Africa’s abundant resources will make other continents envious. But the continent cannot harness these to achieve sustainable development through high value added activities. Instead, it remains a raw materials supplier and a destination for finished products. Expe0rts at the 1st International Business Development Summit organised in Lagos by the Institute of Business Development (IBD), point the way forward for Africa’s industrialisation, reports, Assistant Editor CHIKODI OKEREOCHA.
The statistics are inspiring and intimidating. Africa offers a consumer base of more than 900 million people. And the demographics bode well for the continent as a market, as more than half its population is under 24 and highly entrepreneurial. The continent also boasts of tremendous agricultural and mineral resources, holding, for instance, 60 per cent of the world’s uncultivated arable land. It is also rich in oil & gas, complimented by a growing middle class with spending power, and an increasingly stable polity. Regrettably however, Nigeria and other economies in Africa have not been able to harness these resources to achieve sustainable development through technology-intensive, high value added activities.
At moment, the continent is largely a raw materials supplier, with little or no value addition via processing. Africa consumes mostly imported finished products and the situation, according to development experts, constitutes a stumbling block to Africa’s quest for industrialisation. “We are basically raw materials exporting people; we are supplying raw materials, we don’t process them into finished products. We sell at a pittance to other industrialised countries that process them and sell back to us at cut throat prices. We don’t have a choice,” President/Chairman of Council, The Institute of Business Development (IBD), Mr. Ifeanyi Obibuzor, said, pointing out that the arrangement creates jobs for citizens of the processing countries, leaving citizens of raw materials-endowed economies in Africa poor.
Obibuzor made the remarks in his welcome address at the 1st International Business Development Summit for Africa 2015 held last week in Lagos, Nigeria. Obibuzor, who was one of the experts drawn from across Africa to brainstorm on how to harness the continent’s abundant human and natural resources for sustainable development, described the theme of the summit, ‘Business Development in Africa: Regional Integration for Sustainable Comparative Advantage’ as “apt and timely.” He said there’s no better time for such thought-provoking seminar aimed at overhauling African economies with clear shift towards technology-intensive, high value added activities than now. He stated that Africa must look towards processing their primary products into finished goods rather than remain basically a raw materials exporter.
For a start, Obibuzor said African economies must make conscious and concerted efforts to develop their science and engineering infrastructure base. According to him, a robust science and engineering infrastructure base, which consist of the capabilities and physical plants that allow a prolific machine and equipment design and production to take place in the country, is the tonic to stimulate job creation through the proliferation of industries. He said the acquisition of endogenous capability in science and engineering infrastructure would also enable African economies produce basic necessities of life including, but not limited to food and shelter.
The IBD Council Chairman observed that Nigeria and indeed, Africa’s failure to develop her science infrastructure base is responsible for some of the challenges it is currently facing such as inability to refine and distribute crude oil, translate her agric policy into actual measurable production of food items in sufficient quantities, and outright sale or abandonment of strategic industries in the iron and steel industry. It is also responsible for the unacceptable level of unemployment with its obvious implications, as well as inability to keep the factories/industries, which are employment creators, running. “The old factories cannot be sustained due to lack of endogenous capacity to reproduce spare parts,” he said.
As Obibuzor explained, the first component of national engineering infrastructure involves the development of well-motivated technical manpower and experts, through local and overseas training, in order to raise the required critical mass of development engineers, technologists, technicians, and managers who possess the necessary know-how and practical skill. The second, he said, involves the establishment of many sectoral Engineering Infrastructure Development Complexes (EIDCs), which develop technologies by research and development (R&D) and by technology adaptation; and the generation of associated private sector satellite industries.
According to him, there is need to deliberately and carefully encourage, nurture and protect private-sector owned satellite industries and tertiary industries until they mature and thrive. He said they are essential parts of the national engineering infrastructure. While noting that although, the Nigerian government has, over the years, been undertaking some important elements of the national engineering infrastructure initiatives, which are highly commendable such as the Ajaokuta Iron and Steel Complex, Aladja Steel Project, Oshogbo Machine Tools, and the Aluminium Smelter Project, among others, he said such initiatives must be vigorously pursued, completed, and put to full and efficient production.
Obibuzor was emphatic that “Unless African economies evolve endogenous engineering infrastructure they will continue to pay all the moneys to foreigners and that is what we call capital flight.” He said developing a robust engineering infrastructure would resolve the crisis in Nigeria’s power sector, for instance. “We have a problem with electricity. We can’t generate, transmit or distribute. These are engineering. If we have indigenous capability to design and repair machines that will generate, transmit, and distribute power, we can translate that to other sectors,” he told The Nation on the sideline of the seminar.
He, however, pointed out that the task of developing Africa’s engineering infrastructure must be done by government because it takes a long gestation period. “There must be commitment from the top to the last person. We must get our priorities right; if we get it right every other thing will follow. That is why I call it ‘Premium Mobile’ (the first thing that moves every other thing). If we develop our engineering infrastructure you multiply chances of jobs in the industries,” he admonished, adding however, that what is required is the political will.
Registrar/Chief Executive Officer, IBD, Mr. Paul Ikele, could not agree less on the need for governments in Africa to muster the necessary political will to develop the continent’s economy on a sustainable basis placing emphasis on areas where it has comparative and competitive advantage. “We have a lot of resources; we have the manpower, but we are not harnessing it,” he said, pointing out that the problem of Nigeria, which is three fold, namely corruption, dearth of infrastructure, and insecurity, also confronts other African countries.
“The problem of Nigeria is also the problem of Africa. Nigeria is a giant, but because of corruption, insecurity and under-development of infrastructure, her development is hampered. But let us not bother ourselves about these challenges. A journey of one thousand miles starts with a step. We need to create competitive advantage in areas we have the strength. From there we can see how we can resolve areas we have weaknesses,” he told The Nation.
Mr. Ikele explained that while last year’s summit was focused on Nigeria, the institute decided to focus on Africa this year because “Africa is the next level of the world. We want to bring Africans together; lets us know what we have and then plan on how to develop them.” He said the idea of the summit came up from what happens in the United Kingdom (UK) where the ‘City Week’ is held every year, drawing up about 2, 500 participants mostly intellectuals and government officials to discuss everything about the UK and the European Union with the aim of finding solutions to their peculiar problems.
President, World Federation of Business Development Organisations (WFOBDO), Dr Mohammed Kafafy, admitted that the potential in Africa is indeed, huge. While pointing out that Africa is of increasing strategic interest to the global economy, he said China and India, for instance, are rapidly increasing their business dealings with the continent and are often beating out American and European firms.
“Africa offers a consumer base of more than 900 million people. While more than half of Africa lives on $1 or less a day, the other half does not,and they are hungry for products and services. Even among the poor, there are surprising opportunities,” Kafafy, who was keynote speaker at the seminar said, noting that the demographics also bode well for Africa as a market, as more than half its population is under 24. “Whilst Europe’s population will lose 60 million people by 2050, Africa will add 900 million – creating opportunities,” he projected.
Kafafy, an Egyptian, said although, the risks of investing in Africa remain high, just as they are for most emerging markets, but that the perceived risk is much greater than the real risk. He however, said the key is the management of that risk. He also stated that as part of minimizing the risk, the culture of strategic alliance should be imbibed in Africa.
