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14 February 2014

Africa: The Next Great Leap for Humanity

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This is an extract of my keynote speech at the BUILD Africa conference in Congo last February 6th. Over 800 African political and economic leaders (including President Dennis Sassou Nguesso) attended the conference. The theme of the conference was the building of infrastructures for the new African renaissance.

 

Ladies and gentlemen, I thank you for the opportunity to speak to this selected audience on the future of Africa.

Africa is forecasted to grow at 8% over the next 10 years and at 10% between 2025 and 2050. If true, this would take Africa’s share of world GDP from its current 4% to about 12% in 2050.

The good news is that it can be done. It is entirely possible that Africa’s miracle not only will continue but it will even accelerate over the next few decades. Moreover, African citizens could achieve middle class status faster than those in the West did (it took them over 150 years), faster than Japan (which took over 100 years), or the rest of Asia (which toot 50 years). Africa can achieve middle class status it in less than one generation. And that is not unreasonable.

The bad news is, however, that this sort of miracle is NOT going to happen automatically.  And it is not going to be easy. I hear a lot of talk in this conference and conferences like this around West Africa where politicians and business people optimistically take the future success of Africa for granted. Yes it can be done. But no, there is no guarantee that it will happen for sure. The success of Africa will crucially depend on the decisions that are made today. This is why it is very important for the political and economic leadership of Africa present in this conference to make the right decisions as we move forward.

The Global Competitiveness Index of the World Economic Forum estimates the determinants of productivity for 148 countries. Although African economies have been improving over time, they still lag behind in many important dimensions. Let me highlight the six key areas that will ultimately determine the success of the continent.

First, Africa needs to make an intelligent use of its massive natural resources. Natural resources in Africa have been under the ground for millions of years. Yet, so far, they have not contributed to the economic growth of the. Until today, the natural resource money has been squandered in wars, corruption, waste and political favoritism. This has to change. Africa needs to stop blowing its colossal natural wealth and needs to start putting it to good use. Natural resources have to be invested productively once and for all.

Second, infrastructures. Africa needs to invest in its infrastructures. And that is why congresses like this one are useful. Great nations have been built around great infrastructure projects. American growth during the XIXth century could not be understood without the railroads that crossed the continent from New York to San Francisco. And the success of the XXth century could not have been achieved without the interstate highway system. Infrastructures are good because they facilitate businesses, create networks, reduce costs of transportation, reduce the price and the time of communication, allow workers to get jobs that better match their abilities as they can commute, and improve life expectancy and the standards of living as they provide access to hospitals, schooling and clean water and sanitation. And perhaps more importantly, infrastructures facilitate the exchange of ideas, the ultimate source of growth.

But the fact that infrastructures are crucial does not mean that all infrastructures are good. Many are a complete waste, especially those that are designed and build with political rather than economic criteria. Let me give you an example that is close to my heart. I am from Barcelona and in 2004, the city organized a mammoth forum. The government invested hundreds of millions of euros in infrastructures under the pretext that, once the forum was over, the infrastructures would attract businesses and economic activity. But when the Forum ended, businesses never came. That part of the city is now a ghost town while its infrastructures deteriorate irremediably. Something similar happened in Seville after its massive investments for the 1992 World Fair (Expo Sevilla 92). And during the construction bubble in Spain, colossal infrastructures were built. Infrastructures that were the pride of politicians of all political parties. And now that the bubble is over, Spain has lots of high-speed trains with no passengers, airports with no planes, roads with no cars and hundreds of thousands of empty buildings. The theory “build and they will come” is blatantly false and leads to frustration and waste.

This means that, when it comes to deciding what infrastructures to build, decision makers should learn to prioritize. They should choose infrastructures that have a wide range of benefits to a wide range of industries. They should prioritize infrastructures that are flexible and can have multiple uses (as opposed to infrastructures that only benefit a handful of handpicked sectors or companies). The government should deploy infrastructures that are resistant to the passage of time. This is especially true in places like central Africa where the tropical weather wears and tears and depreciates buildings, roads or bridges at a much faster pace. The government should prioritize infrastructures that create networks: networks of businesses, networks of cities, networks of regions. Finally, the government should prioritize the infrastructures that solve bottlenecks problems. Start where there is clearly a demand. That explains the success of another great infrastructure project in Barcelona, a project that represented a great success: the Olympic Games of 1992. Unlike the 2004 Forum, the 1992 Barcelona built roads that facilitated mobility around and within the city, enlarged the overcrowded airport and ports, and cleaned historical buildings to expand a tourism sector that already existed. And that was a resounding success.

A final word about infrastructures: in a session this morning a number of experts evaluated public works by the amount of jobs they created while they were being built. That is a mistake. The goal of building infrastructures is not to create jobs during construction. It is to facilitate the creation of a business environment and to improve the life of the citizens once they are finished. That is how they should be evaluated and chosen.

Third, enlarge markets. Africa has 54 economies with over 700 million people. And it is expected to have 1,5 billion citizens by the end of the century. But unless things change dramatically, Africa will not be one of the largest markets in the world despite its size. African economies are disconnected both physically and legally. It is very hard and very expensive to travel around Africa by plane, boat, train or road. The infrastructures that connect African economies simply don’t exist. But even if they did, Africa would not be a single market as it is a continent fragmented into 54 different regulations, 54 telecommunications markets, and 54 bureaucracies. Africans need to make an effort to integrate at all levels. And this includes the free movement of people. It is beyond comprehension that in 2014 it is so hard to get a visa permit to enter almost all African countries. It took me two weeks to get a visa to get here. If I was an businessman eager to invest here or a tourist willing to visit this country, I would have decided not to come. It is simply too cumbersome and too hard. And there is no reasonable explanation for these absurd government-imposed barriers. Africa will not succeed in its quest to grow into a wealthy continent if each country remains closed to foreign talent. I think it was Bill Gates who said that the United States will continue to lead the world for years to come because, unlike China or Europe, it can draw talent from a pool of 7 billion people. It can draw talent from the rest of the world. In order to grow, Africa needs talented engineers, architects, businessmen, doctors, lawyers and teachers. Since it will take a while to grow its own talent, in the meantime, it needs to draw the talent from the world pool. And will this not happen as long as government maintain the current constellation of absurd barriers.

Fourth, the government must work for the people. Political scientists’ measures suggest that, although some dictatorships remain, many African countries have made great progress towards being more democratic. Gone are the days in which there were no democratic countries in the continent. But, by democracy, political scientists mean governments that are elected by the people. A well functioning democracy, however, requires more than just elections. The government should not only be elected BY the people. It should be committed to work FOR the people. By the people, for the people. The public sector should not be seen as an institution that employs and benefits the friends, relatives and supporters of the parties that win elections. The government should not even be seen as an “employer”. The role of the government is not to employ people but to create the environment in which businesses and entrepreneurs create the jobs. Too many public teachers in Africa miss more than 25% of the classes. Too many public doctors in Africa get away without seeing patients for weeks. Too many public employees live off kickbacks. Shiny new ports are useless if it takes weeks and an uncertain amount of bribes to get the containers from the bureaucrats and the border police. Roads are useless if it takes hours or days to get a visa that allows people to cross borders. Railroads are useless if it is prohibitively costly to move goods across borders. None of these practices are acceptable in a well functioning democracy. An economy cannot function properly without a properly functioning public sector. The reform of the public sector should also be a priority in the reform agenda for Africa.

Five, embrace technology. One of the key infrastructures for Africa is telecommunications. In many African countries, there are more cellular phones than people. And Africans have been very creative in putting these technologies to good use (everyone knows and cites the success of MPesa in Kenya). But the cellular infrastructure is already obsolete. While the rest of the world is moving rapidly to adopt smartphones, Africans are being left behind because the high-speed networks have not yet been implemented. It is very hard to connect to wifi and the internet, even in the most expensive hotels of the capital cities. Delegates attending this conference know that high speed internet does not work efficiently even in this very state-of-the-art congress center! This needs to change. Africa cannot afford to stay behind in the telecommunications revolution that is spreading around the world. Hence, as governments around the continent ponder on how to prioritize their infrastructures, fiber optic networks should be at the top of the list. Every building, every business and every school in Africa should have easy and cheap access to high speed internet.

Which brings me to the sixth and last point: the mother of all infrastructures, the most important of all policies, the most urgent of priorities is… EDUCATION! It is impossible to understand the miraculous economic performance of Japan, Korea or China without recognizing the massive effort made in the education of its population. In less than one generation, Korea has gone from a rural and largely illiterate society to a modern technological world leader, whose scientists and engineers dominate the admissions committees of the best colleges of the planet. Over a third of the students accepted at the top elite universities in the United States now come from Asia. Education is the ultimate key to progress and development.

But when I mean that Africa should prioritize the investment in education I do not mean more of the same education. The current education system is obsolete and more of the same will do little good. The education system must change dramatically. Research shows that 72% of business ideas come from workers (like Amancio Ortega, the founder of Zara, was a salesman at a bathrobe company before creating his empire). 20% of business ideas come from non-workers who are not researchers (the three founders of Starbucks were high school teachers, the founder of Cirque du Soleil was a street performer, and the founders of Ikea or Facebook were students). Only 8% of business ideas come from formal researchers.

This means that the education system needs to focus on promoting the creativity of the regular students (as opposed to the superstar students who have the potential to becoming researchers and scientists). This means that the focus of the education revolution needs to be in primary and secondary schools, including professional schools, as opposed to tertiary schools. It also means that African schools should emphasize more the creative aspects of education than the traditional mechanical aspects.

The world is witnessing an educative revolution. Americans, Europeans and Asians are experimenting and learning how the internet revolution changes the way we educate our children. It is not clear how it will all end up. I am not even sure how it is going to affect my job. The Massive Online Open Courses (MOOCS) that are being offered everywhere may end up meaning that a few superstar teachers have millions of students while the rest of us have to rethink what we do in our classrooms. Initiatives like the Khan Academy may change what primary and secondary schools students do in the classroom and at home. It is a fascinating moment in the history of education. And the beauty of it is that everyone who is connected to the internet can be part of it. That is why it is so important that the governments of Africa make every effort to connect every school of the continent to the internet. So that, this time around, African kids don’t miss the train. Because it does not matter whether you are in New York or in a remote village in Equatorial Guinea. Today, if you have access to the internet you can have access to the best education in the world.

Nobody should underestimate the power of millions of educated, creative, young African people that live in an environment that allows them to develop and implement their ideas.  If today’s African leaders are able to create such an environment and are able to endow the children with the right kind of education, Africa’s future will be as bright as the optimists foresee.

In 1960, John Fitgerald Kennedy pledged to send a man to the moon and bring it back to earth safely by the end of the decade. After the inspiring speech, the entire country committed to achieve that goal. And Neil Armstrong made his “giant leap for mankind” in 1969.

I whish that leaders made a similar speech today. But instead of sending a man to the moon, they should pledge to have a universal education system second to none by 2030. Only if African children have access to stellar education, the miracle of Africa will become a reality. And it is within our reach. It is only a matter of political will. That would be the real giant leap for mankind.

 

 

NOTE: For another account of what went on in the BUILD Africa conference, read Nisha Pillai's blog.

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INTRODUCTORY NOTE

Starting January 30, 2012, I decided to put the random (economic) thoughts that I was posting on Facebook, in a blog. In this site you will be able to read all Facebook notes going back to 2008, (without my Friend’s comments, unfortunately), but we will only maintain the new thoughts. If you want to check out the old comments, they are still posted on Facebook. If you want to comment on them, you have two options (1) Become a Facebook Subscriber. Since all the posts will also appear in Facebook, you will be able to comment there. (2) Comment on Twitter, as each post will also be announced in Twitter.

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