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Nurturing ‘grey matter’ is also infrastructure

Nurturing ‘grey matter’ is also infrastructure

Few Africans in the global leadership space are as instantly recognisable as the Senegalese Makhtar Diop, who as the head of the Africa Department at the World Bank over the past six years, placed the continent and its needs at the very centre of the organisation’s heart.

Since July, Diop has taken up a new position as the World Bank’s Vice-President of the Infrastructure Department. Although his responsibilities now span all regions, Africa will continue to have pride of place in his considerations. He talked with Hichem Ben Yaïche.

In what frame of mind will you be leaving the Africa Department at the World Bank?

In a positive frame of mind, encouraged by the progress that has been made in Africa in recent years. I have spent six years as head of the Africa Department and during the last decade, we have seen average growth rates of 5%, which is a robust figure for African economies.

We have also seen a climate of confidence: African economies have become more resilient. We have encountered major shocks due to external factors, despite which growth has continued at reasonable levels. We have also seen non-oil exporting countries, whose growth was therefore not dependent on commodities, manage to resist. This means that the economic fabric has become more robust. These are real grounds for satisfaction.

Are there things that you regret?

Of course. There are always things that can be criticised, whether it concerns my own personal contribution or the changing economic situation in Africa. I’ll let you be the judge of whether or not my contribution has been worthy of what can be achieved in such a position of responsibility.

I believe that we have managed to accomplish a certain number of things with African countries. Firstly, we have succeeded in enhancing the role of the private sector. When I arrived six years ago, when we talked about energy generation, we were still discussing whether or not it was a strategic sector and if we should or should not enter into partnerships with the private sector. Today, almost everybody buys electricity generated by the private sector!

The change of mind-set has been very rapid. Secondly, we have seen a change in the dialogue between African countries and the rest of the world on many issues. In the past, many people considered hydroelectric power to be too complicated for Africans to be able to produce over the long term. I believe that African countries have demonstrated the opposite.

They have also become major players in the debate on climate change. The sources of supply in Africa have become greener, especially thanks to hydroelectric and solar power. When I arrived six years ago, African countries were buying a kilowatt hour for 22 cents because of the perceptions of the technology and market risk. The rate in Senegal is now 4 or 5 cents per kWh. That gives you an idea of the progress that has been made. The private sector has truly embraced Africa.

As you take up your role as Vice-President of Infrastructure, how will you “rediscover” Africa through this department, which covers transport, the digital economy, the mining industry, etc?

They are different, but they are all essential components of the production sector. It is this sort of infrastructure that enhances the competitivity of the sector: energy, roads, logistics, and integration into the international market through information and communication technologies.

We need to position ourselves in the current world of production, which is based on these technologies. It is no accident that my friend, AfDB President, Akinwumi Adesina has stated that infrastructure is one of the ‘big five’. Look at the way all the African heads of state point to infrastructure as being the very top priority…

While everybody talks about infrastructure, what needs to be done in practice?

We must take a rational approach as we cannot take into account any given aspect in isolation. This is the precondition for enabling the emergence of sophisticated means of production: the production of commodities cannot ignore the issue of road infrastructure for transportation.

If we wish to enjoy growth based on exports and remain competitive, we must have far less expensive logistics, energy and production costs. Without this, we cannot be competitive as exporters compared to Asia or other countries.

But when we talk about infrastructure, we do not just mean building roads or supplying electricity. Policies must also be implemented to exploit these resources to the maximum. For example, a transport policy must include the deregulation of the haulage sector for it to be competitive. This policy means lowering non-tariff barriers and addressing all these administrative formalities that constantly hinder the free movement of commercial transport.

The issue of infrastructure must therefore be seen from a broader perspective: it must take into account issues of governance and corruption, administrative barriers that increase costs and, finally, the issue of education, so that people can make the best possible use of their investments in these infrastructures.

The question of infrastructure also has a social aspect: without roads, children cannot get to school. Without electricity, they cannot study late at night and their schools do not have access to the technologies that help to raise the level of human resources.

In practice, what will your programme involve?

It will be specific depending on the part of the world in question. In the case of Africa, we have already made great progress in terms of electricity generation.

The major problem concerns the distribution companies which, because of their poor financial situation, have been unable to develop the grid, meaning that a large part of the population does not yet have access to electricity.

To this must be added the major financial losses caused by a lack of investment in maintenance. Many of these distribution companies continue to rely on public funds to be able to operate and maintain prices that the population can afford.

In the future, we must make these distribution companies more efficient so that they can invest and expand their grids at a cost that is acceptable for the majority of the African population.

Over time, we should be able to reach a situation whereby these companies can finance themselves on the open market. If their financial situation were better, they would not have to turn to governments to fund their capital expenditure. For all these reasons, we must work to bring these companies up to a level of competitivity equivalent to that of similar companies in developed countries.

What place does Africa occupy in this strategy?

Africa will be at the heart of what we do. At the World Bank you cannot currently talk about infrastructure without talking about Africa. Quantitatively speaking, the lion’s share of the World Bank’s portfolio concerning transport, energy and digital technologies – where we are a long way behind with internet access – is devoted to Africa, which is the main focus of our activities.

Whenever I talk about working on infrastructure at the World Bank, Africa is clearly at the centre of everything.

How will the structural transformation of Africa, and above all the diversification of the economy, fit with your responsibilities?

The department I am going to be running will not only help to increase the current competitivity of our economies, but also prepare them for the future. We are entering the era of artificial intelligence and 3D printers and African economies must be prepared.

But how? Africa currently seems to be completely out of step…

That’s why I insist on the importance of education. Of course, we have to invest in physical infrastructure, but we also need to work with the engineering schools.

That is one of the reasons why I went to Paris on the first of July, before even taking up my position, to start discussions with the French engineering schools – including Paris Tech and Ponts et Chaussées – about training engineers in Africa. I also had discussions with telecoms training centres with a view to training even more African engineers in that area as well.

Does the battle for grey matter not worry you? All over the world talent is being snapped up. Could Africa lose out here?

We need to train engineers in sufficient numbers. As long as we have not achieved critical mass, the few engineers we do train will be attracted by the outside world.

Today, only 22% of students graduating from African universities succeed in joining existing systems in terms of the sciences, engineering and mathematics. This is unacceptable!

That is not how we are going to succeed in the structural transformation of our economies, whether industrialised or not. And if this transformation has to rely on artificial intelligence, that is precisely why we need to increase our investments in grey matter. In our discussions with African leaders, we must emphasise the fact that infrastructure in itself is not enough if we do not also invest in grey matter, especially in the field of science and technology.

Is Africa really ready for all these changes? There are major challenges in terms of artificial intelligence, knowledge and skills. All this will require huge resources that Africa simply does not have at the moment. 

Apart from the resources, what we need above all is clarity in terms of the options: 80% of students leaving university have taken non-scientific and non-technological courses. We need to think hard about the subjects that should be nurtured and encouraged.

For example, Rwanda has made a very clear choice. A major American university was invited to come to the campus in Kigali, where it is currently providing a Masters in IT in partnership with the big international companies that also accepted the invitation extended by the Rwandan authorities.

That is how Kigali succeeded in creating an African Institute of Mathematics and Sciences, which already exists in Senegal and Benin. Rwanda is busy creating an ecosystem that will help to develop a scientific hub in Africa.

The challenges we are currently facing will oblige us to make a united effort in the future if we are to succeed in creating centres of excellence everywhere. Any country that has succeeded in training
high quality engineers will have to accept sharing its knowledge with others.

That’s what the World Bank is trying to achieve through its African Centre for Excellence programme: the engineering hub in Yamoussoukro is developing, as are a number of universities in Nigeria. Senegal is also developing a science and information and communication technologies hub. The development of infrastructure does not simply concern the building of roads and ports, but also human resources.

The creation of a free trade area constitutes a revolution for Africa. What role do you plan to play in this undertaking?

I recently had the honour of talking with President Kagamé in Kigali. On the same trip, I also met Moussa Faki in Addis Ababa, who currently chairs the AU Commission. Our discussion covered the things we need to do for the free trade area to become a reality.

We need to get started right away on a number of areas that fall under my responsibility. Firstly, in terms of transport, the creation in Africa of shared airspace. Simple statements of intent such as the in Yamoussoukro are simply not good enough. We must stop talking and start doing. For example, by investing in safe air travel.

We are also working on what we call ‘Power Pools’. In West Africa, we have a ‘West African Power Pool’ that interconnects all the countries in the region for exporting electricity generated at a low cost in one of the countries.

Over the past 10 years, the World Bank has invested heavily in the construction of the actual transmission lines. But the major political issue is that some countries, when we ask them, are still not willing to accept imported electricity. They are afraid that it will not necessarily meet their needs. The exporters are also concerned about not being paid. Faced with these obstacles, we are trying to find solutions. We are considering the creation of a fund to guarantee and secure these exchanges.

In relation to the hydroelectric potential of Guinea and rapidly expanding solar power, the fund could help us to settle the issue of production costs. And we really need to get to grips with the difficult issue of the distribution companies. Here again, we refuse to bury our heads in the sand. Political decisions must be taken. We must accept that these companies should be managed like private businesses, with the same discipline, even if governments do not actually privatise them, so that the consumer can benefit from the best rates.

The effective creation of the free trade area implies a concerted effort by the captains of industry in the private sector – the ‘AfroChampions’ – of whom there are still only a few.

You have put your finger on a fundamental issue. Progress has already been made on the role of the private sector in Africa, but it is not yet enough and the effort must continue. President Mahamadou Issoufou (of Niger), who was to some extent responsible for driving the free trade area project, has done a remarkable job, alongside President Alpha Condé (Guinea) and other heads of state, who worked with them. The result is impressive.

There again, it’s true, there can be no economic area without the private sector playing a major role. We need to work together to achieve a number of things, starting with aligning the regulatory framework on the scale of the regions. Senegal, Côte d’Ivoire, Mali, Niger, all have laws on public private partnerships or PPPs.

When you take a closer look, these laws are all very similar and they differ only in terms of details. We could quite easily align these various laws in a common PPP law for the whole of WAEMU. This would enable those wishing to invest in these different countries to avoid starting each transaction all over again in each different jurisdiction.

We could do the same thing in other areas as for PPPs, something that has already been done within the framework of OHADA (Organisation for the Harmonisation of Corporate Law in Africa).

You mention various methods, such as PPPs. What will your focus be, in relation to other comparable structures?

We will be working with everybody. PPPs require us to put in place a lot of guarantees – as perceptions of risk remain high in Africa – so that the private sector is prepared to invest in our countries. We plan to work with the AfDB, the EIB, the French development agency AFD, Proparco, as there is a major need for guarantees…

Do you have a new approach to syndication or will you be content to simply rationalise what already exists?

Syndication is perhaps a step too far just now. Let’s start by working together.

The chairman of the World Bank initiated regular in-depth consultations with the development institutions two or three years ago. So under the leadership of our CEO, Kristalina Georgieva, the whole team at the World Bank had a full day of very in-depth discussions with representatives of the AFD about how we could work together.

This sort of cooperation is now starting to be part of the ways of working within the development institutions.

In many circles the Bank is referred to as a bogeyman. Nobody would dispute its undoubted expertise, its ability to find solutions for countries in crisis, but does it always live in the real world?

Yes, I believe we live in the real world! You mention countries in crisis, fragile countries such as Libya. It is precisely in these countries that the World Bank is most active. We have even created a department for that purpose.

I’ll just give you one or two examples: when we build a road in Kivu (DRC), we run into a lot of problems, in terms of security, for example. And yet, we are present in these countries. The World Bank is currently one of the biggest providers of funds in Central African Republic. We are investing in energy there…

How do Makhtar Diop the African and Makhtar Diop the citizen of the world coexist? 

I cannot be a citizen of the world without firstly being an African. Without my roots, I am nothing. It is my Senegalese roots that make me a citizen of the world.

The world will only become rich when the point of view of Africans is finally taken into account. Africans are rich. Every day, they demonstrate that they are contributing to the development of the world. If I can just make a small contribution to this process, then I do it with pleasure and a lot of humility. Yes, I believe that the World Bank is useful for Africa. Otherwise, I wouldn’t be here. I have no hesitation. 

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Written by African Business Magazine

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