29 Oct 2012

It is without doubt Africa’s Century

The 21st Century belongs to Africa and its people. It is not a handout but our responsibility to manage and make the most of its development opportunities.

Other experts on Africa explain that Africa is a rich continent, 30 percent of the globe’s natural resources are vested in its land mass, as is 60 percent of the world’s arable land. However, little of this has benefited the people of a continent where some 400 million are still near or below the poverty line.

The question, however, is do we want this Century?

This is according to Jason Drew, international business leader, environmentalist and author, who recently spoke at the Gordon Institute of Business Science (GIBS) in Illovo, Johannesburg.

Drew says Africa has the land, water and minerals that the world need and as the West declines and the East rises, Africa will be the new battleground of the superpowers.

Of the two billion additional people on our planet by 2050‚ half will be born in the slums of African cities – the rapid urbanisation means cities not only need to be sustainable but have to look at ways of providing housing for the growing population.

“The outlook for Africa in the 21st century may seem bleak; however‚ capitalism‚ innovation and some remarkable and local sustainability revolution businesses may help deliver the future we want,” says Drew.

View the video of his talk here.

Drew says we have to take the opportunity and make Africa central to this next era in the development of mankind – ask the question of where would Texas or New York be if it was

not part of the USA - we need a sense of Africanism and togetherness - we need strong political institutions for Africa as a whole.

He explains that Africa has to be ready to accept capital inflows from investors coming into the continent as it will change Africa sustainably.

That is, instead of the continent being a recipient of handouts, it should, through its various governments and governance structures put in place measures that will ensure foreign capital is used effectively.

“Africa is the last investment frontier and the world is looking for ways to profit from its transformation – the key is in making that investment sustainable.”

Asked about slums in many African cities, he says cities are a fact of the future and slums are also a fact of the growing cities.

Jason Drew, international business leader, environmentalist and author says Africa is the last investment frontier and the world is looking for ways to profit from its transformation – the key is in making that investment sustainable.

As an example, he says using innovations such as FreshLife that deliver services profitably and sustainably are important to poverty alleviation and slum formalisation.

FreshLife is an entrepreneur led sanitation system - it builds toilets in slums and sells them to entrepreneurs in the slums that then charge residents 5 Kenyan shillings to use the loos, he explains.

The entrepreneurs earn on average $8 a day and the company then sells the human waste compost and also the urine once treated as liquid fertiliser, he says.

“We have to engage formal settlements in the solution - if cities are to be sustainable for all their inhabitants - education and opportunities are essential to this - China's mixed development new cities are the way forward - but the old sanitation and energy intensive solutions are not.”

On land issues and food security in Africa, Drew points to lack of capital and management experience to exploit land sustainably and profitably.

He notes that progressive land allocation programmes that leave some of the physical food produced in country are the newer and better development models - the Saudis are pioneering this model.

According to the latest World Bank report, Africa’s farmers can potentially grow enough food to feed the continent and avert future food crises if countries remove cross-border restrictions on the food trade within the region.

The continent would also generate an extra US$20 billion in yearly earnings if African leaders can agree to dismantle trade barriers that blunt more regional dynamism, says the bank.

Furthermore, the report suggests that if the continent’s leaders can embrace more dynamic inter-regional trade, Africa’s farmers, the majority of whom are women, could potentially meet the continent’s rising demand and benefit from a major growth opportunity.

According to the latest World Bank report, Africa’s farmers can potentially grow enough food to feed the continent and avert future food crises if countries remove cross-border restrictions on the food trade within the region.

It would also create more jobs in services such as distribution, while reducing poverty and cutting back on expensive food imports. Africa’s production of staple foods is worth at least US$50 billion a year.

Other experts on Africa explain that Africa is a rich continent, 30 percent of the globe’s natural resources are vested in its land mass, as is 60 percent of the world’s arable land.

However, little of this has benefited the people of a continent where some 400 million still near or below the poverty line.

This is according to Greg Mills and Jeffrey Herbst, authors of the book entitled: Africa’s Third Liberation – The New Search for Prosperity and Jobs.

“The current political environment in Africa offers the possibility – but it is not an inevitability that leaders will develop the kind of productive economic politics that have led to growth and development elsewhere,” says Mills and Herbst.

The authors say African countries face two challenges in particular – firstly they must transform their wealth in minerals and other natural resources to benefit their entire society.

Secondly, many African leaders need to end their public and private animus towards business.

“The biggest challenge of all remains the gulf between those who favour distributional model of growth over the model based on enterprise through entrepreneurship and the creation by government of an enabling environment.

“Until now, African entrepreneurs have made progress by circumventing their government,” according to the authors.

Brett Abrahamse, a director at Terrace Africa says real estate and private equity funds are investing in opportunities across the continent attracted by the regions’ high growth rates and nascent shifts from commodities to consumer economies.

Meanwhile, Terrace Africa believes that agriculture is currently the most exciting investment avenue in Africa, along with infrastructure.

Increasing local demand for food and rising global commodity prices are providing a solid foundation for agri-investments, says Brett Abrahamse, a director at Terrace Africa.

“Investors should understand the changing regional climatic conditions and transport infrastructure to fully capitalise on these opportunities,” he says.

Abrahamse notes that real estate and private equity funds are investing in opportunities across the continent attracted by the regions’ high growth rates and nascent shifts from commodities to consumer economies.

This is being driven by a growing middle class and rapid urbanisation with all the major real estate funds very focused on the large capital cities across Africa, he says.

He says they concentrate more on the secondary growth nodes such as Solwezi in Zambia, Tete and Pemba in Mozambique and Point Noire in Congo.

“It is also vitally important to travel around as much as possible to understand the specific cultural dynamics of each country and partner locally if possible, network and interact with those working in similar regions and industries,” says Abrahamse.

Drew’s tips that the continent can implement to make the most of its resources:

1. Develop win-win strategies where business parties and the environment benefit

2. Educate the population on sustainability revolution in business

3. Give people a sense of ‘can do’ and show Africa’s talent the new road to business success – not the old exploitative Industrial Revolution methods

4. Disregard the free market push of the first world and understand that mandating benefaction is necessary to winning

5. Not just become a commodity supplier but a producer and employer. – Denise Mhlanga