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'Africa has turned the corner'

By Staff Writer

From Fin24, 

January 24, 2008

Africa's national levels of economic growth remain "far from spectacular",
however, while inequality is fast becoming a growing concern. Income levels
continue to "sharply diverge from the other four billion people on the
planet", added the delegates.

Africa's best source of impartial information. Justmoney - your guide to money

One of the insights gleaned from this session was that Africans have
graduated from the best school in the world: the discipline of experience
and failure. "People have learned what not to do."

And while not all policies are brilliant, Africa is avoiding the truly bad
ones, such as inflation and corruption, attendees heard. Because this
learning process has been gradual, it has also been robust.

Commodity booms are now regarded as much with caution as with joy. Too often
in the 1970s the influx of easy wealth from oil and minerals was squandered
in opaque transactions and ill-defined projects given to cronies, it was said.
This bred corruption and embezzlement, misguided spending sprees and
economic decline.

However, it was noted that a new approach has taken hold in many African
countries.

Generate new wealth from within

Among these is that African states do not just seek foreign direct investment,
but generate new wealth from within. Some do this by slashing the forms
required to set up a business from 27 steps to three or four. This reduces
corruption, legitimises what had previously been black market trades, and
speeds trade within borders.

African countries now learn from, and trade with, each other - another new
approach noted. Revenues generated within countries create opportunities for
neighbours, especially resource-poor landlocked countries, it was heard. Malawi
can rely on an economically improved Mozambique; Niger needs Nigeria to succeed, for example.

Today's leaders and institutions seek to invest in long-term and gradual change for a payoff down the road, the conference was told. Investing in schools and clinics, as much as in critical infrastructure, can make African countries more competitive for foreign investment.

However, foreign companies must become full partners with countries, as best
exemplified by the decades-old arrangement between De Beers and Botswana. Both parties benefit from trust, stability and an educated and healthy workforce. This may require short-term corporate loss - such as agreements to process diamonds in-country instead of overseas - but it yields overall long- term gains.

Governance matters, "but it is a big fuzzy word applied all over the place", said
the delegates. In terms of managing commodities, governance requires five decision points: how rights are sold; how revenues are taxed; how transparently the revenues are reported; how money gets saved; and whether
these savings are invested in an honest and efficient manner.

African economies collapsed over 1975-1985, stagnated between 1985-1995, but then turned the corner to an extent over 1995-2005.

The World Bank, according to its Africa Development Indicators report released late last year, and before the current US shudders, sees growth in sub-Saharan Africa at 5.3% in 2007 and then at 5.4% in 2008.

Yar'Adua is the first civilian leader in Nigeria to have taken over from another
after winning controversial polls in April last year. The former chemistry teacher is also the first Nigerian leader for 40 years to be university educated.

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