Good morning! I am pleased to join you at BusinessDay’s CEO Nigeria Forum 2024. Let me express my gratitude for the invite, and I congratulate BusinessDay’s management, staff, and partners for convening this forum, now in its 16th edition. I strongly support the Forum’s inspiration—to be a premier leadership event that showcases the ambitions and concerns of business leaders and investors in Nigeria. Congratulations on turning the idea into reality.
In the opening paragraph of his novel “A Tale of Two Cities,” Charles Dickens sets up the contrasting conditions for his story. “It was the best of times; it was the worst of times; […] it was the season of light; it was the season of darkness; it was the spring of hope; it was the winter of despair.” Unfortunately, this paragraph applies equally to the evolution of Sub-Saharan Africa (SSA) in the second half of the 20th century. Political independence and self-rule in the former colonies during this period were momentous and ushered in high expectations of economic development and improvement in the livelihood of the citizens. However, as is now well documented, the economic outcomes have at best been disappointing. For instance, per capita GDP in SSA increased between 1960 and 1981, from US$145 to $1,005, and then declined to US$595 in 2001. It is no wonder researchers did not mince their words in stating, “There should be no doubt that the worst economic disaster of the 20th century is the dismal growth performance of the African continent.” Further, overall conditions improved in the early 2000s, and GDP per capita rose to US$1,910 in 2014 before crashing subsequently to US$1,637 in 2023. Accordingly, the proportion of the population living in extreme poverty has remained high in SSA compared to other regions—it was 35 percent in 2019, compared to 9 percent in South Asia or 1 percent in East Asia and the Pacific.
At the 74th Session of the United Nations General Assembly in September 2019, the Prime Minister of Barbados, Mia Mottley, declared: “We don’t come with tales of woe only. The Caribbean has produced excellence. It really has. Nobel laureates are sportsmen who have excelled and are the best in the world of their type. Artists are the best in the world of their type. Leaders who have inspired previous generations and current generations. […] What we want—no, what we need—is fiscal and policy space […] to achieve sustainable development, to be nimble, to adapt, and to innovate in ways that allow us to be true and faithful to the task of bringing prosperity to our people. […] [To] eradicate poverty, to educate our people, to include all such that there is not some outside and some inside.”
Prime Minister Mottley is right. Who is not in awe of Arthur Lewis, the only black Nobel laureate in economics (1979), the Caribbean laureates in literature, and Alexander Hamilton, the first Secretary of the U.S. Treasury? Usain Bolt and the other phenomenal men and women runners. Bob Marley and other legends. And her words apply equally to Africa, with its vast wealth and ability to produce excellence. Africa has vast untapped mineral wealth—about a third of the world’s mineral resources—lush-green equatorial forests, pristine beaches, snow-capped mountains, and large expanses of land with agricultural potential. Africa has a vast and priceless cultural heritage of song, dance, and writing. The cradle of humankind in East Africa, the rock paintings across the continent, and the monuments from Timbuktu’s golden age. The pyramids in West and North Africa—we still don’t know how they were built—and the trade routes that crisscross the Sahara Desert. Africa has continued to produce excellence—Nobel Prize laureates, outstanding sports figures, writers, musicians, artists, and global and local leaders that continue to give to the world from this heritage. Africa is truly rich. But we need to take to heart Prime Minister Mottley’s counsel—adapt and innovate in ways that allow us to bring prosperity to all our people.
Evidently, everyone is interested in Africa’s development. There is also no shortage of ideas, analyses, or policy prescriptions. From Dr. Adesina’s address at this forum last year on revamping industrialization to the Africa Union, IMF, World Bank, universities, and think tanks such as the Africa Growth Initiative at Brookings. The issues are well-rehearsed, and while the prescriptions have their own strengths and weaknesses, what is needed is not a perfect solution but the implementation of a good plan. In this case, the perfect is the enemy of the good.
In the rest of my address, I will reflect on how to boost sustainable development in Africa, focusing on what may be more relevant for this conference. I will first outline some broad themes about the reality that will unfold by 2050. Against that backdrop, I will then highlight some key elements to ensure that the opportunities that will emerge as Africa transforms will be captured.
The following four megatrends will dominate the backdrop for Africa’s future.
First, the projected population dynamics favour Africa. In the words of the New York Times, the world is becoming more African. Today, Africa is home to 1.5 billion inhabitants—about 18 percent of the world population—and is projected to nearly double by 2050 and account for more than 25 percent of the world population. Today, 60 percent of the population in Africa is youth under 25 years old. The median age in Africa is 19—China and the US are at 38—and by 2050, 35 percent of the world’s population between 15 and 24 will live in Africa. By 2050, 25 percent of the world’s workforce will live in Africa.
The projected shift in the age distribution may provide Africa with a demographic dividend, an opportunity that should be seized to expand per capita growth, as happened earlier in the emerging market countries. This would require investment in human capital—health and education—and promoting opportunities for productive employment. Today, Africa creates 3.7 million jobs annually. However, Africa needs to create 10 to 12 million jobs each year for the growing labour force, and the demand will rise to more than 15 million annually by 2050. That is a tall order, but the consequences of failure are dire.
Second, we are in an age of continuous innovation driven by new technologies. Technology has been and will continue to be a significant driver of economic outcomes and opportunities. From mobile banking to cloud computing, artificial intelligence, blockchain technology, the internet of things, and robotics, all are heralding opportunities to re-engineer the operations of businesses and governments and to transform people’s lives. Africa has not been left behind and looks poised to benefit massively. For instance, while Africa has a small fraction of software developers—China and India have the lion’s share—the numbers are growing steadily. Lagos, Nairobi, Cape Town, and Cairo are cited as the best African cities to find software developers—due to their large talent pools, a strong tech ecosystem, and the availability of investors.
It should also be acknowledged that Africa has already reaped greatly from its digital transformation by revolutionising how people communicate, transact, and connect to the financial system. The leading case is the M-Pesa story from Kenya, which has hit virtually every African country. From this basic money transfer platform, an elaborate financial services ecosystem has evolved, and millions previously excluded from the financial system are now beneficiaries of these innovations.
Third, globalisation will remain relevant in the period ahead. Globalisation has been a key driver of the global economy over the last three decades, integrating and opening distant markets to producers across the globe. Global supply chains have overhauled traditional manufacturing and production processes, resulting in efficiency gains. Nevertheless, SSA accounts for less than 3 percent of global trade, even as its direction of trade is tilted outside the region—intra-regional trade has remained at around 15 percent of SSA’s total trade, compared to 60 percent in Asia and 70 percent in Europe.
While many countries, including Africa, have felt the benefits of globalisation, the significant cost to many economies, such as from premature deindustrialization and the social cost of job losses in the sectors that collapsed, has also been apparent. More recently, however, we have seen a retreat from globalisation by the advanced economies. Concerns about the possible breakdown of supply chains and national security have caused these countries to consider reducing their dependency on foreign manufacturers in some key industries—by encouraging local solutions and onshoring and nearshoring of key components—which would result in a more fragmented world. These recent concerns have reinforced long-standing fears about the differentiated impact of globalisation and ignited discussions about how to better manage globalisation. Nevertheless, I am convinced that the benefits of the interconnectedness of economies augur well for a resurgence of globalisation. Closer home, the operationalization of the African Continental Free Trade Area (ACFTA) is expected to create an Africa-wide market with resultant benefits from economies of scale.
Fourth, there is an urgent need to support policies and actions to deal with climate change. The global situation with respect to climate change remains dire, and urgent action is needed—an all-hands-on-deck situation. Further, the State of the Climate in Africa 2020 Report indicated that the climate indicators in Africa in 2020 were characterised by extreme weather events such as floods and droughts, increasing temperatures, and an accelerated rise in sea levels, with devastating impacts on millions of the population. Getting back on track to reach the 2030 targets will require a massive acceleration of efforts to mitigate and adapt to climate change by all citizens, corporations, sectors, and countries. Further delays in these commitments would spell doom for our destiny.
These are the four megatrends most relevant for us today that I believe will touch every corner of Africa. In the rest of my address, I will reflect on how to prepare for these trends. What are the key elements of preparedness for the opportunities that will emerge as Africa transforms towards 2050? What must we do for Africa’s moonshot to succeed? For success, we must.
Before delving into those questions, here is a story I want to tell. Climbing Mount Everest is extremely challenging and dangerous, and with 17 reported deaths, 2023 was the deadliest year in Everest’s history. Against this sombre news is that of Gelje Sherpa, who in May 2023, while climbing with his client and at only 500 metres elevation to the summit, came across an unconscious climber—alone, without oxygen, abandoned on the trail by his friends and guides. This was in the death zone—above 8,000 metres—where the brutal conditions would lead to certain death. Gelje Sherpa convinced his client to abandon the summit attempt and instead decided to rescue the stricken climber. Gelje Sherpa wrapped him up and carried him on his back down the mountain for six hours—a very daring and herculean effort—before another guide joined in the rescue. Regrettably, the story’s happy ending was shattered by the rescued climber going on TV interviews and social media after he had recovered, thanking everyone except Gelje Sherpa, and promoting his own exploits! He even blocked his rescuer on Instagram. Just bizarre. Following an uproar slamming the rescued climber, he eventually thanked Gelje Sherpa, and everyone was happy to let the story end there. Everyone except the media, which continued to generate new stories about the rescue,.
I recount this story to underscore the huge debt of gratitude that each of us has, and should acknowledge, to those who were there for us at crucial moments. We can never fully repay it. You would have thought that having your life saved in such extreme circumstances would be a humbling experience that generated profound gratitude. For me, it is also a reminder of the huge responsibility to build our country and continent the best we can for the benefit of others, even though we will not get the recognition.
I now return to the question of what is needed for Africa’s moonshot to succeed. I group my thoughts around four key themes.
Firstly, quality jobs must be created in sufficient numbers to absorb the emerging youth. A total of 3.7 million jobs are created in Africa each year, which must increase to more than 10 million annually by 2050. This will certainly not happen if we continue as we have done thus far. To further compound the problem, we do not even know the type of jobs that will be created, as technology is quickly changing how we work and what we do for work. According to one estimate, about two-thirds of students entering high school this year around the world will have careers that have not yet been invented, highlighting the importance of their adaptability. This puts a lot of pressure on schools and businesses in the near term to escape the methods of an earlier century.
Secondly, the basic building blocks for economic development must be put in place. For the most part, this is the legitimate responsibility of governments, influenced by government policies and actions. While the declared objective of governments is to improve economic and social outcomes for the population, the more immediate objective is to put in place the conditions that will allow those outcomes. These conditions include strong macroeconomic fundamentals supported by strong institutions, well-designed and well-implemented economic policies relating to the tax regime and regulation of markets, protection of property rights, etc. The desired outcomes include low and stable inflation, inclusive productivity growth, an appropriate and predictable tax regime, a low cost of doing business, appropriate spending and fiscal budget outcomes, and well-functioning markets. The government should also foster the development of its citizens, including by providing education, health, security, and a well-functioning judicial system.
Nevertheless, there is a familiar interchange between government and businesses, and I will make a few observations on this. First, governments and businesses profess support for good economic policies—poor macroeconomic policies have negative short-term economic and social effects and enduring harmful consequences. Second, businesses have a long list of issues—grievances—against government and public institutions. In the recent Africa CEO Forum 2024 in Kigali, CEOs were forthright about high taxes and unpredictable tax regimes, complications of intra-Africa travel, poor infrastructure and inefficient public utilities, loss of competitiveness, poor governance, and accountability. Similarly, governments regret the private sector’s dependency on taxes and other concessions, lethargic growth of employment, poor quality, and costly products. Third, while there is a lot of dialogue between the business community and policymakers, political vested interests often dominate the outcome. The term “state capture” has now entered the regular lexicon.
The government also discusses these matters with civil society organisations (CSOs), influencers, concerned citizens, and the media. These entities provide agency to other members of society in shaping their economic or social outcomes. Their discussions with the government are often highly charged, in part because the government may misjudge the intricacy of the matter at hand. These entities are also largely focused on a single issue or sector and therefore may not take a comprehensive view. Concerns that are raised include state capture by businesses and misuse of state power, poor governance, weak regulatory and judicial structures, weak social protection schemes, and poor health and education outcomes.
Thirdly, businesses must embrace the responsibility of creating meaningful jobs and supporting a favourable environment for long-term growth. As is the case elsewhere, returns on equity (ROEs), price-earnings (P/E) ratios, and the bottom line are easy clutches for businesses. But people-centricity should be at the heart of their products and operations, and they cannot be blind to the needs of the citizens. Additionally, while the immediate focus of businesses is on their outputs, their decisions affect future outcomes, including the opportunities that will be available for other businesses and workers. This is especially relevant as innovations will necessarily impact the number and skill composition of workers.
The interaction between businesses, CSOs, and other agencies is less streamlined, but it concerns you deeply. Businesses do not exist in a vacuum but are tightly woven into society, giving and taking from it. Keeping the production processes running is crucial for productivity and the bottom line, which underscores the importance of good labour relations. However, in the presence of large pools of labour that can quickly learn the requisite skills, the need for businesses to be loyal or fair is diminished. Further, well-meant actions by businesses may have unintended consequences and even intensify deep-seated antagonism. These agencies will raise concerns about employment growth, wages and other benefits, support for the community, and more generally, income inequalities as we have seen in the advanced economies.
Fourthly, services, not manufacturing, will dominate in terms of employment creation. Unlike when the Asian tigers industrialised, manufacturing industries are no longer the labour-absorbing activities they used to be. Summarising his recent research on this topic, Dani Rodrik argues, “Innovation in manufacturing has taken a predominantly skill-biassed form, reducing demand for workers with relatively low levels of education. […] The rising skill- and capital-intensity of manufacturing in turn means that globally competitive, formal segments of manufacturing in developing countries have lost the ability to absorb significant amounts of labour. They have effectively become “enclave” sectors, not too different from mining, with limited growth potential and few positive effects on the supply side of the rest of the economy.”
Achieving sustainable, inclusive growth will depend on creating opportunities in the service sector. Services—ranging from transport, telecommunications, finance, and tourism to health and education—account for about half of the workforce in low- and middle-income economies, up from about 40 percent in the 1990s, even as the share of workers in manufacturing has held steady. Services generate more than two-thirds of the global GDP, creating the largest number of jobs. But the productivity and quality of those jobs need to be increased.
As I finish, I note that a lot of attention is being given to cross-border payments, which is one of the barriers to trade in Africa. Others include high tariffs, cumbersome border procedures, divergent commercial regulations, and poor roads and air links. However, it is crucial that more attention be given to cross-border trade in services and investment flows. The role of Africans in the diaspora should also be expanded beyond their remittances. They should serve as a bridge for innovative ideas, technology, and management practices that create sustainable businesses at home. Instructively, India’s success story in the IT industry is anchored in the diaspora, with many successful startups having been founded by the Indian diaspora.
