Business leaders and political bigwigs will soon meet in Cape Town for the World Economic Forum. There is a clear understanding that the dialogue has shifted in recent years when it comes to understanding Africa’s role in the world.
No longer dismissed as a business basket case, the global community knows that money is being made on the continent. Growth rates are strong. Investment is flowing. Returns are good.
The big question for Africans is to ensure that they too get a share of the spoils.
But how do they do this?
The answer for many is the rather wordy phrase “beneficiation at source.” Politicians like to throw this buzz phrase into conversations because it describes how local communities should “benefit” from their own natural resources.
Traditionally, foreign companies buy Africa’s raw materials, whether they are metals, oil or crops, and then sell the finished product back to Africa.
Now, there is a political push for more African control over its refining capacity, to have more influence over the end product.
While this makes sense, economists and analysts all point to two significant challenges that Africans face as they try to unlock the potential of their continent and grab the opportunities “at source.”
Over and over again, I hear the same two concerns - that a lack of infrastructure and a skills deficit continue to hold back Africans.
If Africa’s working-age youth - an estimated half-a-billion people by 2050 - are to seize the chances that lie before them, then more investment has to be plowed into education.
African engineers, farmers and architects are urgently needed to create a better infrastructure to underpin the continent’s economic potential.
Highways linking big cities and regional hubs need to be built. Fertile agricultural lands need to be farmed strategically. Electricity and power grids need to be upgraded and maintained.
The world and African leaders cannot talk about economic growth unless they increase investment in the critical areas needed to sustain that potential.
The gold price has hit $1,500 for the first time. However, it is unlikely South Africa, once the world’s largest gold producer, will reap the benefits of these prices.
South Africa’s gold mines are some of the deepest in the world and so extracting the precious metal has become more expensive over the years. Mines have closed down and retrenched many workers.
Even though commodity prices for gold, copper, coal and iron ore have been rising steadily, many say the South Africans may have missed opportunities to capitalize on these heady levels. Despite the boom times, the South African mining sector has contracted, admitted the government in parliament recently.
Negative perceptions have scared off potential investors for a number of reasons. Inflexible labor laws make employers think twice before setting up shop in South Africa. Infrastructure, like rail corridors to transport coal, for example, is woefully inefficient. Also, there has been much political noise about the possibility of the mines being nationalized. Government keeps on discrediting the calls but the worries still persist for international investors.
South Africa's leaders also point to the new rail links that are being built, the electricity supplies being upgraded and other benefits to doing business in Africa’s largest and most sophisticated economy.
That said, there is still the sense that South Africa is missing the boat.
Interestingly, many economists and mining experts say it’s other African countries that may benefit, because as commodity prices skyrocket, the appetite for risk increases.
The South Africans recently joined the BRIC club of emerging economies and the Trade and Industry minister says that they expect $17 billion of investment over the next three years because of this new relationship. Doors will be opened, new deals will be done, say the South Africans.
However, will it be too late to ride the wave of these boom times?
They call it “indigenization” in Zimbabwe. However, the process of forcing foreign mining firms to hand over 51% of their companies to local black owners is commonly understood by many to be “nationalization” or “expropriation.”
The Zimbabwean government says the forcible handover of a majority stake by foreign mining firms is necessary to readdress historical imbalances. It says international firms like Angloplat or ImpalaPlatinum are “taking money” out of the country and ordinary Zimbabweans aren’t benefiting from the country's mineral wealth.
Critics of the Indigenization Act say it’s not about giving mineral rights back to local Zimbabweans, but a way of ensuring an entrenched system of patronage in the southern African nation.
The issue is not about race, or even foreign ownership, say critics. Instead, it’s about buying support and currying favor among acolytes of Robert Mugabe’s ZANU PF party.
Mugabe’s partners in government, the MDC, seem powerless in the face of ZANU’s push for this far-reaching legislation. Prime Minister Morgan Tsvangarai has been reluctant to criticize the “indigenization” legislation – perhaps fearful of being labeled pro-white or pro-West? In its defense, the MDC has said companies should be paid fair market value for their stakes.
However, it still seems unclear how international mining firms will be compensated for their 51%. The Indigenization Minister, Saviour Kusukuwere, says the state will raise the money via a “Sovereign Wealth Fund.” He says mining companies will not be paid for any of their “underground assets” because they “belong to us.” However, companies will be compensated for “improvements” above ground.
Just weeks ago, Zimbabwe had an investment conference in Harare, urging foreign investors to come and do business there. These latest pronouncements can’t have done much good to Zimbabwe's reputation as an investor-friendly location.
What do you think?
The price of chocolate could increase if the violence and political stalemate in Ivory Coast continues. Prices of cocoa are already at an all time high and confectioners warn that the consumers could soon be paying more for chocolates if there is no resolution.
The West African country is the world’s largest producer and exporter of cocoa. The international community has slapped embargoes on the Ivorian cocoa industry, stopping exports of the crop, in a bid to cut off foreign exchange revenue to former president Laurent Gbagbo and his supporters. Gbagbo refuses to give up power after losing elections last year
The fighting has also paralyzed the country’s biggest port, which exports much of the raw produce for chocolate.
Latest reports indicate that forces loyal to Alassane Ouattara, the would-be president of the West African nation, have taken the coastal cocoa town of San Pedro. Hundreds of thousands of tons of cocoa beans are reportedly in warehouses, ready to be shipped to international markets.
As the crisis of leadership continues, ordinary Ivorians say they are paying the ultimate price for Gbagbo’s stubbornness. Cocoa farmers are forced to stockpile their crops, waiting for the impasse to end. However, the longer this goes on the longer they don’t get paid.
Beyond the economic hardships, the human impact continues to horrify observers.
“Ivory Coast has reached a boiling point,” says Human Rights Watch (HRW). It says ordinary Ivorians and West African immigrants continue to be massacred by forces loyal to Gbagbo. “We are extremely concerned about the potential for further human rights atrocities, given the killings on both sides,” says Daniel Bekele, who heads up HRW in Africa.
Now, the United Nations has eventually beefed up its response against Gbagbo’s regime, implementing tougher sanctions against him, his wife and three associates. However, the Security Council fell short of referring Gbagbo and his supporters to the International Criminal Court.
With both the economic and humanitarian situation reaching dire consequences for ordinary Ivorians, what is the solution? Will sanctions work to shift Gbagbo out of power? Will West African nations take matters into their own hands and launch their own offensive? After all, the impact of this instability is felt far beyond the borders of the Ivory Coast.
As international attention focuses on Libya, there is criticism that another African country, which is also sliding into civil war, has been abandoned to its fate.
The intractable violence in the Ivory Coast continues unabated.
West African leaders say that the situation is a "regional humanitarian emergency."
The U.N. peacekeeping mission warns that forces loyal to former President Laurent Gbgabo are using heavy weapons to target civilians.
Alassane Ouattara, the man recognized by African leaders as the winner of last year’s presidential election, blames the U.N. for not doing enough to protect civilians. It is estimated that hundreds of ordinary Ivorians have been killed since November’s disputed election, including defenseless women protestors mowed down by government forces and then aired on YouTube.
Tendai Biti, the Zimbabwean Finance Minister, is a history buff. He loves to read about the Second World War and he is passionate about understanding his country in the greater context of history.
While he doesn’t want to underestimate the political challenges facing Zimbabwe, he believes the international community has failed Zimbabwe and that he and his countrymen have been “hung out to dry.”
When Biti and his party, the MDC, joined Robert Mugabe’s party in a coalition government two years ago, there was hope that the stabilization brought about by the political agreement would see a flurry of foreign investment. It wasn’t to be.
Biti is now on a mission to urge the West to engage more with Zimbabwe and quotes the impact of the 1947 Marshall Plan as proof of what can be done if there is political will.
Biti believes the international community has mismanaged recovery in the past two years. He says the West has failed to understand the dynamics of the country and been “unstrategic” in their dealings with Zimbabwe.
He identifies three attitudes hindering foreign investment in Zimbabwe. The first school of thought is “wait and see what happens.” The second approach urges Zimbabweans to “show progress, give proof they are moving” and the third way is to say, “as long as Mugabe is there we will never engage.” He says all positions are wrong. He suggests finding ways to do business with ordinary Zimbabweans.
Many who listen to his studied argument are not convinced. There is a sense that Zimbabwe – despite the unity government – is still firmly in the grip of Robert Mugabe and that the political future of the country is unpredictable.
Will foreign-owned companies be expropriated? How secure are property rights? How much longer can the fragile coalition hold? Will an early election bring more violence and intimidation?
All questions that no doubt infuriate Tendai Biti as he tries to rebuild an economy on the rickety foundations of a coalition government that even he calls an “unholy alliance.”
But here’s another: Will Zimbabwe confound the sceptics and increase investor confidence if the international community continues to be blamed for being too cautious?
I recently discovered a tiny nugget of information that I am savoring.
Don’t get too excited. It is just a word; only two syllables of linguistic pleasure. It’s a word that doesn¹t really make sense when you first read it. However, it is quite pleasant to say out loud.
Go on, say it:
I was doing some online research on African innovation and creativity and stumbled on the concept of ”bushpunk,” which is described as a uniquely African way of making something out of nothing. Or as some might say, “low-tech solutions to high-tech challenges.”
One blog I discovered, www.bombasticelements.blogspot.com, describes ”bushpunk” as when we, “unhitch our imagination” and repurpose or “cannibalize” objects to refashion them to meet our demands.
In Africa, the staggering growth of mobile-phone banking, for example, grew out of this need to use mobile phones for more than just making calls.
In Kenya, a similar description refers to this same sense of grassroots innovation. “Jua kali” literally means sitting in the “hot sun” in Swahili and it describes an industry of roadside inventors creating things in the open-air.
Across the continent, there are numerous examples of how people interpret objects and technology for themselves. We have all seen those homemade radios or the makeshift generators that litter the African urban landscape.
In Lagos, there is a bustling industry of pavement computer experts. In Maputo, satellite dishes are rewired to provide access to whole apartment blocks. In South Africa, I have seen kids fashion toys out of discarded rubbish that make you smile with wonder.
Then there are the local inventions that make you wonder why the research and development department of a global multinational didn’t think of it: bicycles that also charge cellphone batteries while you peddle or the vuvuzela-like washing machine for rural women to use.
It is a fascinating combination of poverty breeding ingenuity. Millions of Africans lack opportunities to better themselves but everyday they create a wealth of innovations that defy the boundaries of their village.
Harnessing the power of “bushpunk” is the next step in Africa's development.
What are the most ingenious African solutions you have seen or heard of?
As usual, it seems the Zimbabwean government isn’t singing from the same hymnbook, as the saying goes.
During a conference in Harare set up to try to encourage “investment in Zimbabwe,” a slew of mixed messages emerged that cannot have done much to change perceptions that Zimbabwe is a “business unfriendly” destination.
The investment conference attracted hundreds of delegates, among them business people, policy makers, financiers and key overseas players keen to explore business opportunities in the troubled nation.
However, instead of placating international investors, conflicting comments from the two factions in the Zimbabwean government have managed to highlight exactly why it is still deeply risky to invest in Zimbabwe.
What sound would you associate with Africa? For me, it is the hum of generators.
From Lagos to Maputo, from Addis Ababa to Dar es Salaam, many businesses are powered by generators because power is either non-existent or intermittent.
I recently chatted with someone from the World Energy Council and he told me that in most sub-Saharan African countries about 15% of the population has access to a consistent, standard supply of electricity. It is only in three countries (South Africa, Mauritius and Botswana) that electricity access rates are above 50%, he said.
Basically, nearly three-quarters of the continent has no access to power when the sun sets over Africa. We know that seen from space at night, Africa is pitch dark while other regions twinkle with light.
The implications are huge. I concede that this realization is nothing new - the need for more power stations and for creating clean sources of energy is a widely recognized issue. However, I spend each week talking about “Business in Africa” and the striking question is, how will Africa embrace the opportunities of the 21st century if there is no stable electricity network to power growth?
As the continent continues to develop at the rates we are currently seeing, the demand for more power is only going to grow. This is, of course, only going to put further pressure on the already inefficient infrastructure.
There are solutions - and many countries are trying to rectify the situation - but the process is expensive and slow.
How bad is the electricity situation where you are? Which African country is the worst affected by power cuts? How do you deal with not having regular electricity? Is this issue one of the biggest barriers to development?
If you are poor, one of the cheapest nutritious fast foods you can buy is a “vetkoek” or “magwenya” from a makeshift shop on a Johannesburg pavement.
Magwenya resemble donuts and make for a filling breakfast for thousands of South Africans, who buy them outside taxi ranks and train stations.
These days, however, even vetkoek are becoming pricier. Food inflation has started to hit southern Africa, belatedly. Prices last year were relatively low compared to the global average because local harvests and supply conditions were more favorable than normal. Now, economists warn people living in sub-Saharan Africa to brace for food price shocks.
The cost of one vetkoek is now one Rand; that’s only about 13 U.S. cents but it’s double the price from 2008, when I took a mini-poll among vetkoek sellers during another bout of price shocks.
Oil, flour, yeast, sugar, salt, and sometimes mince, are the ingredients in vetkoek. Most of these foodstuffs will average a 10-12% increase over the year, says one business leader in the food industry.
Cooking oil prices are due to really soar, and further impact the cost of vetkoek, because sunflower seed prices were reportedly up more than 50% year on year.
All this means that the southern African poor will continue to spend most of their disposable income on basic food. Others will forgo little luxuries.
And if prices rise to the high levels that economists predict they will there is the expectation that many more people will be hungry this coming winter.
So my questions are: Do you think food security is one of the most pressing global concerns? What are the solutions? Are you already feeling the pinch of high food prices?
About Business 360
CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.