After a decade of progress, Africa’s path to economic self-reliance and political pluralism is now strewn with obstacles. In many countries, reformers have stabilised economies and whittled down government debts but the political price of those measures will be much higher in 2015. Governments will have fewer fat surpluses with which to placate restive towns and cities.
As favourable economic tides start to ebb, such as Asia’s commodity spending spree, the search for investment capital under more unfriendly market conditions will intensify. Last year, African states including Ghana, Kenya, Nigeria and Rwanda – raised some US$10 billion by floating sovereign bonds at relatively cheap interest rates. Already those interest rates are rising.
This will pressure economic managers to be more effective and imaginative, and its politicians to end their cold war with the continent’s embryonic capitalist class. ‘Most African governments would rather cut a deal with a multinational, stuffed with concessions, than work with companies by their own nationals… they fear successful businesses will use their economic power in politics,’ the owner of a string of thriving African companies told Africa Confidential. ‘But the truth is that most business people want to be Harry Oppenheimer, not Nelson Mandela. They want government to get out of their way so they can make money.’
One test case this year will be Nigerian magnate Aliko Dangote‘s bold plan to build a $9 bn. oil refinery and petrochemical plant in the south of his country. The project, in which Dangote is investing $3 bn. of his own cash and raising $6 bn. abroad, was initially welcomed in Abuja but now top officials favour a rival Saudi Arabian project. Insiders talk about political fear of the Dangote empire.
Despite a panoply of civic organisations energetically campaigning, the links between better governance and economic revival will remain much disputed. Many of the fastest growing countries, such as Angola, Equatorial Guinea, Ethiopia and Nigeria, score badly on international governance indexes. Civic activists’ most impressive achievements have been in education and health care provision, not justice and human rights.
Foreign-financed civil society organisations that stray from those areas will come under growing legal and political pressure. Local activists are spending more time working with sympathetic politicians to improve public services. Due to be launched this month, an African Union-backed report by South Africa‘s ex-President Thabo Mbeki, which shows how tax fraud, trade mispricing and political corruption cost treasuries some $50 bn. a year, should concentrate minds as finance gets tighter.
As many African governments drift and in some cases, gallop, towards more authoritarian rule, some officials justify such moves by pointing to Asia’s economic successes under harsh regimes. However, the smallholder farmer revolutions seen in China and India are yet to take off in most of Africa. Nigeria’s Agriculture Minister, Akinwumi Adesina, a candidate for the presidency of the African Development Bank this year, has said that once farming is seen as a business rather than an aid project, Africa will be able to build a developmental base, whatever the turbulence outside.
Source- AFRICA Confidential