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UNEMPLOYMENT, independent of any other
factor, threatens to derail the economic promise that Africa deserves. It’s a
time bomb with no geographical boundaries: Economists expect Africa to create
54 million new jobs by 2020, but 122 million Africans will enter the labour
force during that time frame. Adding to this shortfall are tens of millions
currently unemployed or underemployed, making the human and economic
consequences nearly too large to imagine.
Thus, even with the strong economic growth we have seen over the past
decade, job creation in Africa remains much too slow. Africa needs a
comprehensive, coordinated approach akin to America’s “Marshall Plan” in Europe
after World War Two. That effort focused on building infrastructure,
modernizing the business sector, and improving trade. By the end of the
four-year programme, Europe surpassed its pre-war economic output.
We
can, and must, do the same for Africa. Entrepreneurs, politicians,
philanthropic foundations, and development organizations – such as the World
Bank, International Finance Corporation and USAID – must all work together to
solve the unemployment crisis and make Africa an engine of growth. If we are
outrun by the employment challenge, Africa will be a drag on global growth and
resources for generations to come.
Africa’s Marshall Plan should prioritize three interdependent “pillars”
of development, which all work together to form a virtuous cycle of growth:
policy reform and a commitment to the rule of law; investment in infrastructure,
and a commitment to developing Africa’s manufacturing and processing
industries. This virtuous cycle forms the heart of Africapitalism: the public,
private, and development sectors all coming together, united in a single
objective of creating jobs and social wealth.
First, we need enlightened government policies that help reduce
administrative and operating costs for investors and businesses. We must
streamline licensing and permitting processes, reduce import duties and tariffs
and ease visa restrictions, among other reforms. Such policies would do much to
attract investment, increase entrepreneurship and ultimately generate jobs.
Enlightened government policy in Kenya and Nigeria has already helped to
advance the information technology and financial services sectors. Microsoft’s
pilot project to expand broadband access in Africa depends on government policy
that frees up unused “white space” in the TV and radio broadcast spectrum.
Financial services reform across several African nations, starting with
Nigeria, enabled United Bank for Africa to grow into a pan-African financial
institution. The government’s privatization programme has attracted billions of
dollars of private investment to develop Nigeria’s power infrastructure.
Governments and the private sector must also commit to strong,
transparent institutions to help boost confidence in Africa’s business climate.
African nations such as Botswana, Rwanda and Liberia have made tremendous
progress in this area, though in some countries, war and civil unrest continue
to take a toll. Sustained economic and job growth requires creating a safe and
reliable environment for capital – including strong civil and legal
institutions, corporate financial transparency (such as efforts by the Nigerian
Stock Exchange to improve the quality of financial reporting for listed
companies), accountable, democratically-elected politicians, and modern, open
and transparent markets (like the new commodities exchanges that Heirs
Holdings, Berggruen Holdings and 50 Ventures and its partners are creating at
African Exchange Holdings). Aggressive advances on such policy fronts will help
support the development pillars of infrastructure investment and
industrialization – both of which are vital to creating employment on the
continent.
The second pillar of Africa’s development programme must be
infrastructure investment, particularly in power and transportation, without
which business cannot function. Today, more than 70 per cent of sub-Saharan
Africa lacks access to electricity and every one per cent increase in
electricity outages reduces Africa’s per-capita GDP by approximately three per
cent. Access to affordable electricity is essential to unlocking the
continent’s growth potential – reducing costs and enabling business growth,
including homegrown businesses that create jobs and sustainable local
economies.
Transportation infrastructure promises to have an equally transformative
impact: roads, railways, waterways and airways are the backbone of a thriving
commercial economy. The African Union should encourage and embrace
transportation projects that first connect African nations to each other, and
then to our global trading partners. Projects like the toll road between
Entebbe and Kampala, and the Kenya-Tanzania highway will facilitate greater
trade of agricultural and manufactured goods within Africa. Consider that today
in Nigeria, 65 per cent of our produce spoils for lack of storage
infrastructure, and is difficult to export to other African markets for lack of
rail and road infrastructure.
Major multinationals like Diageo, Wal-Mart, Barclays, and Microsoft are
ramping up African operations in spite of infrastructure challenges. In some
cases, they even build their own infrastructure. Stronger policy and physical
infrastructure would bring more investment from those who cannot or refuse to
bootstrap it. It would also help small and mid-sized enterprises grow faster,
and these companies are the engines of job growth in any economy.
Africa’s third development pillar must be building our manufacturing and
processing industries. Africa lacks the capacity to process and refine its own
natural resources. Raw materials such as oil, cocoa and gold are shipped
overseas, where they are processed into high-margin products and often
re-imported into Africa – costing both jobs and hard currency. For example,
Nigeria exports raw crude oil and then imports expensive gasoline, when the
country should be able to refine the oil itself, supplying not just its own
market, but also other markets across Africa. This inability to create finished
goods at home, and trade them with other African nations, drastically limits
the continent’s growth potential, and thus its ability to create businesses,
jobs and wealth within Africa’s own domestic economies.
I believe we can solve Africa’s employment challenge, but only if we
focus on these three development pillars with great urgency, and accelerate
current investment and business trends.
Many of Africa’s stock markets are delivering stellar returns, while
institutional, retail mutual fund and private equity capital is flowing rapidly
into African markets. Many multinationals and African conglomerates are
investing heavily in Africa.
Despite such investment and economic growth,
however, Africa is not creating nearly enough jobs. According to demographics,
time is not on our side. But with a coordinated jobs plan for Africa, we can
secure a productive, economically independent future for the continent and its
people.
• Elumelu is Chairman, Heirs Holdings and
Founder, The Tony Elumelu Foundation.
