RABAT - Like Asia did in the second half of the 20th century, Africa can move up to the economic big leagues only if it can manage to industrialize and learn to increase its productivity.
The future of the continent as a whole, notes economist François Fadi Farra, will not depend on one single economic model to fit every African country. But while each country has its own specificities, Fadi Farra stresses that joining efforts within a large free trade area would be a great advantage.
However, following the footsteps of the Asian dragons is no easy feat. According to economist Greg Mills, Africa still lacks assets that are essential to be competitive: energy for instance, but also infrastructures, physical and cultural, financial resources and (skilled) human resources. The manufacturing sector has seen a 17% drop in the past few years.
So what is the best solution? Boosting industry with foreign investments, or relying on local funds? According to Mills it is essential to develop local businesses: they are at the heart of African development, even if Foreign Direct Investments (FDIs) should not to be neglected.
In order to catch up with international standards, local businesses need the support of the public sector. Mills believes that government funding and support play an essential part in protecting emerging industry. Case in point, he says, is an industrial park in South Africa that used to have 129 production plants. Today, the measures of government support have all been lifted, and there is only one manufacturing plant left.
According to an international businessman who wished to remain anonymous, Africa suffers from a lack of overall organization. He thinks the costs related to transactions and production should be reduced. The business environment also has a great influence on investment decisions, and should not be neglected.
He also points at the spirit of entrepreneurship on the continent: “We insist too much on growth and not enough on employment.” For him, an entrepreneur must see risk as an opportunity and not as a threat or a danger: “When facing a tiger, some immediately think about fleeing, whereas the Chinese businessman asks himself how to tame it,” he says.
Not ready for stability
Failures also come from insufficient knowledge and business strategy. The school system is often held responsible for these failings, due to its obvious lack of efficiency. Mills points out that it wrongly focuses on memorization rather than analysis and the building of a critical mind.
Regulation is another obstacle to the development of companies. According to American billionaire Ronald Lauder, who gave 60% of his money to non-profit organizations, Africa should change its fiscal system in order to attract more investments. The complexity of legal systems and fiscal regulations, combined with the absence of tax exemptions are scaring investors off, he says.
A financial manager denounces the numerous differences between legal systems, which go to show that “Africa is not ready yet for political and economical stability.”
“We wrongly insist on growth rather than employment. Sometimes growth can actually harm employment,” the manager insists.
This brings another question to the table. What are the priorities of African officials on the employment front? Making jobs more temporary, more durable, or simply more decent?