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Mbabazi To Dubai Investors: Africa Rising

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rx http://cdkstone.com.au/wp-content/plugins/ubermenu/pro/updates/plugin-update-checker.php geneva;”>His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai

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Hon. Amelia Kyambadde, Chairperson of the Council of Ministers of COMESA


Hon. Ministers and Senior Government Officials


H.E. Abdulrahman Saif Al Ghurair, Chairman Dubai Chamber of Commerce & Industry


The Secretary General, COMESA


Your Excellencies Ambassadors and members of the Diplomatic Corps


Distinguished Leaders of the Corporate and Business Community


Distinguished Representatives from International Organisations and Investment Promotion Agencies


Members of the Media


Esteemed Ladies and Gentlemen


Good morning.

It is my great honour and pleasure to be in your company and to address this very important conference of Africa Global Business Forum. I bring you the warm greetings and best wishes of President Yoweri Kaguta Museveni, the President of Uganda and the Current Chairman of the East African Community, Chairman of COMESA and Chairman of the International Conference of the Great Lakes Region.


I recognize that this is the third business forum being held under the patronage of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of United Arab Emirates (UAE) and Ruler of Dubai and will build on the COMESA Investment Forum held in Dubai in 2011. I just want to say to His Highness, thank you. It is also gratifying to see the overwhelming enthusiasm


characterised by the growth in numbers of participants from 1500 in 2011 to the 2500 that are here today. To you too I say thank you. This clearly shows that Dubai has become the centre piece for Global trade.


Background

Recently while addressing the East African Legislative Assembly sitting in Kigali, the Republic of Rwanda, President Museveni outlined the African history of backwardness, its origins and causes. He said that Africa couldn’t defend itself mainly because of internal weaknesses.


“Africans are favoured by God and nature. They live in a land area of 11.7 million square miles or 30.30.million sq.km. in size – bigger than the US, China, Brazil and Western Europe combined. This land is very well-watered by powerful rivers?the Nile, Zambezi, Limpopo, Niger, the Congo, etc.


It contains vast lakes: Nalubaale (L. Victoria), Edward, George, Kivu, Tanganyika, Nyasa, Turkana, Chad, etc. Africa’s one billion people are divided into just four linguistic groups: the Niger-Congo (including the Bantu and the Kwa groups), the Nilo-Saharan (including the Nilotic and Nilo-Hamitic dialects), the Afro-Asiatic (Arabic and Amharic) and the Khoisan (so called bushmen). Yet the non-progressive people talk as if the African peoples are so divided that they cannot live together.


While the African peoples, therefore, are either similar or linked, the pre-colonial chiefs preferred to keep them divided into small tribal kingdoms, chiefdoms or segmentary societies and those divisions are still being promoted today by the people who do not believe in change. This was definitely one of the causes for the colonisation of Africa.


Eventually, we regained our independence, with Ghana being the first in 1957. Unfortunately, on account of, again, exogenous and endogenous factors, 50 years after independence, most of the African countries are still listed as Least Developed Countries. Today, the middle income countries in Africa are 25.


Bottlenecks to development

There is not a single First World country in Africa. Why? In the last 50 years we have identified the following strategic bottlenecks:


1. Ideological disorientation, whereby those who oppose change in Africa fragment the Africans into sectarianism of tribe, religion and gender chauvinism.This ideological disorientation cannot allow the leaders to build viable and capable state pillars such as Army, Civil service, Judiciary, etc. Consequently, any slight disturbance or challenge leads to the collapse of the State authority to the detriment of the people.


2. Owing to inadequate analysis, attacks against the private sector, including the physical expulsion of elements of the entrepreneurial class as was done by the regime of Idi Amin in Uganda. Even where there is no direct attack on the private sector, corruption, bribery, extortion and poor administration or regulation also hamper the thriving of the private sector.


3. An under-developed human resource (society) on account of lack of education and lack of health care. A non-literate, non-skilled population does not fully realise its potential.


4. Inadequate infrastructure that causes the cost of doing business in our countries to go up, thereby undermining the profitability of companies operating in our countries.


5. Small internal markets on account of the excessive balkanisation of Africa that cannot support large scale agricultural and industrial production.


6. There was also neglect of developing export oriented industries apart from exporting unprocessed minerals and other raw-materials.


7. Lack of industrialisation, whereby we export unprocessed agricultural products and minerals, thereby losing money and jobs to the outsiders.


8. An under-developed services sector.


9. An under-developed agricultural sector.


Lack of democracy.

The African countries, after a number of wasted decades, have started solving some of these strategic bottlenecks. Democracy is now more widespread than in the 1960s and 1970s, for instance. Private sector-led growth is now accepted. Market integration started after the 1980 Lagos Action Plan.”


Africa Arises

There is little doubt that Africa’s socio-economic fabric is in resurgence. Barely two months ago, the Economist magazine reported that never before in Africa’s half-century of independence had the Continent been in “such good shape” . The global consulting firm Mckinsey’s, had signaled this pleasant state of affairs in Africa in 2010, heralding African countries as “Lions on the Move” .


The Evidence

This record, is not merely assuasive or placatory, especially from some sources that are usually critical of what comes out of Africa. The Economist records an increase in real incomes per person in Africa of 30% over the last decade, with overall economic growth estimated to grow at least at 6% a year over the next decade.

More than half of the countries on the continent hold elections, however imperfect, compared to only three at the end of the cold war. Peace and security is increasingly ubiquitous, with the Economist journalist, interestingly having travelled through 23 countries crossing borders easily, without being asked not once for a bribe, or being “… shot at, forced into detours and subjected to endless discomforts…”, as Paul Theroux had experienced over a decade ago.


Mckinsey’s had signaled this resurgence in 2010; recognizing an economic momentum given the renewed pace of real growth at 4.9% per year recorded between 2000 and 2008, compared to only half the growth during the previous decade. I illustrate Africa’s progress using independent sources, rather than official ones, to underscore the depth of the renaissance the Continent is undergoing. It is pleasantly surprising that official African statistical sources report


lower performance. This often causes upward revisions of reported statistical performance, as evidenced in Ghana and Nigeria where economic activity worth US dollars 13 billion had not been recognized, as reported by the CNN at the end of March 2013. CNN, aptly concludes how it is possible that Africa could be much richer than we think.


Key Determinants of Progress

The source of Africa’s resurgence, according to Mckinsey’s, is not a natural resource boom. It is self-evident that the following three key factors continue to provide the bastion for Africa’s way forward.


Firstly, Africa’s resurgence has been and will continue to be, the result of internal dynamics pertaining to Government actions aimed at ending political conflicts; improving macro-economic conditions and the concerted creation of a conducive business climate.

Secondly, Africa has increased its access to international capital, by forging new economic partnerships both with foreign investors, and also non-traditional sources of finance for public projects.

Thirdly, the growth, development and socio-economic transformation of Africa in the long term, will be significantly influenced by internal social factors such as: a demographic dividend, urbanization and a burgeoning middle class.

Together with the growing global demand for commodities from Africa, these critical factors will determine the Continent’s future growth and prosperity.

Actualizing Development in Africa


Actualizing Africa’s future development, therefore, rests in addressing the strategic imperatives that impact on the key determinants of Africa’s progress, that I have enumerated. However, three fundamental tactical imperatives are required, in my view, to actualize development in Africa. These are the following:


Sound Private Sector-led Economic Policy and Management


Infrastructure Development for Private Sector Development


The Development of the Human Resource


Sound Economic Policy

To be able to increase Africa’s share of the Global economy requires African Governments and policy makers to put in place sound policies that support private enterprise.


Bad economic policy is without doubt disastrous. The disastrous economic policies pursued in the 1970s and early 80s led to collapse. Disastrous economic policy was exemplified by fiscal indiscipline, and a lack of focus on unlocking the key binding constraints to development.

Government expenditure was out of control, with the central banks printing money to finance Governments’ fiscal deficits. Printing money created rampant inflation with consumer price inflation eroding the purchasing power of citizens. The high rates of inflation destroyed the value of money and incentives for saving in the banking system.


The lack of sound economic policy provides investors, both foreign and domestic, with the natural incentive to deploy non-fixed factors of production outside of Africa. This has, in the past, been a very big cost to our economies, and must never be countenanced.

Bad economic policy would ultimately only be contributing to the growth of other countries, while our people face high levels of unemployment and continued marginalization. Establishing sound economic policies is therefore a critical pre-requisite for all African countries, to ensure economic growth and for the socio economic welfare of our people.


The barometer test for sound economic policy in Africa is if entrepreneurs feel safe about investing their money in a country for which they are confident about a whole range of things.

These include firm assurances that the law will be upheld; that contracts will be enforced; and that business regulations will not be imposed merely to secure an endless stream of bribes for corrupt officials. Entrepreneurs also need stable economic policies, predictable and transparent taxation and effective competition laws. These requirements hold true for both domestic and foreign investors in Africa.


Infrastructure Development

Inadequate infrastructure across Africa has constrained the potential socio-economic development that could take place. Enhancing physical interconnectivity, therefore, is an important factor in speeding up Africa’s development and facilitating inter-regional trade. Moreover, providing adequate infrastructure will enable greater access to markets by our people, making them more productive, and have a better livelihood.


With rapid globalization and the integration of regional markets, roads, aviation, telecommunication and railway networks can no longer be limited by national boundaries. The development of critical pan-African road, railways and telecommunications infrastructure is therefore necessary, to enable strengthened economic links across Africa.


Power shortages are another major constraint to Africa’s socio-economic development. The issue of electricity, as President Museveni has said many times, shows how Africa got off the track even after Independence.

There is a Kwh per capita yardstick that is simply amazing. The US has a Kwh per capita of 12,400. Some of the African countries have a Kwh per capita of as low as 12! Uganda had a Kwh per capita of 30 in 1986.

We now have a Kwh per capita of 150. When Karuma, Ayago, Isimba, the mini-hydro stations that are about to be embarked on and the geo-thermal project of Lake Katwe are finished, we shall have a Kwh per capita of 400.


This is, like in about five years time. There is some awakening now in Uganda after repeated quarrels with the persons concerned. As of now, only South Africa and Libya have a Kwh per capita of 4,000 and above. Uganda aims at 42,000 MW by 2040. Africa and EAC and COMESA need a general awakening on this issue. We should not be diverted about it.

The total installed power capacity of the African continent is around 107,000 Mega Watts, with almost 79% of the installed capacity being from more expensive thermal sources, and only 18% being from renewable sources such as hydro-power or the abundant solar. Africa is naturally endowed with huge energy potential but most of it is not exploited.

For instance, the 100,000 Mega Watts (MW) hydro power potential of the Democratic Republic of Congo (DRC) alone, if developed can supply the 93% of the current installed power capacity of the Continent today. Apart from proven crude oil reserves in excess of 32,000 trillion barrels, Natural Gas reserves of about 131 trillion cubic feet, and recoverable coal reserves of about 55 billion tonnes; there is also considerable potential for renewable energy resources such as nuclear, solar, wind, geothermal, small hydropower, and biogas waste potential across the Continent.


A state of affairs where we experience power shortages and have the lowest access rates to modern energy should therefore be unacceptable to policy makers. This electricity supply shortfall severely constrains economic growth and development, trade, and the provision of social services.

It is therefore imperative that construction of additional power generation capacity and increased inter-connected transmission infrastructure are prioritized to meet the potential power needs of the African Continent and to facilitate cross-border investments.

Further investments in power generation will also ensure greater environmental sustainability as we enable greater access of more households to electricity.


Infrastructure development in Africa will reduce the cost of doing business and improve the capacity to trade. Together with business regulatory reform, simplification of inter-country tariff systems, and removal of cumbersome customs procedures, will make it easier to set up and run businesses in Africa. Infrastructure development will also improve economic integration within the continent’s regional economic communities.


Development of Human Resources

The greatest resource Africa can harness is its human resource. Human resource development is a necessity beyond basic human rights and social justice as it is also economically sound.

A healthy and skilled workforce is logically a more productive one, enabling society and nations fulfill their ultimate potential. Investing for economic growth not only requires rebuilding African health and education systems, but ensuring the delivery of positive outcomes and results.


Human resource development ultimately contributes to economic well-being of individuals and also empowers communities. Providing education and adequate health care, especially to girls and women, will create the necessary skills base for productive employment and increase firm productivity while also increasing income opportunities for African households.


Conclusion

I have sought to dwell on the aspects that we policy makers can do to make Africa grow and prosper; which ultimately make the Continent a better investment destination.

The evidence is clear that Africa has silently been rising from the ashes of political and socio-economic mis-management of yester-year. Africa is undoubtedly at the threshold of sustained growth and development.

This conference, therefore, convenes at a time when Africa has diagnosed the causes of its underdevelopment, identified the path forward and and is in search of a mutually beneficial partnership to match forward.

We are grateful to the Dubai Chamber of Commerce & Industry and COMESA for organising this forum to provide total understanding of the opportunities on the African Continent as a whole and to reflect Africa as the investment destination.

The Chamber and COMESA working together on an equal footing as equal partners to promote investment in agro-processing and food security, the various infrastructure projects and trade, making Dubai an international hub and direct link to Africa.


Looking at the recent trend in global business, Africa provides the next frontier for business growth, making investment in the African economies and COMESA in particular very attractive.

COMESA needs to learn from the UAE experience of the Public Sector working in partnership with the Private Sector for a common goal of growing business. This approach calls for identifying players that are not risk averse. This Dubai experience is attractive and worth emulating.


My vision is that Africa of the future will, in partnership with our friends abroad, especially for COMESA, with our nearest neighbours the GCC countries, become an engine of economic growth, creating jobs and economic opportunities for the young population we are nurturing to perform their historical duty to cut the umbilical cord of permanent dependency thus transforming the continent.


I urge you all to make Africa your investment destination of choice, and be part of its renaissance into a vibrant and prosperous Continent, that it will surely become in the next few years.


I wish you all a fruitful and successful conference.

I thank you.

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