Growth path in Africa

By Andrew Moody and Zhong Nan (China Daily) Updated: 2012-12-17 17:32

James Shikwati, director of the Inter Region Economic Network. Photo by Feng Yongbin / China Daily

Sven Grimm, director of the Centre for Chinese Studies at Stellenbosch University in Cape Town, says it is an encouraging development, even though people should not get carried away.

"You could argue that it is not difficult for these economies to grow because they are doing so from a very low base and they aren't actually booming yet, but it has to be seen as positive news," he says.

Grimm believes it would be difficult for Africa to replicate the China model of development because of the shortage of labor.

"Labor is not cheap in Africa, so it is difficult to manufacture. When it comes to attracting foreign direct investment, the markets are minuscule compared to those of China, where there is always the lure of a billion consumers. It is a very different starting base."

Harry Verhoeven, a researcher in the department of politics and international relations at Oxford University and a convenor of the China-Africa Network there, says one of the key factors that kickstarted China's huge growth was Deng Xiaoping's land reforms in the 1970s, which has yet to take place in Africa.

"One of the main barriers to African development remains poor productivity of African agriculture in terms of output per acre. The other problem is the extreme dependence on commodity exports, which goes back to the colonial era and makes their economies extremely vulnerable to all kinds of price shocks."

Verhoeven says countries that are dependent on oil and other commodities have no incentive to develop the economies, with political elites able to live off the rent from the foreign multinationals that move in.

"It is addictive. It is such easy money. You don't have to work for it. You don't need to do anything," he says.

"You don't need to develop productive enterprises because you don't need the tax from them. The money gets channeled into real estate and consumption, particularly of foreign goods. I won't say that all of Africa's growth in recent years has been illusory, but I would caution against those who see Africa as the emerging next frontier."

On the terrace of the Hotel Boulevard in Nairobi, Ngari Gituku, a journalist with the magazine Diplomat East Africa and vice-chairman of the Kenya China Friendship Association, believes it is difficult to foster a manufacturing culture in Africa.

"When you have a factory here owned by an Asian, most of the Africans who work there as machine operators do not take much notice about how this operation works. They just fit in, and that becomes their world. They don't think they could set up a similar operation.

"We must try to find a way of bridging the gap. Africans have this belief that they are not born to industrialize, and this is something our education system needs to change," he says.

Back in Addis Ababa, Shide insists Ethiopia, which is one African country that does have a nascent manufacturing base, is well aware of the need to develop human capital.

"We are focusing on the education system to produce the skill level the economy needs. That is why we want to ensure that 70 percent of our university intake studies mathematics, science and technology and just 30 percent humanities and sciences," he says.

Many in Africa are hopeful that they will benefit like countries in Southeast Asia and pick up some of the 80 million manufacturing jobs to be shed by China over the next five years, according to a recent World Bank forecast.

Davies of Frontier Advisory, who is also a senior lecturer at the Gordon Institute of Business Science at the University of Pretoria, says that is the major question.

"Are we going to become the next Vietnam? It has taken Africa some 300 years of development to get to 10 million blue-collar manufacturing. If we were to pick up just 10 percent of the jobs leaving China that would almost double our manufacturing employment figures in less than a decade.