NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Business Action for Africa’s report From Crisis to Opportunity: Harnessing the Power of Business to Sustain Progress Towards the MDGs is hardly ground-breaking in its arguments. It presents, through the voices of influential leaders in business, development, and academia, a series of strategic imperatives that will mitigate the damage caused by the financial crisis and steady African progress toward the MDGs. What I appreciate about the report is the re-orientation of the MDG-driven development agenda in terms of the impact of the financial crisis on Africa.

Perhaps this is not entirely surprising because collectively, Africa was unlikely to reach these goals before the financial maelstrom emerged, as the Chairman of Anglo American Sir Mark Moody-Stuart points out. However, it is useful to frame the dialogue in way that explicitly acknowledges the systemic link between the failure of global financial institutions and the economic progress made by African countries. After all,Paul Collier, Oxford Professor notes that “Africa’s growing integration into the global economy” pulled it into the mêlée, resulting in a reduction in FDI and trouble in the commodity markets.

Moody-Stuart goes on to assert a well-worn, but highly appropriate warning against protectionism in response to the disaster, a sentiment that is echoed throughout the report. Instead, the challenge should be met by the re-doubling of efforts to address the long-standing agricultural, infrastructural, and regulatory challenges that the continent faces, as well as trade liberalization and resource extraction dependence. The familiar call to action also includes pushing richer nations to assist poorer ones; encouraging the private sector to collaborate with government to create healthier investment climates and business linkages; and focusing on providing the basics, such as food security, healthcare, and education. Although the report reads a bit like an institutional showcase, highlighting the priorities, initiatives, and accomplishments of the organizations featured, there is some interesting commentary.

My favorite bit of analysis, one that literally put a smile on my face, is offered by Richard Laing, Chief Executive of the CDC,”the biggest private equity investor in Africa.” According to Mr. Laing:

Any simple prognosis for the continent’s economic future ignores the fact that there are 48 countries in sub-Saharan Africa with differing economies and at varying stages of development. It is action, not talk, that is required. Of course, as the global financial crisis brings about falls in foreign aid, commodity prices and remittances, it is clear that no country will emerge unscathed. Some nations like South Africa are already in recession and those economies with a greater reliance on exports and trade with the West are undoubtedly bearing the brunt of the crisis. However, we should caution against too much doom-mongering. Many African countries are still growing on the back of strong domestic demand and consumer markets, with Uganda, Ghana, Nigeria and Rwanda as prime examples.

Bravo, Mr. Laing. He also contends that African businesses, especially those that serve local and regional markets, are sorely in need of capital. Companies like these will serve as the engines of economic growth and contribute to the fight against poverty. Another interesting excerpt by Gabriel Solomon, Senior Vice President, GSMA, highlights the tremendous impact of telecom on African development:Across Africa the mobile industry employs more than 3.5 million people today. It will generate $71 billion in tax revenues between 2000-2012. And it is a substantial generator of economic growth, responsible for around 6% of East Africa’s GDP in 2008. A 10% increase in mobile penetration boosts GDP by 1.2% in a typical emerging market.
He also makes a rather cogent observation about the need for cross-sector cooperation with telecom, i.e. the development of supportive financial regulations and the co-location of telecom infrastructure with that of utilities.

Other notable initiatives include DFID’s North South Corridor project, which aims to improve the efficiency of trading routes between Southern and Eastern Africa by improving ports, roads, railways, and customs processes, and efforts made by Diageo and SABMiller to source sorghum and barley locally.Although the report was quite informative, two questions lingered in my mind upon completing it. First, “Why do new challenges still garner old solutions?” While many of the concerns highlighted remain critical, new dilemmas have emerged, such as the need to assure African citizens that their financial institutions are trustworthy (and actually ensure that they are so), an observation made by DeBeers Chairman Nicky Oppenheimer.

The second question, and perhaps the more troubling of the two is, “Where are the African captains of industry, academicians and civil society leaders?” Kofi Anan,Obiageli Ezekwesili and Omari Issa and Nicky Oppenheimer are featured prominently in the report, but appear to be lone voices. Oppenheimer notes this as well—“African leaders need to continuously engage with, and play a constructive leadership role in, the global forums that address these key issues.”

The question is how do we make that happen? If it’s a pipeline issue, part of me thinks (and I apologize for sounding trite) that there should be a mandatory “take a rising star to work” policy so that more emerging African leaders become privy to these debates. Reports like these could also feature excerpts from new voices in the field; Dambisa Moyo comes to mind. Regardless, surely a wider set of stakeholders could have been invited to weigh in.In any case, the report is new andt the debate ripe for commentary. Be sure to check out the report and voice your opinion here.