Welby: Africa can shape future of global economy

22 September 2017

REUTERS

Trade: fruits are displayed in Nyala market, in Darfur, during a visit by the President of Sudan, Omar al-Bashir, on Tuesday

Trade: fruits are displayed in Nyala market, in Darfur, during a visit by the President of Sudan, Omar al-Bashir, on Tuesday

THE Archbishop of Canterbury has praised a new book on Africa, which calls on the continent’s leaders to liberalise their economies and abandon their “hostility” towards foreign investors.

Making Africa Work: A handbook for economic success (Hurst) was co-written by Greg Mills, Jeffrey Herbst, and Dickie Davis, all of the Brenthurst Foundation, a think tank based in South Africa that works to facilitate economic growth; and Olusegun Obasanjo, a former President of Nigeria. It was launched in the UK at Lambeth Palace last week, where Archbishop Welby described it as a “hugely important” book that had “human flourishing at its heart”.

“The future of Africa depends on Africans, and too often it has been outsiders who have told Africans how its future should be shaped, and that has always been a catastrophic error,” he said. Some of the issues facing Africa today were a “direct result” of the “dark time” of colonialism.

The book urges the continent’s leaders to learn from other countries, including Singapore, where the country’s zero tariff for imports, low taxes, and free-trade agreements are singled out for praise. Dubai is praised as a country open to other cultures that has created an environment “where other people could succeed”.

It identifies two major challenges facing Africa: a huge increase in the population — it will double to two billion by 2045 — and a growing number of young people in need of jobs. It warns that this could be a “tremendously positive force for change”, but that the continent faces a “possibly disastrous future”, unless it acts to “consolidate democracy, liberalise its economies, invest in people and infrastructure, and ensure the rule of law”.

“Reform necessitates fundamentally changing the way in which African economies work,” the authors write. “It means being open to international trade and capital rather than aid, being reliant on enterprise rather than personalised and patronage-ridden systems, while the aim of government should be private-sector growth rather than public-sector redistribution.”

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Citing international audits, it warns that democracy is in “retreat” and that safety and the rule of law have deteriorated in many countries in recent years. It is critical of governments, who are blamed for economic mismanagement and a failure to implement development plans or challenge elites: “The reason reforms often don’t work is because it is not in certain key officials’ interests to see them implemented.”

It warns that, without economic growth, “Africa’s poverty threatens to overwhelm Europe”.

The World Bank estimates that 40 per cent of Africans live in extreme poverty. Hope can be found in the trajectories of other countries who have faced challenges, the book argues, notably those in East Asia that have moved away from “socialist giantism”, such as Vietnam; and Chile, where the “bright young economists” of the 1980s — the Pinochet era — are praised.

The authors call on African leaders to “drop their animosity towards business”. They must put in place incentives for investors, they argue, including tackling poor levels of infrastructure and supporting the rule of law. Low wages are an opportunity to exploit, it suggests, as rising wages in China make it less attractive to investors.

There are chapters devoted to agriculture, mining, manufacturing, services and technology, but little space is devoted to some of the priorities singled out by development charities in recent years. There are no suggestions on tackling climate change while an entire chapter is devoted to mining which, it argues, “does not have to be a sunset industry”.

There is one paragraph on “illicit financial flows” that cites an African Union estimate of the loss of $850 billion between 1970 and 2008, facilitated by tax havens. The “key enablers”, the authors argue, are “weak systems of governance in Africa, and a lack of confidence in both policy and the rule of law”.

Renewable and low-carbon energy should be included as an “engine of growth” in Africa, Christian Aid’s private-sector policy adviser, Dr Matti Kohonen, said this week.

“Africa is very vulnerable to climate change,” he said. “If large parts of Africa may potentially become unfit for farming owing to drought or prone to extreme weather conditions, and if deforestation carries on at the same rate, we lose entire ecosystems that also serve as carbon sinks, all leading to worsening poverty.

“African countries are generally wishing to attract foreign direct investment, and have investment promotion policies, tax incentives — with which we sometimes disagree if [they are] not well designed — and other measures in place. Dubai or Singapore have no corporate taxes and income taxes to pay, so they don’t work for larger economies.”

The business environment required “improving”, including “clear regulatory environments, tackling high transport costs, lack of skilled labour supply”: all areas covered in the book.

“Mining companies have been found to avoid and evade taxes in Africa, but they can also contribute positively to development as in the case of diamond mining in Botswana where they have a diamond cutting industry, and they use revenues much better to develop and diversify the whole economy,” Dr Kohonen said.

Making Africa Work features interviews with current and former leaders, and ministers and investors. Speaking at the launch, Chief Obasanjo suggested that, “so far we have been the architect, if not of our own misfortune, of our own inadequate performance. Now we want to be the architect of our own fortune, our own adequate performance, and our own getting there — making [Africa’s rapidly growing population] not a liability, not a disaster, but an asset: an asset that will make Africa to be in its rightful place by the middle of this century. That can be done, and this book is saying how it can be done and how it can be achieved.”

Tendai Biti, a former finance minister in Zimbabwe, said that there was “no substitute for macro-economic hygiene”, constitutionalism and the rule of law, and democracy.

Archbishop Welby expressed a wish that the book would be “read by the people who should read it, and that they will pay attention to it”.

 

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