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“Africa is the last frontier for development,” says Carlos Lopes

“Africa is the last frontier for development,” says Carlos Lopes

You’ve always lauded the vision of industrialisation as a pillar to support a free trade area. But what does industrialisation mean in the context of Africa?

The first thing you need is awareness. In 2012, when I started arranging debates on this subject, some people were still reluctant to accept the idea of industrialisation. They preferred to discuss diversification – providing markets with opportunities to reduce dependence on traditional export products – but the very concept of industrialisation was not very popular, and was viewed as a byword for state intervention. However, since then there’s been a lot more awareness of the value of industrialisation – there’s scarcely a single document in Africa that doesn’t talk about it!

Of course, there’s still a long way to go before this awareness can be translated into policy. If we look at countries that have made real progress in industrial policies – Ethiopia, Rwanda, Morocco, Namibia, and even Côte d’Ivoire, which has made remarkable strides of late – we see that these policies are highly complex and challenging, with very few bearing fruit. I believe that three ingredients are needed if industrialisation is to succeed: ambition, sophistication and coherence. Ambition is needed, because we can’t be satisfied with limited measures. We need to set our sights higher, and to do this we need a vision and a strategy. Sophistication is important because it’s impossible to isolate ourselves from what’s happening elsewhere in the world. We need to be familiar with every value chain right down to the smallest details in order to make decisions that are appropriate for the level of the value chain. We can’t do everything! We need to choose a specific area of industry and a specific value chain, and work on all of its details. The last element is coherence because everyone, from governments to the private sector, needs to work together to get on board with the policies. We can’t be satisfied with sector-specific policies. If industrialisation policy is limited to the areas of influence of ministers for industry, then we won’t have industrialisation at all!

Beyond the theory lies the question of practice, and what methods can be used to make the idea reality. Does Africa have the financial resources to get behind this idea to which you are so committed?

The problem is about more than just financial resources. We also have to take into account a number of other factors, such as education, the quality of the workforce, and infrastructure. By infrastructure I don’t just mean what we need to build, but the infrastructure for natural resources. When it comes to finances, Africa has a lot more than most people think, but the money isn’t put to use well as it should be. African pension funds currently hold almost $800bn… which isn’t being invested. It’s a farce! And why is that? It’s because we’ve never seen these funds as a tool for financing development. Secondly, looking at the example of taxation, a minority of wealthy taxpayers are subject to progressive tax, but when all is said and done, very few people pay. Kenya, as large as it is, only has 7m taxpayers… that shouldn’t be possible! We need to be able to call on far more resources from taxation but we’re not doing this, partly due to inefficiency, but even more so due to corruption. International aid also plays a disproportionate role in Africa. Africa today represents an opportunity for global institutional funds, as we don’t need enormous financial commitment. By investing $20bn a year, which is no more than 4% of its global investments, China is able to do a lot in Africa. Because we’re so marginalised from global flows, even a proportionally small use of global finance would be enough to work miracles.

Africa has another problem, in that figures don’t always add up. Having headed up the United Nations Economic Commission for Africa, it’s no doubt a problem you’re familiar with. How can projects be carried out when things are so fuzzy and uncertain?

As you observed, this is a pitfall I know all too well. Analyses tend to be bad, because the statistics behind them are bad as well. The three key statistical sources for carrying out a good analysis – the national accounts, the civil register and the land register – all hold low-quality information. The figures aren’t accurate.
Without knowing about their land, people and economy, it’s no wonder that African countries are unable to carry out reliable analyses. Any forecasts made are seldom worth the paper they’re written on.

Awareness of the problem is increasing. All African leaders that I’ve head the pleasure of working with are aware of the vital role that statistical tools play in developing the country. However, this is just the start. Only a dozen countries have up-to-date records in the three categories I mentioned earlier, which simply isn’t enough. As long as the majority of countries don’t have access to reliable statistics for analysing their economy, they have no hope of successfully creating a suitable model for development.

The industrialisation of the continent is going to happen through these “African champions”. Before thinking about new groups that might be created or developed, are there any such groups which you think already exist?

The major African groups exist right now, and they existed before the agreements to create the AfCFTA were signed: entrepreneurs are already looking at their activity from a continental perspective. They’ve had to overcome a number of restrictions to develop, but they’ve done so. Examples include the financial and telecoms sectors. In the air transport sector, Ethiopian Airlines is a great success story. In the industrial sector, some entrepreneurs, albeit still not enough, have made the most of the African market as it is. In the area of consumption, where there is the greatest potential, a number of groups, primarily in South Africa, are positioning themselves to become champions for regional integration.

Are these Afro-champions connected to each other?
Are they working in synergy with a shared vision for Africa’s future?

That is indeed the case in Morocco and South Africa, where a lot of people and institutions have formed associations and networks with a regional approach in mind. However, apart from the initiative recently launched by Dangote and others, we aren’t seeing other movements like this forming on a continent-wide scale.

Where is there scope for movement for Africa in the future global economy?

What I’ve learned from this work is that Africa’s future is inextricably linked with the world’s future. We can’t look to the future without taking into account the changes in demographics happening on a global level, in particular the areas where Africa is behind the rest of the world, and where it is the last frontier for development. We also need more awareness about climate challenges, which could create an enormous opportunity for Africa. We can create a green industry from the ground up instead of having to adapt by correcting the effects of polluting technology, which other countries are having to do. African people need to figure out how to take these opportunities, but success also depends on leadership. We’ve become aware that the way in which the AU currently works is not suitable for confronting these challenges, and that it therefore needs to move forward. It all starts from the AU, which is effectively the mother of all the institutions in Africa. On a personal level, I’m very happy to be helping these three commissions in their work to reform the AU.

Africa is full of potential, which makes it ripe for conquest by other, better organised actors who are further ahead in development. How can we deal with this situation?

Once again, if we want to answer this question, we need to change mentalities on a fundamental level. Let me tell you a story. I remember a number years ago during the Angolan civil war, I came across a young boy on the streets of Luanda. Despite the poverty, this boy was acting incredibly arrogantly. I asked him why he was acting like that. He replied, “Because I’m Angolan, and we are rich.” He was a poor boy who had nothing at all, but he saw things in terms of “potential”. Even though he had nothing, he was convinced that his country was rich. This is the mentality that we need to change. People mustn’t think that Africa’s future is guaranteed because we have oil, diamonds and so on. People don’t see any of this wealth, and yet they buy into the idea that Africa is rich! It’s not the case. These countries aren’t rich just because they have natural resources – countries are rich when they have the capacity to transform themselves. Take Cape Verde. It has no natural resources, but it is an example of quality and how to make leaps forward, because its people have always believed that the only option was transformation.

Rwanda would be another example. What exactly do you think is the reason for the fascination surrounding President Kagame? Is he just the flavour of the month? Or is there more to it?

President Kagame’s approach is a lot like the approach taken by Deng Xiaoping. It involves identifying the areas of transformation that are working, using them as a model for developing the whole country, and finally demonstrating that Africa is not cursed or flawed. What worked for China could work for Africa too. We don’t have much time to lose.

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Written by African Business Magazine

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