This piece is the text of a speech delivered at the 2018 African Law and Business Forum by Elikem Nutifafa Kuenyehia, Chairman, ENS Ghana originally titled “The Future of Africa”.
With 54 independent countries, hundreds of ethnic groups and over one thousand languages, it might seem that the concept of a collective African future might be misleading. But, it’s my experience, as I’m sure it is for many of you, that the similarities of these countries make such a conversation not entirely meaningless. In 2004, in Boston, at a similar African conference, I heard many inspiring African stories, told first hand by people with skin in the game, people cultivating African opportunities. I heard about a continent which, after decades of decay was growing faster than Asia; had more than doubled foreign direct investments, in under four years, with a projected 300% increase over the following six years. I heard about MTN’s annual revenue of 1.8b US Dollars in Nigeria, after only three years of operation in that country. I heard about the first project-financed deal in Nigeria’s power sector. Each of these stories, and many others I heard, illustrated mind boggling rates of returns, possibly not available then, anywhere else in the world. So, inspired and moved by these stories, I gave up on my American dream to pursue an African dream. Today, like the speakers at that conference, I too tell stories of Africa’s impressive potential and about the mindboggling returns available. Available that is – to those willing to take the risk.
Twelve years ago, when I started my own law firm, I couldn’t get partners of many of the London law firms to meet with me. Understandably so.Africa had such little bearing on a typical London partner’s drawings, it made no sense to waste precious chargeable time, on tea and cucumber sandwiches with an African lawyer.
Twelve years ago, when I started my own law firm, I couldn’t get partners of many of the London law firms to meet with me. Understandably so. Africa had such little bearing on a typical London partner’s drawings, it made no sense to waste precious chargeable time, on tea and cucumber sandwiches with an African lawyer. Today, it’s a different story. Instead of struggle to have meetings, I struggle not to have them.
I no longer announce my London trips. Because invariably, a partner or other, doing work in Africa, or aspiring to do same, would invite me for coffee or lunch, to catch up on what’s going on in Africa and to discuss how “we” could either work together or do more together.
Africa’s secret is out…. of…. the bag.
Economic revival has provided modern day spoils in the new scramble for Africa:
Many African countries benefited from the increase in the price of oil from $20 a barrel in 1999 to $145 in 2008, as well as similar price increases for minerals, grain and other raw materials, coupled with rising global demand.
But according to McKinsey, resource gains only accounted for a third of economic growth. The bigger drivers came from internal structures. It is true. Africa’s made significant progress – Now, instead of war, famine and despair, we have thriving economies and an entrepreneurship renaissance. Now, instead of dictatorship and military brutality, we have strengthened regulatory and legal systems as well as free and fair elections. Now, instead of a culture of silencing and intimidation, we have a vibrant free press and an engaged civic society; And now, instead of African governments shamelessly relying on begging bowls…. for handouts, we have these governments pushing trade and open economies. Widespread availability and adoption of mobile phones have enabled all kinds of platforms empowering hitherto marginalized citizens. These include the famed MPesa, the mobile phone-based money transfer and microfinance service for 30 million active users in 10 countries. And Esoko which allows farmers to access market prices for produce by sending an sms message. So as to be able to set prices for their own produce. I’m told that in Northern Ghana, Esoko has had the unintended consequence of resolving marital conflicts. Before Esoko, wives sometimes suspected that their husbands were selling farm produce for higher than they’d report. Esoko now allows these suspicious wives to access the data themselves. The increasing use and acceptance of English law in Anglophone Africa and the use, in Francophone Africa, of OHADA, a unified business law has created a greater level of investor confidence than was previously the case. That there’re many precedents of private individuals and companies winning cases against African governments in Africa, and successfully enforcing judgement only reinforces this. This makes English lawyers particularly well placed, to also partake in the spoils of the new Africa. It’s getting harder and harder to get away with corruption. Nigeria, for example, once a poster child of corruption has made massive strides to fight and penalize corruption. So, we’re seen high rates of returns and the empowerment and enrichment of millions of Africans, in a way humanity’s never seen before. But that’s… not the whole story – many of these opportunities have been exaggerated. But even when not overstated, they’re counterbalanced by many enormous challenges, several of which are unique to Africa. There’s a laundry list of challenges that Africa faces, many of which have been widely publicized and are well known: Off the top of my head, there are at least ten that I can think of. I’m sure you all could significantly expand this list. The challenges to Africa’s future will come from:
- Small economies
II. The inevitable population explosion
III. Poor leadership
IV. Inadequate infrastructure
V. Food security and Climate change
VII. Uneducated workforce
VIII. Corruption and corrupt regimes
IX. Land tenure systems
X. Basic tenets of democracy absent in certain countries like the DRC and most of Central Africa.
It is a long and depressing list.
But I’d like to focus only on two – the two that give me the greatest cause for concern, which are the small size of African economies; and the inevitable population explosion.
First of all, the continent of Africa put in economic context is rather small. The combined GDP of all of Africa is equivalent to the GDP of Germany.
Less than that of Japan.
Less than that of the US.
And obviously less than that of China.
The vast majority of African countries also have pretty small economies. By way of a random example, the combined GDP of The Gambia and Madagascar is less than the annual revenue of Coca Cola. Now, think about that! With such a low base, no matter how much growth there is, I do not hold much hope for bigger mightier economies that create enough jobs for sustainable livelihoods for its growing population. So, one of the greatest opportunities for future African growth will be Africa’s ability to trade with itself. While trading blocs such as SADEC (South Africa Development Community), EAC (East African Community) and COMESA (Common Market for East and Southern Africa) have made reasonable progress towards integrating their markets, a lot more needs to be done.
Intra-regional trade currently hovers around 11%; low but unsurprising, given poor linkages between various African markets. Also, lower tariffs on African goods entering European and American give African exporters more of an incentive to export to those markets than to other African countries. Plus, there are all kinds of bottlenecks including unnecessary border documentation requirements and slow and costly customs. Conscious of this, the African Union, as part of its Agenda 2063 to integrate and transform Africa has initiated the Continental Free Trade Agreement which if implemented, is expected to double intra-regional trade.49 African countries have signed up to the framework to create a single continental market for goods and services, with free unfettered movement of business, people and investments. The plan is for this to come into force when at least 22 countries ratify it, at which point it’ll create potentially, the largest trading bloc in the world. All that sounds great.
It’s a bold move which truly will integrate and then transform African economies if it succeeds. But Nigeria, our largest market has refused to sign up, concerned about its likely impact on local businesses.
Now let’s look at the impending population explosion; the total African population today stands at 1.2 billion, of which 60% are 25 or younger. The UN estimates that an additional 1.3 billion will be added by 2050. Where will all these people live? The answer is increasingly in cities. The urban population is projected to reach 60% in 2050; which will only increase the already large housing deficit, worsen inadequate water and sanitation services and increase pressure on other infrastructure.
And what work will all they do?
Unfortunately, for a vast majority of them, absolutely nothing. The economies of Africa are not growing anywhere near the population growth. So, it is unlikely there’ll be enough productive work for all its people. We’ve seen the effects of this – migration to Europe and alarmingly high number of African youth joining extremist groups. If nothing is done to ensure economic opportunities across Africa, we’ll see a rise in modern day pirates, terrorists and extremists. That’s why, if you ask me about the African future my son will grow up in I’m in despair. The challenges appear so great as to seem insurmountable.
So, what can we hope for? Is there anything we can hang our hats on? What gives me hope in Africa and its future is the people of Africa and their dreams. A lot of the progress we’ve seen so far, that’s resulted in tangible economic gains, has been because of a new wave of ordinary Africans whose refusal to accept the status quo and whose bold brash dreams of a better Africa, have resulted in rewriting the narrative and lifting millions out of poverty.
Collectively, these entrepreneurs have built over 400 companies with annual revenues in excess of one billion US Dollars. In 2015 – the last year for which the data is available, Africa’s largest companies earned a combined 1.4 trillion US Dollars in revenue. At the other end of the spectrum, are millions of micro, small and medium size enterprises that make up the majority of African economies, providing crucial jobs. There are several hundred thousands of such entrepreneurs, seemingly ordinary Africans, who are disrupting entire industries, empowering millions and generating wealth not only for themselves but for employees, suppliers and governments. In 1997, 33-year-old Tony Elumelu, frustrated that retail banking remained the preserve of an elite few in his country, started Standard Trust Bank, with the bold mission to democratize banking in Nigeria. Within six years, it had become the fourth largest bank in Nigeria, making it possible for millions, previously disenfranchised from banking to have bank accounts and access banking services.
After succeeding in Nigeria, Elumelu went pan-African with his mission and today, after acquiring United Bank of Africa, operates in 20 African countries. A firm believer that only Africans can develop Africa, Elumelu subsequently set up the Tony Elumelu Foundation with a bold brash dream to develop ten thousand African entrepreneurs. And he’s on course to do so. Three thousand two hundred and fifty (3,250) young Africans are so far benefiting from his program. In Ghana, like in many other parts of Africa, home ownership can be a significant challenge due to a number of factors including land title issues. Unwilling to accept this status quo, Theresa Oppong Beeko started Manet Properties, to provide middle class Ghanaians the opportunity to own reasonably affordable good quality homes with no title issues. Today, she’s enabled over 2000 families to have homes. In 2008, Fred Swaniker, set up Africa Leadership Academy, with the bold brash dream of developing the next generation of Africa’s leaders. Taking an approach very different from the rote learning that permeates most of Africa, he’s focused on developing critical thinking, creativity and problem solving skills. So far, African Leadership Academy, the equivalent of a sixth form college, has graduated 1,000 Africans from 46 African countries. He’s now turned his attention to higher education with the African Leadership University and a much bolder dream to develop 3 million African leaders by 2060. So, despite the despair, what really gives me hope in Africa and its future is ordinary every day Africans chasing their dreams.
Paradoxically though, what might stand in the way might be the African mindset – our culture of shattering, rather than nurturing dreams. Most African cultures frown on bold brash dreams. We’re brought up to be conformist and never to challenge the status quo, perhaps a legacy of colonial rule. African society typically, pre-authorise certain dreams and woe betides you if (like me), your dreams are not one of those pre-authorised. We generally don’t encourage or tell stories of success – we tend instead to delight in people’s failures and are intolerant of failure of any kind, even in pursuit of worthwhile enterprise. Yet we know that failure could be an important part of the journey to success. At home, parents dampen imagination of children who dream beyond the limits of their reality. School prepares us for white collar jobs using outdated curricula which emphasizes rote learning; government provides little or no support and our laws and regulations are not as protective of innovation as ought to be the case. And many of those who break through all of this to achieve success have what I call ‘the only chief in the village syndrome’ where to preserve their status as the only one, or one of only a few, make no attempt to pull others along, to nurture, mentor and develop the next generation.
So, at the intersection of Despair and dream, how do we ensure an Africa where dreams and opportunity trump despair? What are we to do….? As lawyers and business people, what should we be doing? Those of you working for multilateral agencies, governments and donor agencies with some influence on economic direction could advocate for policies that support entrepreneurial ecosystems. This will include incubators and accelerator programs, coaching and mentoring programs for entrepreneurs, incentives for venture capital and private equity firms and stronger linkages between research institutions and business. As well as lobbying for wholesale changes to educational curricula. I also suggest that instead of focusing on measurements of GDP and GDP growth, we focus instead on measuring entrepreneurial activity and job creation? Measuring GDP is at best a guessing game, given the dominance of the informal sector. And it doesn’t accurately capture African job creation and prosperity. For those of you in the media, may I suggest that you tell and amplify distinctively African stories…both of successes and failures and the journeys to get there? For investors, may I suggest that in negotiation and documenting deals, you consider borrowing from our social enterprise friends, measures of long-term job creation, community impact, and if you’re investing in education, certainly matrices in respect of the curricula. All of us doing business in Africa should consider how, in whatever small way, we can contribute to long-term job creation and wealth creation. It’s not just a good thing to do.
We all know what will happen if we don’t. For global law firms, it might be through secondments and programs such as ‘International Lawyers for Africa’ which enhance technical legal and commercial skills of African lawyers who’re critical in this whole process. In developing African ‘best friends’ networks, be more conscious about sharing best practices. In any event, these ultimately help with transactions down the road. International companies could help better equip African companies in their value chain. A great example is Invest in Africa, founded by Tullow Oil, to upskill small and medium enterprises and to connect them to multinational procurement opportunities, including their own.
And as we continue to talk at this conference, let me ask us all to think about this: Maybe … Maybe … it’s not aid … Maybe it’s not trade…but maybe… primarily,… it’s Africans and their dreams…that’ll will fuel … the future prosperity of Africa. In my lifetime I don’t believe I’ll see the end of war or terror. I don’t believe that I’ll see the end of disease or of poverty; But I do believe passionately that if the dreams of Africans were supported, Africa would be a better place for it. I should know. I’m African.
And I’ve been a dreamer all my life.
This piece is the text of a speech given by the author at the African Law and Business Summit on 8 November 2018.