sending communiqués to the Foreign Secretary William Hague about the issue. At the present moment the United Kingdom is South Africa’s largest trading power and most of the major companies have dual listings on the London and Johannesburg Stock Exchange. The political and fiscal reality is that Britain does not have the money to sustain an international aid programme.  In addition to this the British influence in South Africa and the wider continent is on the decline due to the rise of powers such as China and Brazil.  The cutting of Aid to South Africa is a sign that in the next two decades Great Britain will no longer have a major political relevance on the continent.

In response to the cutting of aid Peter Hain in an op-ed about the decision wrote:

Purely out of self-interest this decision is catastrophic for Britain. South Africa, a key strategic partner, is the sole African member of the important Brics alliance, and is already turning to those countries, away from its traditional European trading links. In turn this threatens the gateway the country provides to vast African markets – where it has close ties of friendship and mutually beneficial trade and investment agreements. It offers a solid base from which companies, including Britain’s, can develop their operations across Africa.

And the continent is awakening, with huge growth rates especially compared with sclerotic Europe. Soon seven out of the world’s 10 fastest growing economies will be in Africa. If Britain wants to be part of that future, then being a respected partner of South Africa is key, accounting as it does for fully a fifth of total GDP for Africa – despite having a population of just 50 million in a continent of one billion. (Guardian, 1/05/13)

The reality for Britain is that it is no longer a major international power both as a result of the increasing influence of new players such as China and Brazil and the consequences of long term economic decline. At the moment it is ceasing to be a major player in Europe! The moves towards ever increasing isolation are even increasing the chances of the disbandment of the Union with the call for full Scottish Independence. If Britain is struggling to keep the Union alive then long term strategic alliances are the least of its concerns!

Britain is to put Winston Churchill on the £5, however the post second world war international economic order is now long over. In the coming years the UK will be an international political power in name only, respected for its historical legacy but with no real influence.Its importance on the African continent will gradually wane.

So I step on the train headed towards central London and as soon as I enter the train I hear some very loud Afro beat music. So I look around searching for the source of the music and to my amazement there is a well dressed tipsy white male blasting the music from his smart phone. So instead of mirroring the usual British consternation to such incivility I decide to join him and we begin a conversation. It turns out that he lives in Nigeria for Swiss Cement maker Holcim where they are a small competitor to the powerful Dangote Group. At the moment Holcim and other cement manufacturers are under investigation in Europe for cartel offenses. While European authorities will be focusing on Europe market practices speaking to this British expat in Nigeria has brought to the fore the means in which African politics and capitalism is having an impact on the international capital markets. It’s the Dangote Connection.

For those unfamiliar with Aliko Dangote he is one of the continents richest persons amassing a fortune in the manufacturing sector with a particular focus on cement and flour mills. The Dangote group from its own description is the largest manufacturing conglomerate in West Africa and this writer would venture even further and stamp it as the most influential business group on the African continent. If international companies are seeking to do business in West Africa in the area of manufacturing they have to go through Dangote, he understands the market and has an intimate connection with the people and politics. I asked my tipsy stranger on the train what is the appeal of Dangote in Nigeria and he explained that it’s his connection to the people. While Dangote has international expatriates for technical expertise his factories by and large employ large amounts of local people in the region. Dangote’s popular appeal along with his connections to the political establishment across the continent creates a highly favourable business environment for the group which international companies working in the region can only wish they could match.

The Dangote Group with majority market share and with easily pliable legal establishments in West Africa can provides legal and political difficulties for multinational corporations that are subject to European rules. The economic and political reality is that smaller manufacturers such as Holcim have no choice but to cooperate with companies such as the Dangote group even if it appears to stretch competition rules which it is subject to in Europe. As the continent grows in its market potential for global FMCG and manufacturing companies it will come up against the new breed of African Business magnates that have strong political connections, economic clout and popular appeal. International companies that seek to do business on the continent will need to bypass these gatekeepers rather than government officials of old. The liberalisation of the market in 1980s has created a new breed of African economic tycoons both self made and politically connected such as Dangote.  

In each African country there is a figure similar to Dangote that Western multinational companies have to bypass in order to do business on the continent. In essence the future of European market practices might be decided in the African market, it is after the age of globalisation.

This past week Gill Marcus the governor of the reserve bank of South Africa gave a warning to the international financial markets in relation to the chances of economic recovery. Marcus speaking in a briefing on South Africa and the international economy highlighted that she expected a slowing of growth forecasts internationally due to lower than expected growth rates in the Chinese economy. China is reporting growth rates of 7.7% for the first quarter while expectations from the market were 7.9%. The South African is expected to grow at a nominal 2.7% based on forecasts but the warning from Marcus indicates that everything will rest on improvements in China’s economy. China is the main player in the international market at the moment and thus the main engine for the international economic growth, which means that Sub-Saharan Africa will be the chief beneficiary of Chinas economic prospects. It’s the Chinese boost.

In addition to the briefing by the South African reserve bank the International Monetary Fund (IMF) announced that it would be raising the growth prospects for Sub-Saharan Africa. The IMF is forecasting that growth in Sub-Saharan Africa will grow at a rate of 6.1%. What is quite striking about the economic prediction is that the fund expects economies to grow even in countries that experiencing internal conflict. African countries in possession of precious commodities will be experience increased demand due to a slow recovery in Europe and the insatiable thirst by the Chinese. The IMF in their report state:

The generally strong performance is based to a significant extent on ongoing investment in infrastructure and productive capacity, continuing robust consumption, and the activation of new capacity in extractive sectors. (World Economic Outlook, 2013, p67)

The recent IMF report highlights the developments in Sub-Saharan Africa but it does not state the cause, the main driver for ongoing investment is China and regional economic integration. In response to my latest article many commentators have sought to highlight the importance of Western investment in Africa as both a moral and economic stimuli. While the US and Europe continue to be important trade partners for the continent the reality is that the main driver of investment and economic activity continues in the region is China, Nigeria and South Africa. While middle income countries in Sub-Saharan Africa are benefitting from increased economic performance due to regional integration, low income countries on the continent are benefitting solely on Chinese investment in the region. China is improving regional economic integration due to the massive investments in infrastructure which US and European multinational investment would not be in an economic position to fulfil.

The Chinese Boost is what is leading to massive improvements in the economic fortunes of Sub-Saharan Africa while North Africa becomes mired in political conflict and economic stagnation. In many respects the next decade of progress on the continent will be as a result of the dynamic growth of China’s productive capacity. Let’s see what happens.

The presence of Chinese investment on the African continent and indeed their presence on the international market have warranted much interest from observers and commentators. There have been quite a few comments in relation to my last piece looking at Dambisa Moyo’s book on China’s influence on the global marketplace. Those familiar with China’s involvement in the market will know that the country is mostly focused on acquiring resources both material and intellectual that will help drive the modernization program. So from acquiring mineral resources from African countries to borrowing intellectual property (using the term loosely here) from companies that manufacture in China, these attempts are all geared towards China making a great modernising leap. In response to last week’s article many comments have focused on the issue of leadership on the continent. In essence what are African leaders doing to maximise this moment of intense foreign direct investment in their respective countries. What kind of leader will take the continent forward to prosperity when the Chinese have left?

There have been a number of reports written by leading management consulting firms and academics that have examining the shift in governance that has emerged on the continent. In many instances praising the move from charismatic leadership to technocratic leadership. There are very few charismatic leaders that currently exist on the African continent apart from those that continue to hold leadership positions due to strong authoritarian political cultures. The argument goes that the move to more technocratic forms of leadership has led to better governance and this has led to more economic benefits. This writer would agree with those sentiments but while leadership on the continent becomes increasingly technocratic it is also finding that it is losing political relevance in the international community.  African leaders need to have the ability mix technocratic knowledge with political skill and vision. It might be an often criticised initiative but NEPAD engineered by Thabo Mbeki (South Africa), Olegesun Obasanjo (Nigeria), Abdoulaye Wade (Senegal) was the example of political leaders fusing technocratic necessity with political vision in relation to western aid.

At the present moment the continent does not have the kind of political leadership in relation to the issue of China. The governing elite on the continent at the present moment is quite technically capable, but questions still remain as to their ability to truly maximise the benefits of Chinese investment. Technocratic leadership is a fine quality but in relation to leading a country it only has limited uses, it can accurately manage the present but implementing a vision for the future requires political skill that is often the preserve of the charismatic. The African continent needs political leaders who are willing to replicate the Chinese and implement a compelling agenda for the future. All the ministerial meetings focused on China suggest that the only strategy is to get more money from the Chinese, rather than a concerted approach towards the future.

While the continent is moving towards more technocratic forms of leadership it could do with some leaders with strong political vision and strength. We need political leaders ready to make the 21^st century Africa’s century.

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