A ‘Marshall Plan’ for Africa’s employment challenge_____
By Tony O. Elumelu : 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 labor
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 program, 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 program
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 program must be infrastructure
investment, particularly in power and transportation, without which
business cannot function. Today, more than 70 percent of sub-Saharan Africa
lacks access to electricity and every 1 percent increase in electricity
outages reduces Africa’s per-capita GDP by approximately 3 percent. 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 percent 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.